In preparation for the new year, PerformanceIN continues its annual tradition of connecting with performance marketing experts to get their single biggest prediction for the industry in 2017.

In this piece, Richard Dennys, CEO at Webgains, talks about how the UK economy will boost growth for the affiliate marketing industry in 2017.

As budgets tighten, measurement improves and ROI pressures increase, 2017 is set to be another significant year for the affiliate marketing industry. In the wake of Brexit, we will see the UK e-commerce sector using the affiliate channel to expand and find new routes into emerging markets. Retaining European integration and sustainability will be key to consolidate the affiliate channel’s position in the industry as one of the most, if not the most cost-effective customer acquisition option.

UK exporters have had a great year due to the weakened pound, with exported goods increasing by £1.6 billion between July and October this year, according to the Office of National Statistics. Although consumer costs have gone up, including foreign holidays, Marmite-gate and the price of petrol hitting its highest level for over a year, UK e-commerce is still arguably the most developed in the world, and global businesses now see excellent value in assets and the cost of people following the UK’s recent ‘devaluation.’ This has fuelled the beginning of wage inflation in all areas, with Consumer Prices Index (CPI) inflation rising by 1.2% in the year to November 2016, compared to a 0.9% rise in the year to October. The affiliate channel is low risk and offers high ROI, which makes it the most attractive option for retailers in 2017.

Maintaining involvement in Europe is still of critical importance in a post-Brexit world. With new stringent controls arriving in 2017 across the EU region (regardless of Brexit), the gray areas of complexity sit around data protection. Consumers have much more power to decide what happens to data and fines are huge for non-compliance, which is a big issue for cookie-based advertising models. From invoicing and tax planning to data protection and the movement and freedoms of staff, the UK will be focused on staying lean and offering routes to new and exciting markets not available to us through EU membership.

This year’s political events will have a direct impact on how businesses will perform in 2017. Overvalued businesses will be the norm instead of the exception and more will struggle to raise follow-on funding. If this happens, expect even more staff turnover than normal and a switch from growth funding to revenue funding; more adverts and fewer free and discounted services, with a focus on unit economics. Having been largely dormant for a while now, mergers and acquisition activity could roar back into life over the next 12 months.