Businesses in the UK produced sales of £9 billion through affiliate marketing and lead generation during 2012. The two channels combined to make an industry worth £814 million, according to the latest research by PWC that was commissioned by the UK’s Internet Advertising bureau.
It’s worth noting that PwC’s figures are a low estimate. The Value of Online Performance Marketing in the UK report made approximations for companies not directly participating in the survey such as certain price comparison sites, large publishers and B2B publishers.
James Baigent, Affiliate Marketing Manager at iProspect, had only good things to say about the sector. “Affiliate marketing has seen consistent growth since its inception and the results will certainly help underpin the value of the channel to brands and shape opinion on the strength of the industry as a whole,” he said.
Affiliate and leads marketing compare favourably to display. The IAB’s advertising expenditure report discovered £590.9 million of spend in the first half of 2012, which probably approached £1 billion by the year’s end when taking into account the 10.6% year-on-year growth.
Whilst growth is still healthy in the sector, it’s not what it was in the years prior to 2012. Between 2008 and 2011 it was 14% per annum. However in 2012 it’s expected to only be 7%, suggesting the industry may soon be about to reach its ceiling.
During 2012, UK consumers conducted around 100 million direct transactions to the value of £8 billion as a result of affiliate marketing. On the lead generation side, 70 million enquiries (indirect transactions) resulted in £1 billion of sales across last year.
PWC’s report disclosed just how widespread affiliate and lead generation is amongst the digital marketing community. In the UK there are 3500 advertisers and 10,000 publishers currently engaging in the two disciplines.
Tim Elkington, IAB’s Director of Research & Strategy, explained how consumers are at ease with these types of campaigns. “Each year it drives more than two online purchases for every UK adult and causes the equivalent of every UK person to fill out a form showing interest in a product – generating £11 of revenue for every £1 spent,” he said.
Finance advertisers leading the way
The financial vertical, driven mainly by insurance and credit card advertisers, accounted for 45% of affiliate and lead generation expenditure in 2012. PWC has found that the lion’s share of revenues for the sector is generated through price comparison websites.
Interestingly, the substantial expenditure by financial advertisers didn’t equate to affiliate sales. PwC’s survey data revealed how retail is syphoning over half of all advertiser sales, whereas travel and leisure represented a quarter and finance comes in just behind.
OMG Client Services Director, Carla Arrindell, reasoned why finance consumed such a large share of the pie. “The complexity of finance products and the considered way in which they are purchased requires a greater ‘pre-sell’ and affiliate and lead gen segments lend themselves to delivering this more effectively than some of the other disciplines, such as Display,” she said.
A4u will be bring you more analysis and coverage of this ground-breaking The Value of Online Performance Marketing in the UK report over the coming days.