Last week London was inundated with performance marketing experts who descended on the highly anticipated a4uexpo conference to discuss and debate a range of marketing topics including ‘Mobilisation of the Nation’ to ‘Stop Raining on my Parade: The Sales Implications of Weather’.
Other ‘performance’ areas that were up for discussion included retargeting, e-mail, search and social media, plus a wealth of affiliate marketing seminars and panel discussions.
Following on from some interesting questions raised at a4uexpo, Rob Durkin, CEO of FusePump, takes a look at the current state of the affiliate marketing industry.
Value of affiliate marketing
The value of affiliate marketing has been hotly debated since Google’s Panda and Penguin updates. Some advertisers and brands consider content affiliate sites to be in decline – even dying out – whilst affiliate advocates believe they are able to evolve and develop, utilising clever new technology to drive up branding and sales opportunities on the way.
Other channels, like marketplaces, discount and coupon sites etc. do deliver sales, but at a cost to sellers’ margins. They also train engaged customers to expect or even demand discounts which may not be the best long-term marketing strategy.
So why is the affiliate marketing channel still a popular tool for advertisers and publishers?
Affiliate marketers deliver incremental sales
The main point of affiliate marketing is to deliver cost-effective, incremental channel revenue for the advertiser. The mechanics are simple. Every time an online consumer clicks on a linked advert to purchase the end product or service, the affiliate makes commission from the sale, usually via an affiliate network.
The affiliate publisher only receives commission if a sale is made, so affiliates can be an extremely lucrative source of advertising impressions, particularly where there is clear ‘contextual’ relevance between the advertiser’s product and the publisher’s site content. According to The Affiliate Census 2011, almost 40% of affiliates generate more than £10,000 of revenue for merchants each month.*
Free advertising and low entry costs
Nothing ventured, nothing gained – except in the case of affiliate marketing, where you can make very little effort and see potentially large gains. Using affiliate marketers is a relatively low-maintenance way to market your products and brand. In effect, you have an affiliate network and field salesmen (affiliates) who are only paid when they perform. Therefore, it’s in their interest to market your products or services correctly or they won’t make their commission.
It’s still important to keep an eye on your affiliates’ progress, and analyse their success to see what works and what needs tweaking, but this doesn’t have to be time consuming.
Investing in and setting up an affiliate programme can be a simple and, to a large extent, automated process. Technology such as affiliate marketing hubs helps you to centralise your affiliates and allow you to monitor the click-through, downloads and performance of each affiliate through the network reporting platform.
Increased web traffic through referrals
Affiliate display advertising generates millions of free impressions, even if no conversions are made. Each time a user clicks onto the banner, advert or widget, they are redirected to your site, increasing brand awareness and website traffic. The Affiliate Census 2011 claims that 30% of affiliates are sending more than 20,000 visitors a month to merchants’ sites – an increase of over 50% in the last two years.
As affiliates only get commission if a sale is made, incoming traffic from an affiliate site is likely to be highly qualified. Affiliates will tailor the advert or content they place on their site so that proffered products and services are appealing to their audience.
Highly targeted advertising
The simple banner ad might work for some, but affiliate adverts and widgets are becoming more sophisticated, with technical affiliates producing new and engaging brand content that will directly appeal to customers.
Matt Bailey, Commercial Director at Performance Horizon agrees that affiliate tools are important.
“In my experience, brands and agencies are still very concerned about the dangers of fraud and brand compliance within the long tail of affiliates, as well as arming them with the best tools to convert their traffic and drive sales. Therefore providing these partners with dynamically updating tools and widgets containing bang up to date product information is crucial in encouraging brands to continue working with the non-discount, content driven affiliates.”
Affiliate marketing tools allow publishers easy access to an advertisers’ product inventory so they can create novel content that invites customer interaction. Content can also be tailored to the publisher’s target audience using the merchant’s product data feeds to better select specific products that are contextual and relevant.
For example, a tennis coach using a sports shop’s affiliate programme could select only relevant items from the data feed, making sure that the only products featured on his site were clothing and equipment for tennis players.
Recent innovations have made product video content available as well as more content for use in social media and mobile devices, engaging with consumers like never before.
Market control and branding
It sounds obvious but the more affiliates you have working for you, the better. According to a survey by Forrester Consulting, 90% of affiliate shoppers will visit more than one site to compare prices and deals before making a purchase. If your network is doing a good job of promoting your brand to affiliate marketers, your distribution will be improved and your products available on many different sites. The survey also found that high visibility increases the credibility of a brand, making people more likely to buy its products.
Not only that, but a rewarding affiliate programme is an attractive proposition for those wishing to become an affiliate. If yours is suitably attractive, more affiliates will want to use your programme and advertise your products, so you will decrease the scope of your competitors and dominate the market sector.
The future of affiliate marketing
Far from becoming extinct, Forrester Consulting estimates that affiliate growth is set to increase significantly by 2016, especially as affiliate tools become more sophisticated and optimised for smart phones and tablets. As with any form of online marketing, to be successful you need to make sure that you’re evolving with the times and keeping on top of key developments and changes in the affiliate marketing sector.
Chris Bishop, Founder & Managing Director 7thingsmedia believes that affiliate marketing is still important, but that integration is required.
“Earlier in the year, I evaluated a report carried out by Forrester Research on the Direct and Indirect value that affiliates deliver to advertisers. Many thought-provoking statistics were to come from this including 42% of those surveyed are more likely to try and purchase from a completely new brand after seeing it on an affiliate site.
“This exemplifies how affiliates are currently and will remain an important customer acquisition tool. With the continual growth of smartphone ownership, and recent publication of IAB figures mirroring this growth in terms of advertising spend on mobile, the importance of effectively aligning and integrating mobile and affiliate activity is becoming a truly pertinent point. One that I see snowballing in importance over the coming 12 months.”
Consumers know that for most products and brands, deals are readily available and are likely to search online, often on their Smartphone, for offers and promotions before committing to a purchase. A recent UK Internet Statistics Compendium found that 75% of people researched products online before buying, a figure that increases to 81% for electrical. This is where the value of an affiliate site comes in, as Forester’s survey showed that most people believed that non-retailer sites offer better deals than those found on the retailer’s e-commerce site and are more likely to buy through an external seller.
Useful, engaging or specialised content drives sales. Personalisation of content to users will become increasingly important as the technology to achieve this becomes more readily available. If, as an advertiser, you make your product content easily available to 3rd party affiliates, they will be able to use this content innovatively and create more and more interesting ways of engaging the consumer – on your behalf.
- According to its Affiliate Census 2011 conducted with A4U.