Ten years after I joined the world of affiliate marketing I now know how much the industry I work in is worth and I hope you received a pleasant surprise when it was announced on Tuesday that it’s a rather healthy £8bn.

Thanks to the efforts of the IAB and a handful of companies working alongside PwC to carve out a firm idea of what we wanted to measure and how, for the very first time in our history we can place a monetary value on what we do day in, day out.

Rewind to last summer when the study was being transitioned from an idea to something more concrete, the initial (not inconsequential) barrier of funding had to be navigated. The insight we were asking for doesn’t come cheap and so the IAB’s Clare O’Brien set out on a mission to convince companies drawn from the spectrum of affiliate marketing (agencies, advertisers, affiliates and networks) to stump up for what was likely to be the most ambitious project the IAB had ever undertaken. In the end 23 companies added money to the pot and the study was commissioned.

The tender process

With (most) of the money required now secure, the IAB tendered the work to several research companies, with PwC emerging as the obvious candidate. The project team from the AMC was next, with support drawn from the various divisions of the affiliate landscape, namely, Affiliate Window, Commission Junction, Goallover, LeadPoint, Nectar, Neo@Ogilvy, Red Letter Days and Ten Thousand Hours.

We knew the study would also incorporate lead generation as well to form a fairly loose coalition of ‘performance marketing’ channels. Boiling down what we then wanted to achieve – in my mind it was a headline number hopefully with lots of zeros after it – was one of the first dilemmas. Additional context beyond the big numbers was important. There was a general feeling that we wanted the study to reflect the wider economic contribution the channel makes.

It’s important to bear in mind that the biannual PwC AdSpend survey only measures above the line marketing spend and therefore doesn’t reflect the actual money invested in the channel. In other words it looks at fees paid to networks, agencies and other contributors but omits commission payments. Therefore in 2011 they concluded that affiliate marketing accounted for £123m, lead generation £51m. Good numbers but not reflective of the money that flows through the industry.

Fee payments

This study allowed us to include not only these fees but commissions paid to affiliates, the growing prevalence of non-CPA payments (such as CPC and tenancy deals) and any other fees and supplier costs. We could also widen the scope further to include volume and value of transactions driven.

One of the challenges we had to overcome was the headache of double accounting, with agencies and other third party vendors adding extra levels of complexity to the relationships. We also needed universal categorisation across sectors and affiliate ‘types’ so that submissions were uniform. We needed to offer a sense of which sectors were dominating but going too granular with the detail would create potentially insurmountable barriers for those pulling the data together.

Securing buy in from the wider industry to actually submit their sensitive revenue numbers was something we mostly achieved although some players opted not to offer their data. Modelling this ‘unknown’ revenue was therefore a challenge for PwC to contend with. Similarly modelling is a problem when attributing a value to different types of transactions. Whilst we can easily associate a transaction amount to a coat or television, for example, it’s common to record a service based product (such as a phone contract or insurance product) with a nominal value that doesn’t reflect the actual revenue generated.

Future evolution

There were certain areas we wanted to explore but seemed beyond the scope of this first study. It would be interesting to see how many people the industry employs for example: tricky to measure given the range of affiliate businesses. Similarly what price is placed on those sectors that look at lifetime value rather than one off payments, such as gaming and B2B? Definitely considerations for the next study given there is a determination for this to be an annual piece of insight.

Half a dozen meetings, several iterations, numerous amendments, queries and questions later results were presented this week to a full house at the IAB.

Media mentions were copious and coverage extensive. A handful of companies have also asked for the work to be presented at additional conferences such is the level of interest.

The study may have been 15 years in the making but it seems we’re now a grown up industry that can make tangible differences to advertisers’ online marketing efforts with the numbers to prove it. Finally we can confidently and rightfully command a place at the top table.