Keeping one eye on the future is vital in performance marketing and the final quarter of 2012 can often be the most profitable. So we called upon some important industry figureheads to give their views on the big upcoming trends during the key Q4 period.
In this Q&A; we've spoken to advertiser Getty Images' Affiliate Marketing Manager, Rachel Morland. Of course, we couldn't chat to an advertiser without questioning a publisher. We got in touch with Commercial Director of Broadbandchoices.co.uk, Simon Piper. There's also the network perspective from Rakuten Linkshare's Managing Director, Mark Haviland. Finally, giving the agency viewpoint is Femi Omoluabi, Vice President at the new UK arm of Pure Agency.
Have you performed to expectations over the first two quarters and why do you think this is?
The Getty Images and iStockphoto pan-European affiliate campaigns launched with Webgains in Q3 2011. We’ve seen consistently strong growth this year, especially in the UK and Germany, with Q2 revenue up +56%. Despite being niche and B2B, revenue generated through the affiliate channel in the first two quarters of 2012 has surpassed our expectations which show’s that B2B campaigns can and do work in performance marketing.
Yes. In 2011 we implemented a long-term strategy that is paying dividends now. We completely rebuilt our comparison calculator and rationalised our proposition to focus on telecoms. As a result we have seen a considerable uplift in conversion rates and our white-label partner network has gone from strength to strength over the last two quarters.
We’re having a great year as we continue to outpace overall online retail growth. Same store sales in the Rakuten LinkShare UK Network were up 52% in Q1 and 65% in Q2. There are a number of reasons for this growth. Online retailers are investing more in online marketing overall and affiliate spend is growing as budgets grow. In addition, more retailers today understand the value of affiliate marketing. It’s a channel that is getting a lot of attention among executives and we often hear from our clients that affiliate is the best performing channel for multi-channel retailers.
In addition, we are very focused on achieving the goals set forth by our clients – through service and technology – because we are keenly aware that we don’t succeed unless they succeed.
Do you think we’ve heard the last of the E-Privacy Directive now it has come into force?
RM: As the online world expands at an unprecedented rate, so does the need for better, more advanced privacy laws to ensure that online users can browse and shop with confidence. There appears to be an education gap where people don’t always understand exactly how or why cookies are being used, so I think before we can develop E-Privacy further, online users need to get a better understanding about the current E-Privacy Directive, what it means and how it affects them.
Not in the slightest; if anything it's only just touched the crust. Mobile and Privacy will always be a point of discussion. Agencies have enormous responsibility in enforcing and guiding this for their clients . In addition, brands have huge challenges particularly around data retention and how best this can be used to support ongoing customer communications through mobile.
SP: Unlikely. The rule changes are being interpreted in different ways across the industry. We suspect that before the year is out there will be a test with a big name case followed by more rule changes.
MH: The E-Privacy Directive is one of those industry issues that will continue to evolve. Advertisers and publishers are getting better at adhering to disclosure rules and at the same time, consumers are becoming more aware of cookies; what they’re for and how they work. As consumers understand that cookies can be helpful I think some of the concern will ease. That being said, advertisers and publishers need to be diligent about following the rules and instil a policy of transparency at their companies in terms of what technologies they’re using and why, as well as making it easy for consumers to opt out. By doing so I think they’ll inspire trust and loyalty with shoppers.
What do you think will be the next contentious issue for the industry?
RM: Attribution and the role various affiliates can play in the purchasing process continues to be a hot topic for merchants, affiliates and networks and despite all the debating it doesn’t feel like we’re any closer to finding a workable and fair solution that satisfies all parties. With the last click wins model, undoubtedly certain affiliates are missing out on commissions and the more transparency we can get into the true scale of this the better. Here at Getty Images this is something we take seriously as we want to ensure that those affiliates who played an active role in a purchase get rewarded accordingly.
FO: Showrooming’ has proven difficult for many retailers, but what they need to realise is that this behaviour is here to stay. If anything, we are likely to become more dependent on our smartphones and continue to integrate these devices into our everyday lives. For retailers this is essentially a sink or swim scenario.
The value of mobile lies in the fact that it provides the digital bridge between online and offline, and should therefore be at the heart of any retail operation. There’s a chance to interact with consumers in ways not previously possible, offering the chance to cultivate brand equity. To achieve this, retailers need to take steps to incorporate the channel into their existing communications strategy.
The days of working in siloed channels are long gone. I cannot see a future for retailers that do incorporate mobile in their multichannel approach. Pure Agency has helped a number of retailers in delivering a firm strategy to adapt this. For example personalising your existing channel and linking this to a reminder-based service can work well in certain scenarios.
