Uber’s recent decision to acquire Postmates for $2.65 billion was just the beginning. As the delivery market consolidates, there will almost certainly be rising demand for pay-for-performance marketing products that help these companies strike a balance between volume and profitability.
One of the latest examples of this is the launch of Actionable Intelligence, a product by Button that gives marketers the ability to target and test high-value audience segments with personalized offers. Although Button’s new product just launched, the company has already attracted big-name clients like Uber and Groupon. According to Button, Uber Eats has been able to achieve a 45% increase in sales, within the bound of their return-on-ad-spend target, and a 100% increase in app installs since adopting the tool.
Button’s eventual goals with the Actionable Intelligence product go far beyond Uber, though. Despite the virus taking a toll on much of the U.S. economy, app-based deliveries are booming. Uber is just one of a number of players in the space, with market-leader DoorDash capturing 45% of transactions, according to data from the market research firm Edison Trends. GrubHub was bought by the European food delivery service Just Eats for $7.3 billion in June.
As Uber, GrubHub, and others race to catch up to DoorDash, they are increasingly relying on sophisticated targeting tools to increase the level of personalization in their marketing. That means using pay-for-performance marketing products to create an array of audiences and different spend thresholds, and then identifying optimal rates to achieve defined objectives based on real-time performance monitoring.
If that sounds complicated, it’s because it is. Affiliate marketing has traditionally lagged behind channels like display, search, and social media, despite being one of marketers’ most profitable channels. Button CEO Michael Jaconi says the technology powering most affiliate marketing was built in a different era, without the modern marketer in mind.
Broadly speaking, affiliate marketing relies on three parties integrating: the publisher, the network, and the advertiser. However, because integration of the three parties began decades ago, personalization, targeting, and incrementality testing haven’t been capabilities that are a part of the underlying linking infrastructure that powers affiliate marketing to date.
“With the pandemic impacting marketing budgets across every business around the world, CMOs and marketing teams are facing more pressure to deliver profitable, conversion-based marketing strategies,” Jaconi says. “And after years of durable profit generation from affiliate marketing, they want more control out of this channel. That is why they’re now ready for a change or an evolution.”
Affiliate marketing is popular in a number of industries but especially in the growing food delivery market. According to data from eMarketer and Forrester Consulting, nearly half of U.S. marketers say they have greater spend control and better ROI in affiliate marketing than other paid channels. Surveys also show that executive-level marketers rank affiliate marketing in their top three revenue channels. Almost every food delivery company runs an affiliate program these days. Jaconi says affiliate marketing makes up nearly 15% of marketing budgets at the biggest retailers in the country. Despite being “widely touted” as one of the most profitable marketing channels, it’s also been an inefficient channel until recently.
Jaconi says that with his company’s new tools, companies will be able to create multiple audiences and different spend thresholds or offer rates for each audience. Then, based on real-time performance monitoring, companies will be able to identify the optimal rates to pay and personalize which offers they show consumers.
“All of this can be done with holdout groups and incrementality testing baked in,” he says. “I’m confident that once CMOs and these ambitious marketers seeking to lead innovation in their industry realize that there is a way to tap into the features that all other digital marketing channels offer for profit and scale maximization, that the affiliate industry will witness an evolution.”