At Affiliate Window we’ve been focusing on several niche sectors with the advertisers we work with. The aim of these reports has been to shed greater light on the nuances seen within these specific advertisers, who quite often differ from the typical retail, travel and finance affiliate trends, and to provide sector-specific actions for programme managers.
This series looks at a variety of sub sectors, taking into consideration online market reports in tandem with typical affiliate reporting metrics such as conversion, AOV, growth/decline curves and device sale splits. This report analyses the UK cottages market.
The UK’s online cottage market follows a similar path to the overall travel industry with strong performance in Q1, peaking in January with a smaller peak around June/ July. The cottage sector has gone from strength to strength over the past few years, and as a network we have seen 25% annual growth in revenue from 2013 to 2014 and a 23% increase in bookings for the same period.
In 2014 we saw a phenomenal 17% of annual revenues driven in January alone, with the rest of the months averaging at 8% of revenue for the year. In-year growth against 2013 was also prominent at around 17% a month (excluding January). These results come entwined with findings from ABTA showcasing the rise of the “staycation” as more holidaymakers choose a domestic holiday (up 27% in 2015 to date) over travelling abroad. This provides ample opportunity for advertisers to enjoy growth within the affiliate channel as this trend continues.
Changing consumer habits:
Coupled with performance trends, we wanted to map together two trends affecting the cottage sector.
- Customers are booking earlier each year: Whilst January continues to be a strong month for the cottage sector, we are seeing more customers booking earlier, with 26% of January revenues generated within the first seven days of the month in 2014 versus 21% in 2011. After 15 days we see a similar trend, with 53% of revenue accounted for in January 2014 compared to 49% in January 2011. These slight changes reflect research published by ABTA showing that 36% of shoppers in 2015 said they booked earlier in advance this year, compared to 27% in 2014.
- Customers are still in a recessionary mindset: Following on from staycations mentioned earlier, holidaymakers are increasingly opting for domestic locations. That’s especially the case for those going away for short and mid-length (1-3 and 4-7 day) breaks, with the latter growing 5% over the past 5 years. This data from Visit Britain suggests the recovery of the UK economy is yet to filter down to most, impacting the rise in staycations. In a March 2015 foresight report, Visit Britain also published a report showing that 24% of UK holidaymakers choose to take their main holiday in the UK.
The graph below indicates the monthly revenue trend for Affiliate Window’s Cottage advertisers.
Key Performance Indicators
Average Order Value (AOV)
AOVs have remained fairly consistent over the past four years, with a small but steady increase seen each year, from £506 in 2011 to now £537 on average in 2014. In spite of the recession mentality referenced earlier, the cottage sub sector shows strong growth potential, and it seems that customers are willing to pay increasingly more for a domestic holiday.
Average conversion rates in the cottage sub-sector are typically lower than the travel sector’s average at 6.5%. We have however seen an increase from an average of 0.73% in 2013 to 0.95% in 2014. This rate is continuing to rise, with 1.34% seen in 2015 up until February.
EPC and commissions
As conversion rates are lower than the travel sector average, EPCs are also slightly lower. The average EPC in 2014 was £0.25. However, as AOVs are relatively high, affiliates earned on average £26.31 for 2014, up from £26.11 in 2013.
Tools for affiliates
Cottage affiliate programmes typically provide affiliates with banners, regional-based offers and links. Some programmes also have product feeds for their affiliate partners.
Over the course of 2014 and into 2015 we have seen an increase in the total share of smartphone and tablet bookings versus desktop. Tablets accounted for 23% of bookings in 2014, versus 15% in 2013. Smartphone has grown to 3% of total bookings in 2014 against 1% in the previous year.
In the following chart, we’ve broken out the percentage of affiliate transactions by publisher type. We can see that discount code and cashback sites have a strong influence on total bookings for 2014. The other category includes several niche cottage publishers, amongst other categories making up 11.33% of the total bookings.
Finally, we’ve put together some niche sites to consider for the sector: