£814m spent in UK on affiliate marketing generated sales of £9bn, IAB research finds

Over £800 million was spent on affiliate marketing and lead generation in 2012 according to the first ever study conducted on the UK Online Performance Marketing industry.

The study, carried out by Price Waterhouse Cooper for the Internet Advertising Bureau (IAB) found that £814 million was spent last year, generating sales in total worth £9 billion.

100 million direct transactions are said to have taken place last year through affiliate marketing, with 70 million enquiries made, resulting in lead-generated sales worth £1 billion.

Online Performance Marketing through platforms such as price comparison websites, loyalty websites and voucher sites, drove between five and six per cent of all e-commerce sales made in the UK.

Commenting on the impact of OPM to the economy, which he believes is not widely recognised, Tim Elkington, Director of Research & Strategy at the IAB, described the sector as a ‘best-kept secret’ despite it involving 3,500 advertisers and 10,000 publishers.

“This is particularly surprising, considering each year it drives more than two online purchases for every UK adult and causes the equivalent of every UK person to fill out a form showing interest in a product – generating £11 of revenue for every £1 spent,” he added.

The largest spending sector in OPM was found to be the financial sector, with insurance and credit card advertisers accounting for nearly half (45 per cent) of expenditure last year, while another area of significant revenue generation came through price comparison websites. Second was the retail sector, account for 20 per cent of spend, followed by telecoms and media (10 per cent), travel and leisure (nine per cent) and gaming (six per cent).

Anna Bartz, senior manager at PwC, said that with marketing budgets being tightened as a result of facing economically challenging times, marketers needed to be more sure of their return on investment. “As a result, we expect that the attractiveness of paying for advertising based on an extremely measurable and specific consumer action will see more advertisers using Online Performance Marketing as a key channel for driving sales.”

Revenue growth of 25 per cent is forecast in OPM of 25 per cent through market share gain and market growth as marketers are also expected to grow their own spend on OPM by five-10 per cent in 2013.

The research was based on the submissions made by 23 companies, alongside 30 in-depth interviews with industry participants by PwC.

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Stephen Lepitak is editor of The Drum, with responsibility for overseeing the day-to-day running of the content produced for the various platforms run by the publication. Over the years he has interviewed agency network bosses such as Sir Martin Sorrell, Maurice Lévy and Arthur Sadoun, as well as Cindy Gallop, Kim Kardashian, film directors James Cameron, Spike Jonze, Richard Curtis and Lord David Puttnam. With a keen interest in media and breaking news, Lepitak has been with The Drum since 2005 and is based across its UK, US and Asia operations.

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