 | According to E-consultancy affiliate marketing is growing at 45 per cent year-on-year. Kevin Cornils CEO of buy.at asked E-consultancy to investigate this further and commissioned them to undertake a comprehensive survey of attitudes and usage of affiliate marketing. E-consultancy surveyed advertisers across all vertical markets, and agencies, producing the most comprehensive research into affiliate marketing to date. As pay-for-performance marketing continues to grow, it is important that participants/advertisers understand the affiliate marketing channel and the roles affiliates, clients, agencies and affiliate networks play in the mix.
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The survey highlights one of the primary reasons that investment continues to flow into the sector. 95 per cent of the client respondents claimed affiliate marketing was ‘very’ or ‘quite’ cost effective as a source of driving customer acquisition, beating paid search at 90 per cent, email marketing at 81 per cent and display advertising at a disappointing 52 per cent. 96 per cent of the agencies surveyed rated it as ‘very’ or ‘quite’ cost-effective for driving customer acquisition.
The travel industry is making particularly good use of affiliate marketing with marketers in this sector spending an average of 16 per cent of their online budget in the channel to drive 18 per cent of their online sales. 84 per cent of travel marketers surveyed say that affiliate marketing drives a high or medium volume and 56 per cent report it is very cost effective for customer acquisition compared with 35 per cent saying paid search is very cost-effective and just 8 per cent for display advertising. None of the travel brands surveyed consider affiliate marketing to be not ‘cost-effective’ but over half found online display advertising not cost-effective and over two thirds think mobile advertising is not cost-effective.
This puts the travel sector ahead of other verticals. It is partly because of the diversity of travel affiliates, ranging from those who create targeted and relevant content for a campaign, integrating sophisticated tools such as ‘travel wizards’, to those who harvest the long tail through niche sites and travel blogs. Successful aggregators such as Expedia, Lastminute.com and LateRooms.com have made excellent use of this channel.
This follows the news that 71 per cent of travel companies have increased their spend on affiliate marketing over the past two years and around a quarter of travel firms have at least doubled it. 63 per cent intend to increase their spend in the channel over the next two years.
Other verticals are not far behind. 68 per cent of the marketers in the financial services sector surveyed said they had invested more in affiliate marketing with half of them more than doubling their spend in the channel in the past two years. 72 per cent of financial marketers surveyed plan to increase this over the next two years. 75 per cent of gaming companies have increased spend since 2005 along with 62 per cent of retailers. The retailers surveyed spend 19 per cent of their online budget on affiliate marketing.
Brands that are using affiliate marketing most successfully understand that affiliates enjoy being inspired to promote a brand, and are increasingly engaging with affiliate networks to educate affiliates about their products and offers, as well as align affiliates with other marketing initiatives from broadcast advertising to direct mail. This creates affiliates as an online sales force working on behalf of advertisers to drive sales. Many of the retailers we work with, who include John Lewis, Marks & Spencer, Carphone Warehouse and Littlewoods, have just had their best ever Christmas for affiliate marketing. This will only grow as we roll out our new social networking product for affiliate marketing. We are already live on WAYN (Where Are You Now?), the world’s largest travel and lifestyle social networking site, with ‘Share & Shop’ which enables members to develop fully customisable ‘web shops’ on their profiles.
The survey also highlighted some key challenges for affiliate marketing and more than half of the agencies surveyed said they wish they could get more out of this channel.
Buy.at believes that relationships and technology is the cornerstone of a successful affiliate marketing programmes and encourages open communication among affiliates, clients, agencies and network account management teams. Where improved communication with the network increases the incremental sales generated by the affiliates and enables the agency and client to gain a better understanding about the role that affiliate marketing plays in the overall marketing mix as well as its influence on other channels.
Affiliate marketing is a fast growing area of marketing. All marketers need to engage with/embrace the discipline in order to benefit from/capitalise on the level of growth and efficiency highlighted in the report. Affiliate networks must continue to innovate, expand their service offerings and improve their client service; affiliates need to professionalise and invest in their businesses; and advertisers must keep allocating the appropriate level of resources required for successful affiliate programmes.
The survey reveals an opportunity for agencies. 63 per cent of the clients surveyed said they do not use an agency to manage any of their affiliate marketing activity. 81 per cent said they wish they could get more out of this channel, and more than two thirds of them highlighted lack of internal resource as a barrier to further success. For those with the skills to manage affiliate marketing successfully, the opportunity for growth is clear.
Kevin Cornils
CEO of buy.at,
