No one will dispute that online shopping is bigger than ever. The trend is clear: online shopping keeps growing at an increasingly faster rate, year over year (YoY). In 2018, e-commerce growth was 22.2% YoY. The same growth trend is true for shopping apps which saw a 15% growth in the first three quarters of 2019 for app downloads, following 20% YoY growth in 2018 and 28% YoY growth in 2017.
More and more brands are developing native apps and are incentivizing customers to download and shop in-app. For frequent shoppers of a particular brand, it is an easy sell. The user experience in a native shopping app is typically much better than mobile-web, and typically includes features such as remembering addresses, clothing size and payment details. Additionally, access to exclusive deals, making the shopping app proposition very appealing to customers.
For retailers, there are many reasons why app downloads benefit a brand including:
- Higher conversions. First and foremost, the conversion rate is higher in-app vs mobile web. Data from in-app tracking provider Button shows that conversions in-app were 157% higher than mobile web in H1 2019.
- App downloads equal loyalty. Analysis done by App Annie indicates that customers spend 7x more time in apps compared to the browser. What every retailer is looking for is to create stickiness to their brand and a successful app can be the key to creating loyalty.
- App shoppers spend more money. The average order value is 1.5x higher in-app compared to mobile web.
In conclusion, shopping apps equal customer loyalty increased spending and higher conversions. What brand would not want that?
Looking at the affiliate marketing landscape, one would presumably see comparable growth due to increased sales among partnering brands. But nothing could be further from the truth. Despite the shopping app trend being clear for many years, affiliate networks and publishers alike have failed to ensure that advertisers are enabled with in-app-tracking. What this means is that advertisers, affiliate networks and publishers across the industry are missing out on significant revenues from untracked sales.
Zalando reported back in 2018 that they in one quarter had seen 26 million downloads of their mobile app and about 50% of all orders were from mobile devices. The Zalando app is a household app on many millennial smartphones, but they are not alone. Among the most popular shopping apps are Amazon, eBay, ASOS, Wish, Groupon, AliExpress and the list goes on. True for most of them is that they have actively incentivised partners to drive app downloads and in-app transactions.
The industry has a lot to gain from in-app-tracking. Estimates done by the Global Savings Group suggest that the industry can increase total revenues by 7% through industry-wide adoption of in-app tracking.
Especially advertisers can leverage in-app tracking to grow their business and the affiliate marketing channel. Here are five arguments supporting in-app tracking from a retailer perspective:
- Drives app downloads: First and foremost, adopting in-app tracking creates a great incentive for publishers to drive app-downloads and in-app transactions. Affiliate publishers can be an excellent source of loyal customers.
- Ensures VIP status: Publishers prioritize advertisers based on revenue potential. If 50% of sales go untracked, there is a good chance that the business does not qualify for a publisher’s VIP service including the best visibility spots, exclusive offerings and lucrative discounts.
- Provides meaningful insights: If a retailer does not know who is driving sales, they are likely investing in the marketing budget incorrectly. Tracking transactions in-app gives retailers a competitive edge, as it allows them to fully understand the affiliate channel. Imagine if 40% of Google Maps was black empty spots and one had to find their way to a new restaurant in town. You might find your way, but the journey would likely have been much longer than it should be.
- Boost affiliate performance by 2x: Enabling in-app tracking could boost performance from the affiliate channel by as much as 2x. Any professional marketing department must justify their marketing spend and ROI of each channel. Without in-app tracking, there is a great likelihood that the affiliate channel seems to be half the size of what it actually is, potentially resulting in inaccurate budget allocation. If you are an affiliate manager and your annual bonus is linked to the performance of the affiliate channel, you might be entitled to a big payout.
- Treat publishers fairly: At the end of the day, not tracking app sales is like selling a litre of milk that only contains half a litre. Without in-app tracking, publishers are potentially only being paid for half of what they deliver. Over time this is not sustainable and can be detrimental to the relationship and industry.
All in all, the affiliate marketing industry stands before a major opportunity. The trend is clear, customers are getting more and more comfortable shopping in native shopping apps, and shopping on desktop is steadily declining. In this new reality, the industry has a great responsibility to ensure fair and accurate tracking across platforms, including shopping apps.
Failing to address this opportunity will lead to everyone losing out. This year 7% of affiliate sales are going untracked due to lack of in-app tracking. Next year there is a good probability that the industry will hit 10% of total affiliate sales untracked. And this trend will only continue.