The Power Of Admitad: How A German IT Company Is Disrupting Retail
Did you know Barbra Streisand was an early prophet of the digital economy?! In 1964, her song People won a Grammy. It had a famous opening lyric: “People who need people are the luckiest people in the world.” That same year, the sci-fi legend Arthur C. Clark famously “predicted” the Internet. Over half a century later, the six handshake-driven degrees of separation have narrowed down to one click online. From travel and entertainment to education and health, social networking transformed the way the world operates. Turns out, Streisand was right. People who need people now drive global e-commerce through affiliate marketing. Fashion and lifestyle encompass nearly a quarter of affiliate accounts making it the largest segment in this rapidly growing industry. The U.S. affiliate market is projected to surpass $8 billion in expenditure with over 40% of revenue generated from the retail sector. This is good news for proactive content creators, tech-forward brands, and trends-savvy consumers. However, engaging with this lucrative field can be daunting for individuals and companies wary of the complex and dynamic nature of digital marketing. If giants like Pepsi and Peloton can get it wrong, success is not guaranteed.
With the exponentially growing gaming industry and the imminent expansion of the Metaverse, fashion brands are cautiously venturing into the new virtual frontiers where affiliate marketing can serve as a trusted lifeline. I wanted to better understand the challenges and the potential, particularly for businesses operating in or looking to enter emerging markets. Luckily, there are people. Alexander Bachmann, founder of Admitad, has been at the forefront of the affiliate marketing revolution since the earliest days of social media. Launched in 2009, out of his living room in Germany, the company has grown to a dozen offices on four continents with nearly 1000 specialists on staff. What does it mean to be a local-global business? How does one become a global consumer? And why the next industry reshaping influencer just might be you…
Digital marketing is a relatively new field, yet your company is well-established in the field. How did you get involved in this industry?
I got involved in the industry before it became an industry. [Laughs] At thirteen years old, I was very clear that I wanted to have my own “computer company ” one day. I didn’t know what it could be, but I was inspired by the possibilities of the Internet. I launched my first website as a teenager and tried all types of content and monetization ideas: hosting, publishing, filesharing, everything. When I began to make money at 15, I wanted to share what I learned with others. I started my first ad agency and my own social network! I quickly learned that running a social media platform was extremely expensive and that my communication skills were better suited somewhere else. In 2009, we pivoted to affiliate marketing and started Admitad. It was a fascinating time for early e-commerce. Brands suddenly could “go international” and enter markets they would have never reached before. I am still driven by the same enthusiasm today.
What makes affiliate marketing increasingly appealing for brands?
This is one of the most stable business segments, because it is based on the win-win scenario. It must be mutually beneficial, by design. We make money only when our partners make money. Our partners make money when customers trust their products. Thus, it is important that we believe in the products of our clients, too. At this stage of the digital economy, a choice of a market or a product niche is not dictated by chance. Early startup mentality was often driven by anxiety about this new supernova of E-commerce. “Let’s do anything to try and get something.” The marketplace has evolved, and now you can make well-informed choices and decisions. Our job is to create a space for people to make these meaningful connections in innovative ways.
That is probably the answer why we have supported, and later incorporated into our structure a startup WhiteLabel Network – a service that provides promocode solutions for premium media. As result – $25 million in sales for brands in 2021, and secured over $1 million in profit for digital media with their authentic content and our couponing integration. We have calculated that users saved over $1.5 million by using promo codes that they found on coupon pages which WhiteLabel created.
In the context of the proliferating promo code buying culture, this has a huge potential which we unleage with our tools and tech solutions.
Another example is Tapfiliate, a dutch company we acquired a year ago. In a sentence, this is redefining the entire referral and affiliate tracking software for brands, and making affiliate advertising sexy again. I think slowly brands begin to understand that affiliate marketing is not a dirty word as it has been seen years and years ago. It is a great opportunity for brands to be very precise about their offering, to get to know their audience better, and also to use data to understand their current but also future consumers.
Is affiliate marketing a viable business strategy in emerging markets?