SP: Affiliate attribution on smartphone sites is an issue that is gathering muster – many advertisers are building smartphone portals, but in the rush to deliver there is a big risk that tracking and remuneration will get missed. Smartphones are the new ‘wild west’ of marketing and advertisers need to work with their affiliates here.
MH: I think that the issues that generate the most heated discussion at the moment, privacy, compliance and attribution, will continue to evolve for quite some time. All of these topics involve multiple stakeholders and even government regulation and legislation so the resolutions are not always clear and they evolve slowly.
What do you think will be the biggest innovation in the performance space for the rest of 2012?
RM: 2012 was the year that video entered the performance space and started making small waves. With ever-advancing video performance companies such as Coull appearing, it is clear that video plans on being a key part of merchants Q4 strategies.
FO: Mobile email is definitely a huge area. Many publishers and clients haven’t got this right. A lot of marketers continue to use archaic methods of marketing completely ignoring heuristics behind the mobile consumer behavior.
SP: If/when a Facebook real-time bidding platform launches it’ll open up a new frontier, allowing highly accurate and targeted advertising. The affiliate space has always been an early adopter so it will be interesting to see if it works and how it evolves over time.
MH: I think the answer to that question is intrinsically tied to consumer behavior – the more consumers shop through a certain channel or technology, the more the industry will invest in it. Advertisers are using a wide range of tools and staggering amount of data to analyse consumer purchase behavior. Two examples that will be big in the coming months are mobile commerce and end-to-end solutions.
Consumers will drive investments in mobile commerce as they get more adept at buying from more product categories and make a larger share of their total purchases from their mobile phones, smartphone and tablets.
End-to-end solutions that include the affiliate channel will grow in importance. The challenge for performance marketers is to create that end-to-end shopping experience – from the publisher site to clicking ‘buy’ on the advertiser site. Many retailers and publishers are already thinking about this leading up to the Christmas shopping period this year.
How will you be adjusting your business strategy to take advantage of this?
RM: As a leading creator and distributor of still imagery, footage, music and other premium content, our goal is to inspire communicators and give them the tools to create inspiring work of their own. With quality content at the heart of our business, we are always looking for new and interesting ways to engage with our customers and reach new audiences, so providing affiliates with video and other rich media is a fantastic way to achieve this. We already have a Getty Images video campaign live with Coull and have recently worked with AdGenie to launch dynamic ‘in search’ banners across all our UK affiliate campaigns for GettyImages, iStockphoto, ThinkStock and Photos.com.
FO: Whilst, our strategy varies by client and vertical we do have one constant rule that applies to all - simply placing the consumer first and not the product. We have invested a lot into our consumer insight solution. A lot of our clients are already benefiting from this.
SP: Our business strategy centres around one thing – building tools and services to help our customers. Whilst we are always testing new media, marketing channels (including a highly targeted one like real-time bidding) are rendered futile without a solid proposition behind them.
MH: As a network our job is to ultimately build relationships between advertisers and publishers. As new publisher models are developed and as advertisers make investments to take advantage of these trends we will be working hard as an advocate for the performance marketing model as one of the best ways to drives sales and earn commissions. From a technology perspective we’re looking at a wide range of new features and enhancements related to these trends. There are many moving pieces to the puzzle and it’s what makes the industry so dynamic and interesting.
What other trends are we likely to witness over the coming months?
RM: In the UK and Europe the affiliate space has been dominated by B2C merchants and affiliates, but the landscape is changing and riding on the wave of success we’ve seen in the Getty Images and iStockphoto North American affiliate campaigns we are working with Webgains to become the B2B leader in performance marketing. With an innovative approach, high AOV’s, competitive commission rates and a wealth of customers across Europe, the campaigns have grown from strength to strength in the past 12 months since launch we are on track for a huge Q4 and are look forward to continued growth in this space into 2013.
FO: Increased focus around NFC will prove invaluable in the long term for clients’ brand collaboration and has proven effective through other media channels. I believe we are yet to see this rise in mobile. An adoption to customer-centricity will determine the longevity of most business. As such, mobile will redefine how businesses operate in the future. Let's face it, it has already begun.
SP: The performance marketing space is maturing and affiliates must look beyond Google. Nowadays it is more important to have a diverse portfolio of traffic, rather than relying solely on search engine marketing. The affiliate industry is undergoing its own ‘industrial revolution’ of sorts and businesses are becoming more innovative in building brand and acquiring traffic.
MH: Another trend we’re seeing become more important is global commerce. More advertisers are seeing opportunities to reach consumers across international borders while at the same time consumers are becoming more comfortable buying from a retailer that may not have a local presence. Affiliate marketing is a great way for retailers to enter new markets. It can be their source of local skill and knowledge without having feet on the ground.