Research conducted by Optimus Performance Marketing has found that two thirds of small to medium businesses don’t know what affiliate marketing is, with just a third of respondents able to offer an accurate description.
This is despite research conducted by the Internet Advertising Bureau (IAB) and PWC published in January this year revealing that the performance industry is worth £9bn.
Here, a cross-section of the industry react to the news, discuss how perceptions of the performance marketing industry can be changed, and why more education is needed to ensure advertisers understand the value of the channel.
In the past, small businesses have tended to shy away from affiliate marketing, viewing it as too complicated. The reality is that it is anything but. So long as you are armed with the right information about how to best manage a programme, the fact is that affiliate marketing is a high performing and measureable way of driving sales that sustainably grow your business.
It still surprises me that despite the proven power of the affiliate marketing sector, there are business owners who don’t use this pay-by-performance method of driving sales. Tradedoubler generated more than €3.5bn incremental revenue for its clients last year – we have the proof that it works.
These statistics show that the industry still has a big education job to do within SMEs. We describe ourselves as a ‘performance marketing network’ to try and make it as clear as possible that we drive sales for clients and that we and our affiliates are rewarded on a performance basis. This makes it a great way for SMEs to ensure they can see direct, measurable returns on their investments.
Consumers have changed the way they research and buy, and businesses’ marketing strategies need to reflect that change or they risk losing out.
Like all areas of the online marketing industry, there is a continual need to educate businesses, especially SMEs, to ensure they are aware of the benefits of affiliate marketing. If this survey is accurate we still have some way to go, but the IAB Affiliate Marketing Council, as well as affiliate networks, are working to make the industry more recognisable and easier to understand.
The affiliate marketing sector is enjoying strong growth; the IAB’s Online Performance Marketing report in January predicted OPM suppliers expected revenues to grow by c.25 per cent in 2013.
This isn't surprising. As the performance channel continues to grow, questions are beginning to be asked at the highest level within these organisations. The lack of knowledge stems from senior management either coming from an offline background – but even management with online experience lack affiliate knowledge. The performance channel historically has struggled to be considered highly enough to warrant not just in-depth training but budget being allocated to it.
To change this, affiliate teams can no longer sit in silo, but businesses must start to include this channel into their wider digital strategies, especially when looking to grow their businesses internationally. Research suggests that shoppers who started their purchasing journey on an affiliate site are spending just over four per cent more than the average shopper.
It would be difficult to dispute Optimus’ findings regarding business owners’ views of the affiliate market, as a lack of understanding is a common barrier that we face as an agency. This research highlights the need to educate business leaders about the benefits of the performance model and the increasingly sophisticated nature of the industry. It is also important to remind clients that the performance industry was 0.6 per cent of UK GDP in 2012, according to the PWC/IAB report.
Dependant on the relevance of those surveyed, I don’t think we should get too worried with this; as they might struggle with the premise of digital marketing itself.
Affiliate marketing certainly isn’t a niche channel, and any appropriate brand worth their salt will have active campaigns as over 95 per cent of the top 100 Hitwise traffic brands have thriving programmes. Within today’s digital landscape, affiliate marketing is an integral part of any paid media strategy – it just might be these small businesses aren’t quite ready for the full suite of paid, owned and earned media, yet.
This is not surprising, sadly. Despite the best efforts of the affiliate marketing industry and the IAB, it is all too common for brands to overlook the sector. I think the industry needs to make the proposition clearer and talk more about partnerships and instead of focusing on the long tail for example: shine a light on the premium publishing that engage in affiliate marketing. Some of the largest affiliates are brands in their own right; brands that even a digital novice would know. As an industry we should focus more on that.