At the recent OA&A; conference, I gave a talk highlighting my top 10 predictions for performance marketing in the not-too-distant-future. I see this as a pivotal year for the industry and there are many reasons to be optimistic that the channel is in good health and will continue to prosper.
Affiliate marketing contributed over £5 billion worth of sales within the UK in 2011 and 71% of brands involved expect their spend in the channel to grow in 2012. A ringing endorsement indeed.
I have grouped my predictions into 3 broad sets; strategic shifts in how performance marketing is managed; legislative action that will impact the space; and innovations on the publisher side. So without further ado, let’s crack on with the top 10 predictions, in no particular order…
1. Bring it in-house
As affiliate marketing has become a more significant aspect of many brands marketing activity, interest, scrutiny and understanding of the channel within those brands has naturally increased. Leading affiliates are now vital sales channels for these brands and so it goes without saying that said brands wish to be closer to their partners.
Therefore I see a continuing shift towards brands looking to employ resource in house to manage these relationships and looking to foster closer strategic partnerships. I think we’ll see the role of an Affiliate Manager within the merchants organisation rise in importance and I see people with these skills to be in serious demand.
2. Rise of the agencies
There is a growing realisation that just having an affiliate programme is not enough. There is no point in doing so unless it is managed well. Managing an affiliate programme well is an incredibly complex science, balancing the needs of the affiliates with the overall business objectives of the brand across multiple digital channels whilst remaining abreast of all new developments.
This is why I think the role of agencies will continue to increase in importance, lending their particular expertise to affiliate recruitment, development and relationship management.
3. The great attribution debate
The desire to understand exactly what role affiliates play in driving a sale will still continue to strengthen going forward. Advances in technology will allow brands and agencies the ability to drill down into their data in more detail, and with that will come a need to adjust buying strategies and commission plans accordingly.
This I believe, will lead to a diversity in how affiliates are paid. Being paid on a straight CPA if they are last click will no longer be the most efficient method of incentivising affiliates for the role that they perform.
4. The growth of lead generation
We’re seeing a huge growth in the desire of brands to connect directly with their customers, and utilising lead generation as a channel to collect consumer data is an increasing trend. Utilising partners/affiliates to generate a database of existing and potential customers is becoming an invaluable way of ensuring that brands are able to communicate directly with the kind of people that buy their products.
Powering this is the advances in technology and scrutiny within this channel that allows much more granular targeting and better cleansing of the data that is sourced.
5. The EU Cookie Directive
As poorly implemented as it is well intentioned, there is no doubt that the passing into law of the EU Cookie Directive will have an impact on our channel going forward. The law, which requires users to be informed if and when cookies are dropped on their machines, will undoubtedly increase the general awareness of issues of online privacy. Even if it is not as robustly enforced as many people fear, the rise of concern about cookies within the general consciousness will play a major part in shaping our industry.
Unfortunately, with affiliate marketing being such a broad church there remains the issue of bad apples being attracted who are looking to utilise the opportunities presented for nefarious purposes. As the number of people online globally increasing, the possibility of this affecting brands increases.
However, I do foresee networks and technology providers really clamping down on this and fraud prevention technologies becoming a real differentiator amongst suppliers.
7. Pay per Call
Traditionally affiliates have been very concerned about the presence of telephone numbers on a brands site. This is associated with lost sales and therefore revenue. However the emergence of technologies from companies such as AdInsight, FreeSpee and RingRevenue means that sales can now be attributed to individual affiliates. This opens the door for brands to encourage affiliates to drive sales to a phone number, where conversion rates and basket values tend to be higher.
Clearly the growth in people accessing the web via smartphones and tablets presents significant opportunities for affiliates. At present we’re in a bit of a Catch 22 situation as brands are in the process of developing mobile enabled, transactional sites and publishers await this hitting the mainstream.
I foresee a lot of transactions originating on mobile devices but then being taken offline. To this end, I think that two of the trends we’ve already spoken about – lead generation and pay per call – will become mainstream methods on mobile devices.
Affiliates have always been at the forefront of monetising online activity, yet up to now, the huge traffic to social media sites has largely seemed to elude even the most innovative of affiliate minds. Could 2012 be the year that this changes? We’re certainly seeing moves in this direction with companies such as Pinterest, Tribesports and Shopcade launching social spaces and apps which have affiliate marketing at their core.
10. Traditional Publishers
The rise in prominence of performance marketing will inevitably see larger traditional publishers revisit the channel as a way of monetising their reach. We have seen forays before with incentives such as co-branded cashback sites and the implementation of services such as Skimlinks. However, I believe we will see this hit the mainstream.
As performance marketing gains prominence, I think we will see it becoming more engrained across brands and agencies and so more media will be bought on a performance basis. This will open up possibilities for advertorial placements and the like where the publisher is rewarded based on the number of sales driven.