How can cost-conscious marketers put an affinity marketing partnership in place? In this second of three pieces, Nick Howse, managing director at Howse Jackson Marketing examines each step, from planning through to putting the partnership in place and choosing the right marketing channel.
How to create an affinity partnership
You’ll need the help of an affinity marketing specialist – someone with the professional experience, contacts and more importantly the expertise in finding partners and structuring the right deal for
The legal structure of the deal is paramount, as this will avoid complications further down the line. The affinity marketing specialist will put in place a binding legal contract that lays out specifically the responsibilities affecting both parties.
There is no trade organisation for affinity marketing specialists but probably the best method for finding one is either by recommendation or, failing that, an online search.
Tip Get the advice and expertise of an affinity marketing specialist to help navigate you through the unseen pitfalls and legal complexities.
2. Brokering the deal
Your affinity marketing specialist will help you select and approach a potential partner, who should accept your commercial proposition as long as it is relevant to its customer base and is also commercially risk-free.
Now is also the time to define the fine detail of the partnership and draw up a legal agreement covering all aspects of the campaign. In particular, you need to specify the commission per sale as well as the responsibilities allocated to both parties.
You also need to ensure that the marketing collateral conforms to both parties’ brand values and meets brand guidelines.
Tip Make sure you select a partner brand that you think would add value to your own customer base and the individuals within it.
3. Choosing the marketing channel
Brand A, the partner allowing its data to be used, will agree to the terms of a specific promotion to its customer base. It will choose either one of two strategies:
Brand A will promote a third party’s campaign using its own existing business collateral – eg bill statements, invoices and existing marketing material.
For example, imagine a major tour operator (brand A) and a big insurance brand (brand B) agree an affinity deal to promote a specialist accident insurance policy. In Strategy One, brand A would include a leaflet or brochure about brand B's insurance policy within its own marketing material.
In the above example, brand B would simply piggy-back on an existing brand A mailing to its customer base, be that a newsletter, statement or even an invoice.
Strategy One is therefore the simplest form of affinity marketing and easiest to implement. It requires less work for both brands.
Brand A will offer its customer database to brand B for its own use, under strict conditions.
Here, the tour operator (brand A) lends its customer or lapsed enquirers list to the insurance company (brand B) and will hand over its data accordingly. Brand B will then mail brand A’s database with a
co-branded offer aimed exclusively at the tour operator's customers.
Unlike Strategy One, the costs of the creative, print and postage are met by brand B, along with back-end commission to Brand A for every insurance policy it sells.
This is an excellent strategy because both parties are incentivised for the campaign to work. By contrast, when a brand simply buys data from a third party there is less incentive because the data seller gets paid whatever the outcome of the campaign.
Strategy Two is more complicated and expensive as an affinity strategy because it involves close cooperation between both parties throughout the campaign. The advantage, however, is that because it is a dedicated mailing, the responses are often higher.
Whether a brand opts for Strategy One, Strategy Two or both will depend on its commercial objectives and the terms of the affinity marketing agreement.
Potential pitfalls of affinity marketing
Brands will often rely on past experience to estimate returns. These are often inaccurate because (a) the offer is co-branded and (b) the data set hasn’t been used before.
Lack of binding agreement
Affinity partnerships are straightforward when implemented properly but can disintegrate if legal commitments are not fully specified prior to any campaign activity.
Producing a co-branded direct mail piece is expensive if the test volumes are small. Upon roll-out, however, the extra costs can be absorbed easily into the ROI model.
Find out how to evaluate an affinity marketing campaign