UK advertisers spent £1.3 billion on affiliate marketing and lead generation in 2015 as the IAB’s latest valuation of “performance marketing” showed a 9.3% lift in budgets year on year.
Now in its fourth year and conducted in partnership with PwC, the IAB’s annual assessment of two key performance advertising channels is considered a trusted barometer for their economic worth. Both were found to be driving approximately 1% of the UK’s total gross domestic product in 2014 and the same has been said for 2015.
Showing a more obvious trajectory is advertiser spend on the two channels, which appears to be outpacing growth for ROI.
Affiliate marketing and lead generation drove £16.9 billion in sales during 2014, according to the IAB’s revised estimation, which rose 5.4% to £17.7 billion in 2015. When considering the 9.3% rise in advertiser spend, this equates to a return of £13 for every £1 committed last year, which is £1 less than a revised estimate for 2014.
Affiliate and 'lead gen' in numbers
Other headlines from the affiliate marketing and lead generation category delved into the engagement boasted by both channels, as well as their place in the digital marketing mix.
Here are the key takeaways:
- 4.7 billion clicks on related inventory, working out at 13 million clicks a day and 150 per second.
- 155 million "transactions" came off the back of these, resulting in 125 million affiliate-driven sales and 30 million leads.
- In retail specifically, performance marketing takes 8-10% of digital marketing budgets, accounting for around the same amount of sales.
- Price comparison sites are the dominant affiliate type, according to the IAB, with 40% of Brits using one in 2015. This is higher than rates of usage for voucher code (26%), loyalty (23%), cashback (19%) and blog affiliates (18%).
Another slight decline came off the back of the IAB’s publisher usage survey, conducted on 2,049 UK adults, where 75% had engaged with at least one affiliate demographic in a six-month period within 2015, down from 79% in the year before.
But publisher numbers are up, with 12,500 affiliates now ready to serve inventory, showing a rise of 4% from last year’s figure.
While affiliate marketing and lead generation are still driving a hefty amount of ROI for advertisers - groups who are actively investing more in the channels - it will be up to the industry as a whole to at least maintain levels of consumer engagement, affiliate population and return as 2016 unfolds.
The wider performance mix
Away from affiliate marketing and lead generation, there were plenty of good signs for channels also considered part of the performance mix: namely video and social media advertising.
The pair were a shining light for a ‘new age’ of ad formats, with video budgets showing a 98% rise to £353 million and ‘paid social’ attracting investment of £1.2 billion, up 45% from last year.
Over 71% of the latter is being spent on targeting mobile users, and it’s no surprise to see smartphones and tablets playing such a huge part in the growth strategy of social networks like Facebook and Twitter.
Another performance marketing stalwart and slightly downplayed entity in paid search also grew its advertiser spend, this time by 15.3%, to a total of £4.3 billion. It now accounts for the majority (51%) of all digital ad spend in the UK.
Commenting on search’s future prospects, Ravleen Beeston, UK head of sales at Bing Ads, said: “The figures from IAB and PwC’s latest report highlight huge trends that are impacting the digital advertising industry as we know it.
“The rise of intelligent search advertising for example, is indicative of the future that new technologies such as personal assistants promise - from reaching consumers with personalised content, to eventually predicting behaviour and taking action on our behalf.
“As an industry, it is crucial that we do not underestimate the power of search in delivering results and rich data that informs marketing campaigns.”
The lift from paid search carried a huge impact for UK digital ad spend in 2015, which rose 16.4% year on year to £8.6 billion.
A programmatic world
Elsewhere the study generated some interesting movements in display advertising, as programmatic (or automated bidding) drove 60% of all sales, up from 47% in 2014.
This came at the expense of those sold via ad networks and direct sales (inventory bought at a fixed rate from media owners) which chimed in with rates of 4% and 37% respectively.
PwC senior manager Dan Bunyan said the current trends reflected a “three-pronged change” in the way ads are sold.
“There’s a shift in sales from networks to real-time bidding exchanges, a shift from direct to programmatic direct, and one from open to private marketplaces,” he commented.
“It’s almost gone full circle in terms of the desire for a more controlled environment to sell in.”
Offering a more efficient and cost-effective way of buying and selling inventory, Bunyan backed programmatic to scale yet more barriers in 2016 on its way to accounting for “80-90% of display ad sales” by 2019.
What do you make of the IAB's annual performance marketing study? Have your say below.