2013: What’s in store for
performance marketing?

As we approach the end of what has undoubtedly been a pivotal year within the affiliate/performance marketing space in the UK, I wanted to take this opportunity provided by The Drum to look ahead and outline what we at Performance Horizon see as the key trends that will shape the market in 2013. These span widespread recognition, changes in the landscape and a welcome increase in sophistication within the channel by marketers.

Performance marketing goes mainstream
Set to be released in January 2013, the inaugural study from the IAB and PWC aiming to measure the true value of online performance marketing in the UK will provide an incredible shot in the arm for our industry. Having had some insight into what it will demonstrate, I predict that this piece of work will garner headlines far and wide and put performance on the same level as search, social and display within the minds of senior marketers and big brands.

A welcome side effect of this survey will be to finally draw a line under exactly how we define ‘performance marketing’. For too long considered either a catch all term for all online direct response activity, or even more damagingly just a rebadge of affiliate marketing, establishing a boundary around performance will succeed in focussing attention and resource.

Networks out – agencies in
As the wider marketing landscape changes with channels that were previously viewed in silos now converging, the ecosystem will change irrevocably. With advertisers now having previously unavailable access into the interaction between different media and consumer touchpoints the role of an agency begins to look very different, which has serious implications on performance marketing.

Whilst agencies were previously focussed on planning and buying which is now largely automated, there is a definite shift towards agencies being the analysts; having an overview of the huge amounts of data and making sense of it for clients. How does this affect performance? With a credible technology solution like PHG’s ExactView available, which allows brands and agencies to take control of their performance marketing strategy, the role of networks starts to be brought into question. With agencies increasing focus on performance and bulking up their resource, we see a continued shift towards brands and agencies working directly with affiliates and direct partners.

Data is the new oil
As Spiderman was once told “With great power comes great responsibility”, and with the increased focus on performance marketing will come a greater requirement to prove the value of the channel. While this activity has been viewed in isolation and advertising is paid only when the money is in the till, it is easy to believe that all sales through the affiliate channel are good for the advertiser.

This is clearly not the case, and into 2013 brands and agencies will demand access to more information to begin to understand the true value of sales delivered by affiliate partners to their business. They will require more access into product data, as well as cross referencing internal data against affiliate sales to begin to determine metrics such as whether partners are driving new or existing customers, the lifetime value of consumers driven by different partners and the margin delivered by each affiliate partner.

This data will also by meshed with customer journey data in order to get a full view on how marketing spend should be attributed. This will have considerable impact on certain types of affiliates, with cashback and voucher code sites having to work hard demonstrate their worth and should see the ability of traditional content based publishers, eg big newspaper groups, reigniting their interest in this method of monetisation.

Spotlight on fraud
With performance marketing traditionally being such a broad church, it is inevitable that some will attempt to circumvent the rules for personal gain. Affiliate fraud is a big topic of discussion in the US, where admittedly it is more prevalent, but for too long it has been something that is swept under the carpet here in the UK. I foresee, and hope, that this is going to change in 2013 with big advertisers and agencies starting to ask questions and demand answers around exactly what is happening on their campaigns.

There are two types of malevolent activity that occur in this space. The first is criminally fraudulent, such as orders placed with stolen credit cards through affiliate accounts to win commission. The second is activity that is against merchant T’s and C’s, such as brand bidding and delivering forced clicks. Both need to be stamped out in order to give brands the confidence to invest in the channel.

We have already seen brands cull affiliates on their programmes due to concern about activity amongst the ‘long tail’ of affiliates and in order for this strategy not to spread we need to clean up the industry.

As we look forward, 2013 promises to be an incredibly exciting year and I hope that in 12 months’ time I am able to write a similar article about an industry that has grown in recognition, increased its levels of professionalism and pushed forward to even greater levels of success.

Matt Bailey
Commercial Director
Performance Horizon Group

Performance Horizon Group
Tel: 020 7078 4280
Email: matt.bailey@performancehorizon.com
Web: www.performancehorizon.com