Affiliate marketing spend in the UK grew 15.1% in 2017 from £482 million to £554 million, according to the IAB (Internet Advertising Bureau) & PwC’s Affiliate Marketing Study, revealed today (May 10) at Affiliate Huddle.
This growth generated £8.9 billion in sales, a 9.2% year-on-year hike from £8.1 billion, demonstrating an estimated return of £16 per £1 spent.
The industry's annual benchmark report takes a different tack from its previous iterations, taking into account total spend as contributed to by sales generated, technology spend, consultancy fees and data cleansing.
The IAB UK’s Performance Marketing Advisory Group’s chair and Acceleration Partners’ MD, Helen Southgate, commented that the Affiliate Marketing Study shows the industry is “in great health” and seeing the benefits increased transparency and a “pure performance” model which can be applied to a range of marketing activity.
“As the market matures, we are seeing more innovation, transparency, broader reach and brands increasing their spend in the sector whilst maintaining ROI,” said Southgate.
“Affiliate Marketing is still the one true performance model and I expect this growth to continue into 2018 and beyond.”
Providing another perspective on the overall 15.1% growth, the figure represents a 0.8% edge on that of wider digital marketing itself (14.3%) as according to the IAB UK’s Digital Ad Spend 2017 released earlier in the year.
Driven by e-commerce
Amid the results, which are based solely on data provided by affiliate networks, software-as-a-service (SaaS) platforms and major in-house affiliate programmes, it was found that affiliate spend on smartphone grew 49% year-on-year, while sector-wise, retail held the largest share of revenue at 43%.
“The affiliate channel is a key driver of growth for e-commerce retailers and aligns well with some of the largest retail-focused publishers,” said Kevin Edwards, global client strategy director at Awin Global.
Much of this is a result of a rapid uplift in entry by “fast-fashion” brands, Edwards added, attracted by new opportunities to tap into blog and social media content that “aligns perfectly” with target audiences.
Behind retail, other sectors seeing sizeable chunks of revenue share included Telecoms & Media (24%), Travel & Leisure (16%) and Finance (9%), while B2B (2%), Auto (1%) and Other (5%) accounted for the remainder.
PwC Strategy’s director, Dan Bunyan, commented that this year’s study has been “re-scoped” to focus on areas of the marketing where there is “greater visibility and availability of accurate data.”
Last year, the IAB UK and PwC grouped UK affiliate marketing and lead generation together in the Online Performance Marketing (OPM) Study for 2016. Under the previous methodology, spend on OPM was put at £1.578 billion, 88% of which was attributed to affiliate marketing (£1.39 billion).
This year’s study, however, narrows the focus onto areas of the market where there is greater visibility and availability of accurate data, away from areas of performance marketing that are “more heavily reliant upon modelling and qualitative estimations”, according to Bunyan. The focus has been on "pure CPA" activity, which has seen a large portion of the wider industry - such as the gaming sector - omitted from the research. Meanwhile, total spend has been captured, rather than just media space ‘ad spend’, including commission on sales generated, technology spend, consultancy fees and data cleansing.
Data was gathered exclusively via survey submissions and interviews from 12 companies representing affiliate networks, SaaS platforms and major in-house affiliate programmes, which included Awin, Rakuten Marketing, Performance Horizon, MyOffers, CAKE, Impact and Quidco, among others.
“The new study gives us better insight into the affiliate marketing sector and we can see much more clearly how the core affiliate marketing model is growing year-on-year across a broad range of sectors and participants,” Bunyan added.
The official Media Partner of Affiliate Huddle, PerformanceIN streamed the Affiliate Marketing Study reveal and discussion via Facebook Live, available to watch here.