Affiliate marketing is on the move. In the US affiliate spend will rise to $6.8 billion in 2020 and in the UK it grew 6.2% in 2018. It is closely connected to the expansion of e-commerce: In markets where more and more retail sales happen online, affiliate advances.
And from my experience – launching a network in APAC, leading publisher and advertiser-facing teams in the US and in EMEA, I’m aware that affiliate behaviours differ radically between markets. Across commerce strategy, the role data plays in shaping that strategy, and how publishers work with merchants approaches vary.
If you look at how publishers use affiliate, commerce strategy is the first place you’ll see behaviours differ across markets.
Where the US leads, the UK and Europe follow
The US is the most mature affiliate market, which means their commerce strategy is likely the most advanced. Publishers can derive significant value from affiliate – the largest drive 25% of revenue from commerce – because they’ve invested in the channel and really see the value.
It is a key part of the revenue mix for publishers in the US, with large dedicated teams of commerce editors and is so important that in certain cases publishers have launched dedicated commerce brands. These publishers exist purely to create commerce content monetised by affiliate marketing that can drive sales to retailers in high volumes. Editorial brands like New York Magazine’s The Strategist have only come into existence because of the maturity of the affiliate channel and appetite of publishers’ audience to buy products they read about in articles written by expert editors.
UK commerce strategy is different. In terms of online share of retail sales, the UK is the world’s most advanced e-commerce market (16% of sales happen online), but there are fewer publishers and their commerce strategies are less evolved than their American counterparts. Affiliate is not so advanced that there are dedicated commerce brands for example.
But the UK market being smaller does mean brands can afford to be more experimental and face less competition. For example, several large UK publishers have extensive native commerce operations that they run alongside affiliate efforts: Dennis Publishing, for example, was projected to drive 40% of revenue from car sales from the automotive websites they own.
There are also publishers like Trinity Mirror that syndicate content from central teams right across local titles, using localization – focusing on local ticketed events for example – to drive results.
Look at Europe and the picture is fragmented. That's closely related to how advanced e-commerce is in each region. Where people buy less online, appetite for affiliate marketing is lower because there are fewer opportunities for publishers' to monetise commerce content using it.
In Western Europe – which is responsible for almost 70% of European e-commerce spend – publishers are focusing more and more on commerce strategy, especially in the past eighteen months. In France for example, newspaper Le Monde has started syndicating commerce content from The Wirecutter, and across different European markets, publishing houses like Conde Nast and Hearst have begun to roll out affiliate links on international titles. In those cases, publishing houses take learnings from US teams and apply them to scale in European markets.
Differences over data
Some markets are more data-driven than others too.
The US has a real evolved approach to affiliate, with a subset of metrics that publishers and advertisers use to make decisions. Typically US publishers use two metrics to figure out what content to create and who to write about: revenue per article (RPA) and earnings-per-click (EPC). It is how teams understand what can drive real value for their businesses and what will resonate best with readers.
Likewise, advertisers take a similarly data-driven approach to figure out the cost-per-action (CPA) or cost-per-click (CPC) they offer to publishers. They aren’t only concerned with the content a publisher creates, but the platforms they publish on, the volume of new or repeat customers a publisher can drive, and whether their products appear in timely or timeless evergreen content. They have developed granular attribution models to understand the ROI they take from affiliate.
The same metrics are in place in the UK, but across Europe, things are not as advanced. The lack of data to drive affiliate in these markets can explain why international publishing houses are more successfully pushing commerce. They can use data from more advanced markets to expand at regional titles.
Increasing focus on revenue diversification
The other major difference when we think about how publishers use affiliate is the way they think about merchants.
In the US, data is a key decision-maker. The RPA and EPC they can drive from a particular merchant is a key factor in figuring out who they should write about. Publishers know the topics their readers care about, from there they apply the e-commerce metrics to understand the brands that will resonate best with their readers' and drive the most commerce revenue.
American publishers are also really focused on the need for a diverse portfolio of merchants. The original driver of affiliate growth in the US was Amazon and it continues to play an important role in publishers' commerce strategies. However many are now wary of being too dependent on a single retailer and aware that they can offer a better experience to publishers when they write about a broader mix of merchants. Writing about many different merchants offers readers more choice and creates more opportunities for conversions: Articles that feature more than one product drive over 130% more revenue than single product articles.
The key differentiator across regions in affiliate behaviours is maturity. American publishers are really strategic in the way they harness affiliate marketing to generate vast commerce revenues. The UK is on the right track, with the smaller size of the market lending itself to experimentation which can drive impressive results. While Europe is further behind, the past eighteen months have seen real progress, and we can expect they will start to imitate the behaviour in the US and the UK as e-commerce expands and more publishers begin to leverage affiliates to capitalise on commerce as a revenue stream.