It depends on many factors, but with great potential often come greater risks. We opened our first office in Ukraine in 2013 shortly before the Maidan protests and fighting broke out in Kyiv. I was in Turkey during the civil unrest in 2015 and in India during caste-related violence there. We are aware of the volatility in many places. We also want to deliver on a rare opportunity to support entrepreneurship there in massive ways. Established markets can be insular with high competition and limited growth capacity. Right now, we are seeing so many opportunities in the MENA region, in Eastern Europe, Mexico, Brazil. To get innovative you need to be inspired by potential.
Who or what inspires you?
Given my interest in scaling businesses internationally, I am inspired by “the usual suspects” like Mark Zuckerberg, Elon Musk, Warren Buffet. I also have personal friends in different industries whom I admire. I can reach out to them anytime to discuss anything. I call them my “small idols.” [Laughs]. I’ll give you one more example. Our headquarters is in Heilbronn, Germany. This beautiful town is home to Dieter Schwarz, one of the richest men in Europe. He was born here, built several business empires, and continues to actively participate in the local community as a very private citizen. He is another role model. Most of all, as a self-taught entrepreneur, I believe in experiential learning. Do it to know it. I am always seeking new points of view.
What does it take for a fashion brand to go global today?
It takes a lot. [Laughs]. Every market is radically different when it comes to cultural businesses like fashion. From ideas about modesty and appropriate ways to express your identity to practical laws about privacy and data. If you are not warehousing stock there, what is the customs process? In some places same-day or maximum next-day delivery is the standard. Elsewhere it may be not uncommon to wait for days or weeks. This means you need to think about logistics before you get into sales. Then, you must be aware of preferred payment methods, bank options, money apps. Many companies expanding into the German market, for example, underestimate the power of the Maestro payment system. You need Maestro here. Good news is that it is all possible. Difficult, but interesting. We have worked with Ali Express since 2013 and we are part of another incredible fashion success story with Shein. We were with them since they were a tiny startup.
Everyone is after the elusive “global consumer.” It is refreshing to hear an endorsement of cultural differences, because fashion can be a great tool of diplomacy. What else should the brands be aware of while expanding internationally?
Understanding all the nuances of a cultural market can be an impossible task for newcomers. To give an example, throughout the MENA region, concepts like gratitude and loyalty are extremely important. Oftentimes people would rather gift an item than offer a discount. We rely on trusted local partners who can attract local customers. When no one has ever heard of you, it helps to incentivize people who take a chance on your product and leverage it with their reputation. Good relationships equal or sometimes rival the product for customers who have more options than ever.
So, does a global consumer exist?
The global consumer is very young now. [Laughs] I firmly believe in the good of globalization. My daughter is growing up trilingual: English, German, and Russian. Most of my kid’s friends are at least bilingual. They come from all over the world. Europe is a good example of intentional moving beyond political fragmentation. No borders, fewer language barriers, more opportunities. My dream is one accessible market.
Are we there yet?! [Laughs].
We are on our way because social capital is disrupting the game. Here is an example from earlier today. A friend asked me which hotel they should book when they come to visit. I sent them an affiliate referral link. Done. It’s that easy and efficient. I am not a celebrity to make endorsements. There was no banner involved. It is all about connections. In fact, only 2% of affiliate revenue is driven by banner ads. They may still work for brand recognition, but they no longer affect product performance. The world moved on to something more personal.
Is everyone an influencer now?
In a way, yes… Web 3.0 powers financial benefit not only for the owners of the platform, but for content creators and publishers. That has expanded possibilities to anyone with Internet access. We introduced Convert Social as the next stage of merging social networking and e-commerce. Admitad has always been about connecting people to earn together. It’s been my mission since I was a kid with “a computer company” and this will continue to be an important part of my work.
What is the most pressing question on your mind right now?
I am focused on new products and ideas that can help us reach an IPO. At the same time, safety is on our daily radar, because there are still 200 employees in our Kyiv offices. We try to think big and care about each person at the same time. We can only grow on the strength of our people.