Retail e-commerce is predicted to increase by 12% until 2016 and online advertising is estimated to grow to take a 31% share in advertising spend in Western Europe by 2016. The market is extremely buoyant, so what affiliate marketing trends will be helping to drive this growth in 2014?
1. Affiliate marketing will move up the value chain
Affiliate marketing is about paying for performance, so budgets that are spent on affiliate marketing have a proven return-on-investment. This alone gives affiliate marketing a rightful place on the c-suite agenda, but it’s our responsibility to educate these stakeholders on how they can drive the most effective ROI.
To educate, we should adapt their current affiliate marketing model to address today’s multi-channelled, always connected consumer. From social, to direct marketing and advertising, affiliate marketing will become more deeply integrated into the overall marketing mix.
2. Integration between the online and offline
The interesting trend to watch out for will be the growth in integrated on/offline traffic, and how the smartphone will be the connector to bridge the gap between the on/ offline world. Consumers will continue to embrace social, video and offline (for example, pay-per-call).
It will be more important than ever for advertisers to be able to track the diverse path that a consumer may take in making a purchase. Add to this, the growing demand for local affiliate marketing with geo-targeted vouchers and deals, and understanding the user journey and their path to conversion better is suddenly critical.
For example, geo-targeting tells the advertiser exactly where the consumer is located, so they can send tailored online offers. Geo-targeting also helps advertisers to segment their user base, and dynamically change the advertising message they want to send to consumers to increase their chances of a sale.
Advertisers will more than ever have a whole conversation with their consumer, from offline to online and vice versa. Also, advertisers will be able to fully track how effective their advertising campaign was from initial engagement through to the close of sale, thus providing full visibility and accountability for their advertising investment.
3. Data will help understand consumer journey and lifetime value
In 2014, the affiliate marketing channel will be about understanding the whole user journey, not just what the customer did at a certain point in the purchase path. Having the data to understand how the customer first started their engagement and where they ended it will be crucial.
Advertisers will need to know what advertising medium consumers were influenced by, to what extent that medium influenced them, and at what point in the purchasing decision – was it while checking out a promotion on their smartphone, watching a video, reading a newsletter, participating in a social forum, or across all of these activities?
Likewise, advertisers will be able to use the data to analyse how to get value out of the consumer in the long-term (by educating them through ‘long-tail’ channels such as blogs and newsletters), as well as in the short-term (through initiatives like voucher codes and cash-back).
By having the data on the lifetime value of a consumer – across multiple channels and devices - advertisers will be able to make intelligent, insight-based decisions, so they can become more effective at new customer acquisition.
4: Consumer engagement trends will dictate pricing models
Affiliate marketing will continue to embrace the traditional pricing models, such as CPA and CPL. However, as advertising campaigns evolve we will need to incorporate CPE (engagement) and CPV (view) into the pay-for-performance mix, to accommodate consumer engagement trends. Marketers are including a broader mix of marketing mediums into their digital advertising campaigns, to include video and social for example, and are also keen to optimise campaigns with re-targeting.
So, the technology needs to be in place to: track variable traffic activity, set the parameters for the ‘cost-per’ type prior to the campaign commencing, and accurately charge for it. For the advertiser it’s about being able to effectively manage their budget with maximum insight, have presentable metrics, and prove the return-on-investment through an increase in sales. It’s the responsibility of our industry to have the technology in place to accommodate the expanding and variable cost models to support this.
5. The industry will become more regulated
Over the past few years the IAB Affiliate Marketing Council has done a lot of work to bring the industry forward under some charters, regulation and codes-of-conduct. However, more must be done to formalise the industry rules and approaches for new entrants, to ensure we future proof this industry. This means implementing an accreditation programme, with a regulated audit process for guaranteed compliance. By doing this and working closely together, advertisers will place their trust in affiliate marketing networks and publishers so we gain our rightful credibility in the industry.