“The Sell Sider” is a column written by the sell side of the digital media community.
Rakuten Rewards, formerly Ebates, is an 800-pound gorilla in the affiliate marketing business.
But what’s the point of being biggest if nobody wants to be in the affiliate business?
Since its acquisition by the Japanese ecommerce giant Rakuten and the rebranding from Ebates, Rakuten Rewards has set its sights beyond the affiliate category.
“We're busting out of the affiliate marketplace, because we can target using our own first-party data,” said Rakuten Rewards President Kristen Gall.
By combining its owned-and-operated content and logged-in audiences for targeting, Rakuten Rewards built a first-party media platform.
AdExchanger caught up with Gall about Rakuten Rewards’ first-party ad platform strategy, and how its value has evolved to meet changes made by the walled gardens Amazon, Google and Apple.
AdExchanger: What’s new for Rakuten Rewards since the rebrand in 2019?
KRISTEN GALL: Understanding how people navigate the ecommerce ecosystem is incredibly valuable. Over the past couple years, we’ve realized the wealth of first-party data we're sitting on.
We used to be a one-size-fits-all resource, where you [as a merchant] upload your cash-back rate on our site. And that worked. But what we've been able to launch over the last year and a half is a program called Personalized Rewards, with granular one-on-one audience targeting for merchant partners. It's more akin to how they use Facebook or Google to define an audience to reach for acquisition, retention, retargeting, etc. We use cash back as the lever along with media.
What does “cash back as the lever along with media” mean?
We're able to see an elasticity of demand. If you raise your cash-back rate to double digits, I can tell you that you're going to 3x or 4x your volume on our platform. That's really consistent.
Then, the second thing that we do is sell media on our platform to invite people to the party. If you've raised your cash back to 10%, but don't tell anyone about it, it's like throwing a party with no invitations.
The combination of cash back, plus media that gets to the right eyeballs, is where we're very impactful.
Is all your advertising on owned-and-operated properties?
It is primarily on our owned content. We have banner ads on the top of the site, mobile or desktop placements, ads on our app and our browser extension that we call “the Button.”
Then we have our outreach programs, such as email and push notifications, which are really impactful and can be targeted by first-party data.
A lot of what we're doing for our merchants is net-new acquisition, because it is so expensive to acquire new customers on platforms like Facebook and Google right now. And CPAs [cost per acquisitions] are going up significantly. We're a kind of underground alternative, where they can target very specific groups. Saks can upload its data and create an audience specifically of customers who haven’t purchased in a year or more. They’re looking for that granular targeting ability on alternative platforms.
We are dabbling in an off-platform ad product we're calling audience extension. That’s reaching our audience on other platforms, including display and social.
Is that a DSP partnership or with big social platforms?
We're working with The Trade Desk and doing some work with Facebook. That gives us the ability to extend our audience reach. We're so reliant on people coming back to our site or apps, so it’s useful to extend campaigns to other platforms those members are on. But it’s in a beta stage now.
Would Amazon be a partner for you, even after they removed the affiliate partner program last year?
That was a bad day. We actually had a substantial partnership with Amazon at that point. And that was a pretty rough blow.
Fortunately, we have our own first-party data and are in a position to shift volume to other players.
What we’ve seen in the past is when a retailer leaves the platform, about 75% of their shoppers on the platform stay. Because, effectively, they are very oriented to cash-back offers.
The affiliate marketing world has changed significantly, even over the last year or two. And a lot of it revolves around a level of sophistication around data and expectations for ROAS that didn't exist in the space before. It's now beholden to the same metric expectations and the same performance expectations as display, social or search.
There’s also an amalgamation of merchants who see us as part of an anti-Amazon opportunity.
Nike pulled off Amazon and wants to compete with them more directly. They’re one of our largest partners, because we give them … the appropriate targeting and metrics.
What do you mean by that?
For instance, Nike sells through Foot Locker and through other retailers on the platform. But Nike also has its own direct affiliate program. And, increasingly, these brands are bringing a lot of that spend and parts of their portfolio back into the direct-to-consumer realm. Nike’s own marketing engine is significantly larger than it used to be. They used to let retailers own that shopper marketing, as practically all brands did. But they're bringing that power back in-house.
Nike uses us as a mechanism to acquire new customers to compete against their direct competitors, from a DTC perspective, and to wrestle that power away from retailers. And they're doing a very good job at it.
I think as brands see smaller DTC startups do really well, they’re realizing how much power they have in this one-on-one relationship. And if you can get someone to go directly to the brand site, that's actually significantly more margin dollars in the brand's pocket.
So we are seeing brands play significantly harder on our platform, because they understand the profitability equation can be more positive for them.