Looking back at 2020 is something that we must do in order to move forward. However, it’s easy to get stuck in the trap of doing this. The numbers we saw in ‘the year that changed everything’ are important, but are not all that should be relied on when looking to the future.
Following the severe decrease in spend in the first six months of 2020, numbers began to increase again, totalling at a 5% increase throughout the remainder of the year.
PwC estimates that in Q1 2020, investment in digital ads grew by 10%, before dropping sharply by 20% in Q2, and then bouncing back by 10% in Q3 and 18% in Q4.
Within that, the affiliate market grew by 10% year-on-year in 2020, to a promising total of £627 million.
Excitingly, 2020’s report also captures smartphone affiliate spend for the first time – and showed an impressive 23% YoY increase. It accounts for 41% of all affiliate spend (totalling £258m), while non-smartphone affiliate spend grew by 3% (to £369m).
But how can we take these results, compare them with what we are seeing so far in 2021, and implement the lessons?
Some of IAB’s affiliate members analysed the results and what they mean for the channel:
Kevin Edwards, Global Strategy Director, Awin: “Affiliate marketing was a safe investment in 2020. As general marketing budgets were cut and brand campaigns were pulled, many retailers instead focused on partnering with businesses who could drive sales, the area where the channel really excels.
“With its pure payment on performance model, the affiliate channel helped drive exceptional retail growth. The channel also offered a quick way for SMEs who may not have had an affiliate programme prior to the first lockdown to pivot and take advantage of both existing and first time online shoppers.
“Some reports showed the incidence of new shoppers tracked through affiliate activity was more than 30% higher than the previous year, again demonstrating how publishers were able to drive ROI-focused, incremental sales.
“Mobile remains a high growth area as an increasing number of retailers start to track their sales and commissions via their mobile apps, a previously neglected source of revenue.”
So it seems there is a bright future for mobile affiliate marketing, with an increasing number of retailers using in-app tracking. SMEs are also noticing the benefits of affiliate marketing, and with new programmes in place, such as Awin Access and Tradedoubler’s Grow, it seems the channel is promising great results for all.
Matt Gilbert, CEO, Partnerize: “The step-function growth in e-commerce transaction volume in 2020, material improvements in technology innovation, including app-based tracking, and the outcome-based commercial models underpinning the affiliate channel have all combined to deliver results at a time when marketers needed to create real operating leverage for their businesses.
“We expect the increase in allocated budget to the channel to continue to scale well into the future.”
With e-commerce having boomed and showing no signs of slowing down, it’s possible to start thinking about a future where the majority of commerce takes place online, meaning more effort can be put into technology innovation. It’s going to be exciting to see developments in these areas following along from 2020.
Owen Hancock, Marketing Director, Impact: “The 2020 Ofcom benchmark found that, in the UK, more than four-fifths of time spent online was spent on mobile devices. With the overall affiliate market growing by 10% in 2020 – and smartphone affiliate spend accounting for over two fifths of all spend – the trajectory is very much on an upward path.
“This is partly thanks to an increased awareness of the diversity of partnership types, the power inherent within them, and the availability of technologies that can streamline the process – automating where appropriate and allowing marketers to focus on strategy and those all-important relationships.
“Increasingly, too, businesses are seeking new ways to cut through the noise online and reach consumers in meaningful, memorable ways. They are thinking more creatively about affiliate marketing as part of a wider movement towards greater transparency and sophistication. There is a growing awareness that affiliate marketing is not just an acquisition channel but can perform branding and retention roles, too. It offers many constituent parts, including a constant stream of new tools that can help turbocharge strategies.”
Accurate and real-time data, as well as the automation of laborious tasks, are essential cogs in the works if affiliate marketing is to grow going forward. With the positive results from the IAB report and these comments from some of the IAB’s Affiliate Members, it’s clear to see that we’re feeling positive about the potential of affiliate. It’s an exciting time to be in such a rapidly maturing industry.