As we turn our back on 2014 what does the year ahead have in store for affiliate marketing? Here Affiliate Window takes a look at ten trends that could shape the continued evolution of our industry in 2015.
1. Making life easier for affiliates
Affiliate marketing is a simple concept but all of us who work in the industry are guilty of over complicating the basic premise: obfuscating with acronyms, building unintuitive interfaces and failing to adequately disclose programme information in an easily accessible way.
2015 has to be a wakeup call for established networks to ensure affiliate marketing is so simple that there are no barriers for any affiliates looking to get their foot on the ladder.
Maybe a fundamental overhaul of how traditional affiliate marketing is done is overdue.
2. The changing role of networks
We stand at a crossroads with some established networks seeking to expand and transform the way they sell a range of performance products. Does this reflect a lack of confidence in traditional affiliate marketing and what are the implications for existing affiliate traffic?
Affiliate Window has witnessed strong growth in 2014 proving the market is still expanding but there is no doubt that we’re in a transitional phase. Additionally we’re seeing a general fragmentation and breaking down of a consensual network approach that has benefitted the UK market. This should sound alarm bells.
3. Grabbing the overseas opportunity
UK retailers are experiencing huge demand for their products and services from overseas consumers.
A 2012 study claimed the UK has the biggest online trade surplus of any country in the world and this demand has interesting ramifications for the affiliate industry. Many of these companies don’t have a local presence and are increasingly relying on networks to reach out to affiliates who may not be based in the UK but can tap into local traffic sources.
Assuming that traffic quality isn’t an issue, this represents a significant opportunity that brands and SMEs can potentially exploit.
Underpinning much of the potential success for the affiliate channel will be unlocking data that helps identify affiliates as well as understand their value. Knowing that consumers in Australia, for example, will spend considerably more than their British counterparts requires us to appreciate why, and whether the range of products purchased alters marketing plans aimed at affiliates driving these sales.
4. Traffic quality and compliance challenges
Compliance, or network quality, is often overlooked by channel exponents. Maybe because it’s a drier, more involved and often technical discipline that stretches our knowledge of nefarious web tactics, or maybe because it’s easier not to address it, but there is an inherent risk in not tackling the less palatable aspects of affiliate marketing.
2015 should see companies look to redouble their efforts in the network quality stakes. Some may also be caught out by not recognising the ‘hidden’ benefits offered by traditional networks if they choose to switch to in-housing. There is an inherent risk in not maintaining compliance ideals at a time when affiliate marketing and its wider value is being scrutinised more than ever before.
We simply cannot afford standards to slip or greyer promotional tactics to gain a foothold in the UK market.
In 2015 we need to take a much more truthful, macro approach to the channel, acknowledging that external regulators will seek to scrutinise burgeoning industries.
5. The risk of industry regulation and the importance of maintaining standards
An interesting phenomenon over the past two or three years has been the encroachment of external regulation into the digital eco-system. This is unsurprising: as any industry burgeons in size so the chances of scrutiny by those outside it increase.
With heightened consumer awareness of products and services offered, it’s unsurprising that some affiliate models have found themselves under the spotlight. The telecoms industry reacted swiftly a couple of years ago to tackle the perceived consumer issues caused by how product and price information was displayed on comparators’ sites as identified by Ofcom, and similarly we see additional pressures on the finance and utility sectors as we head into 2015.
With the forming of a body that represents industry regulators, it is inevitable that they will start working more collaboratively to understand common consumer concerns and issues across multiple sectors. In 2015 we should expect more coordinated initiatives, where previously they were isolated investigations or policy decisions from individual regulators.
6. Demonstrating affiliate value through data
One area the industry is shifting towards, albeit in a patchy way, is in embracing data and working to showcase the value delivered by individual affiliates and the type of traffic most prevalent in the channel.
Certain advertisers have a history of this, having run general and more specific data insight pieces to try to understand the value of the main affiliates and affiliate types on their programmes and next year will see an escalation of these projects.
We anticipate continued investment in business intelligence tools including the hiring of data analysts who will work closely with account management teams to better contextualise the value of affiliate marketing. This will also include networks pushing to capture more qualitative data from advertisers and affiliates.
7. New commercial models emerge
Affiliate Window has spent much of 2014 understanding influence, or assist, traffic: clicks and impressions that in some way help stimulate a sale, but do not necessarily close it. Let’s be clear, these are still click measurements and clicks aren’t necessarily a good indicator of value. They acknowledge an intent but don’t offer much insight into (for example) the type of customer clicking. But we have to start somewhere and as a network that can pass that data back to both affiliates and advertisers, it’s important we share this information.
With this in mind 2015 will see the start of a wider ‘contribution’ discussion: looking beyond last click CPA to understand how individual affiliates can be more fairly rewarded should they be considered more influence that closer.
We are already starting to share far more granular data to affiliates to enable them to have more informed discussions with advertisers. We’re at the start of this journey and we need to offer alternative payment systems. We don’t believe the last click CPA model is broken but, from a more generalist digital approach, we need to acknowledge it serves some parts of the industry poorly.
Our plans for early 2015 to look at alternative commercial models based on influence could mark a significant shift in affiliate marketing.
8. Incentivised traffic: friend or foe?
Incentivisation (typically any activity that incentivises the consumer to transact) is now an established and hugely important part of the affiliate channel, but with volume comes scrutiny, and advertisers (as well as affiliates) will demand more empirical evidence about the value it delivers.
There is little doubt that cashback, loyalty, reward and voucher sites will continue to thrive in 2015, especially in a multi-channel and multi-device world where they offer advertisers the opportunity to align their products and services with consumers at different points in the purchase cycle based on a suite of promotional tools, but the channel will need to demonstrate value alongside the inevitable volume they deliver.
9. 2015 will not be the year of mobile
We can confidently say that 2015 won’t be the year of mobile because there never was one and never will be. There are devices and there is connectivity and we need to start thinking about how consumers interact with all of them, whether it’s via a smartphone, games console, tablet, laptop, PC, connected TV or via some other piece of tech.
That’s not to say that understanding traffic that flows through certain mobile devices isn’t important. More that it’s time to stop thinking of it as something separate. Consumers today are fearless when it comes to new technology adoption.
That we are on the verge of hitting 50% of traffic via smartphones and tablets marks a watershed moment, focusing the mind and requiring us to think about the thousands of affiliates on the network, not only to understand how they are developing their propositions for new and emerging devices, but also so we can ensure we acknowledge and appreciate the impact of these shifts
10. Piecing it all together
We’re on the cusp of a whole new world of affiliate marketing if we choose to embrace and invest in it. This will impact everything we do from tracking to commercial models to promotional opportunities.
Previously much of the insight any of us who work in the industry has produced has been limited by access to partial or incomplete data. For us one of the clearest manifestations of this has been in our inability to track sales across devices.
As consumers switch between smartphone, tablet, desktop and laptop so the importance of stitching that path together to reward channels appropriately for their contribution takes on heightened importance.
In October we published some initial cross-device findings that said we believe around 30% of affiliate sales start on one platform and complete on another. 2015 will be the year that we finally grapple with cross-device tracking and reporting in the affiliate channel.
So do we have a watershed moment? Probably not just yet. Stitching the data together is complex and new reports will need to be created and analysis carried out to appreciate its full potential.