Companies everywhere are forming partnerships with other companies to enable them both to target consumers more effectively and grow their revenues. David Murphy takes a look at the partnership market.
Partnerships are in vogue at the moment. The last few weeks alone have seen EE team up with The Beano to help parents keep their kids safe online; Sky Sports and Audi Launch a technology partnership. And EasyJet launch a collaboration with Spotify that aims to enable travellers to discover their holiday mood based on their listening playlists and get matched to tailored travel experiences across Europe.
These are pretty substantial partnerships, each involving two big, well-known brands, who feel that by working together the whole will be greater than the sum of the two parts. But alongside these “headline” partnerships, thousands of companies are finding that partnering pays. The Partnership Management Platform (PMP), impact.com alone, is currently managing thousands of partnerships.
So why do companies partner, how do they choose the right partner, and what makes for a good partnership?
Alex Gordon, Channel Partnerships Development Manager at impact.com, says the essential intent of partnerships is to forge long-lasting relationships with businesses that have access to a brand’s customers, and measure these partnerships to ensure both parties are achieving their goals.
“In a time where 85 per cent of millennials don’t trust traditional advertising and 90 per cent of digital ad spend is attributed to Google and Facebook, partnerships create an opportunity for brands to find their customers, wherever they may be on the internet, as well as to promote a positive brand image,” he says.
And, he adds, anyone can benefit from the revenue uptick that partnerships offer.
“Due to the rise in content sites, influencers and technology plug-ins, it’s not just enterprises that can benefit from partnerships. SMEs and early stage companies are able to engage partners to help grow their business in a meaningful, authentic way,” he says. “A report by Forrester revealed that companies with the most mature partnership programmes are driving 2x faster revenue growth than companies that have less mature partnership programmes.
For Helen Southgate, Chief Global Officer at Acceleration Partners, the real appeal of partnership marketing is its accountability. She says: “Partnership marketing is a highly effective and measurable marketing channel. It is outcomes-based, meaning you only pay for the outcome you require e.g. a sale or a lead. Because you only pay for the most desirable outcomes, you can be sure that your budget is being used as wisely as possible. Partnership marketing is also scalable. You can connect with thousands of partners that can engage with your target consumers in a unique and successful way.
So what makes for a good partnership? It’s one that works for both sides, says Southgate. “A strong partnership is mutually beneficial,” she says. “Both parties need to have a shared objective, such as acquiring new customers or audience members, and both must have a clear and equitable incentive for doing so.
“A good relationship is also based on open and responsive communication. Make sure that your partners know how to contact you when they need to – and that your partnership manager is equally available and empowered to make timely decisions, when necessary.”
impact.com’s Gordon agrees. “Good partnerships are those which consistently and reliably deliver value for both partner and advertiser,” he says. “Many partners’ business models rely on their engagement with advertisers, and partnerships are becoming increasingly important as a revenue stream for advertisers. As such it is difficult to overstate how vital partnerships are within the digital mix.
“We’ve seen lots of our clients partner with other companies in really interesting and unique ways, from app integrations to strategic B2B partnerships. ‘Good’ in this context can be described as partnerships that break the mould, and feel natural and organic to the customer, in contrast to other advertisements that can feel incongruous or intrusive.”
A creative approach
When it comes to choosing a partner to work with Gordon believes that a creative approach can pay dividends. This can involve finding partners that have quick access to the customer base. So if your company sells fitness products, looking for partners who are specifically talking about fitness and health. Or finding partners that don’t talk specifically about the types of product a company sells, but are still engaging with the ideal customer for your product.
For Acceleration Partners’ Southgate, the process of choosing the right partner starts not with the companies you are considering partnering with, but with the type of customer you are trying to reach.
“You should start by carefully defining the customer personas you are trying to attract,” she says. “The more detail you can include in these profiles, the better. Then, you can work with potential partners to understand if those personas are part of their core audience.”
Any potential partner should also be aligned with your own company’s brand values, she adds.
“Perform due diligence on their core target audience and values, and don’t be afraid to ask questions if there are any red flags. Reputational management is crucial when working with partners, and you will need to make certain your brand is protected.”
So you’ve done all the hard work to find the right partners, possibly with the help of a PMP, but how do you know if it’s working? The process of measuring the success of a partnership starts before the partnership begin, says Southgate.
“Brands need to clearly define their measures of success before the partnership begins. Common metrics include site traffic, actual sales, new lead signups, or increases in average order value (AOV). These measures are easily monitored with marketing analytics tools and give a concrete sense of whether a partnership is effective.”
The timeframe is also a consideration, she adds. “Brands should set milestones for when they expect certain metrics to be achieved. These milestones should be ambitious, but realistic, based on the size of the partner’s audience, their engagement rates, and the frequency with which you launch events or release new products.”
As impact.com’s Gordon points out, the KPIs will differ depending on the type of company you are partnering with.
“From the perspective of the advertiser, metrics such as year-on-year or month-on-month growth, revenue, or number of leads generated (depending on the commercial model), are key measurements of success,” he says. “Increasingly, partnerships such as influencers are being measured on metrics such as engagement, clicks, likes shares etc.
“From the perspective of the partner, they are measuring their success with advertisers on the amount of revenue generated, or how frequently they work together on placements, tenancies etc. A good PMP will help track all of these metrics, and measure partner success by considering the number of programmes partners are active on.”
The Easyjet and Spotify collaboration mentioned at the top of the piece was arguably one of the more off-the-wall ones. But Jess Ridley, Account Director at VCCP, which helped to broker the deal, says it’s a great example of what can be achieved when two companies have a shared ambition.
“In this instance, this was to develop something that was really innovative but that was rooted in insight and could provide a genuine benefit to customers,” she says. “Through this particular collaboration, we are able to connect two key consumer passions – music and travel – by providing people with personalised travel experiences based on their listening habits.
“It came about through an insight that your music habits can reveal a lot about someone. Therefore why not see if it could inform the travel experience someone should book next? Pairing together Europes leading airline with the worlds largest music streaming platform was a natural fit for making this happen.”
So where is the partnerships market heading? Acceleration Partners’ Southgate says she is seeing rapid growth in the space. “Brands are eager to invest more of their marketing budget because it’s a transparent and measurable way to achieve strong ROI,” she says. “We’re seeing more brands experiment with unique and innovative partnership models, including working with social media influencers and investing in media buying. These trends are likely to continue as consumer habits shift toward omnichannel consumption.”
For impact.com’s Gordon, three trends stand out. Firstly, a huge increase in brands moving to SaaS solutions, as well as more activation across emerging partner types such as podcasts and TikTok. Secondly, more and more clients reacting to changes in tracking and privacy (such as iOS 14.5). And thirdly, an increasing trend towards tracking mobile performance in partnerships.
Talk of podcasts and TikTok is highly relevant in the partnerships discussion. As everyone knows, the digital marketing world moves at breakneck speed. Few people had heard of TikTok a few years ago and BeReal is looking like this year’s new, new thing. If, as a company, you think you need to be active in a certain space or channel, such as TikTok, but have no experience of it, and don’t know where to start, then partnering with a firm that understands the space, for your mutual benefit, makes a lot of sense.
“The partnerships channel presents one of the best opportunities to align a businesses revenue stream to shifting consumer habits,” concludes impact.com’s Gordon. “This means there is inherent longevity in the partnerships channel, and its a safer bet for businesses that grow their revenue through partnering with other businesses. Added to this, advances in technology mean that these partnerships are becoming more scalable, more transparent, and even more automated, meaning that it is becoming less resource-dependent.”