The Drum Awards Festival - Official Deadline

-d -h -min -sec

Inflation Technology Partners Digital Strategy

6 ways inflation has impacted the affiliate marketing industry

Awin

|

Open Mic article

This content is produced by a publishing partner of Open Mic.

Open Mic is the self-publishing platform for the marketing industry, allowing members to publish news, opinion and insights on thedrum.com.

Find out more

March 23, 2023 | 5 min read

It’s nigh on impossible to ignore the word “inflation” as the world closes the chapter on Q1 2023, and for good reason

Rising inflation started its upwards trajectory in early 2021 and, at the time of writing, the UK CPIH stands at 8.8%. Whilst extraneous factors such as the Ukraine-Russia conflict have undoubtedly contributed to this monumental rise, affiliate marketing is in the unique position of having a first-hand grasp of consumer habits and trends over these two years. So what have we learned?

1. Consumers are conscious of spending

Over the course of 2022 Awin data shows consumers spent more time shopping and less time converting. Direct comparisons of the UK’s CPIH and conversion rates illustrate a clear and definitive trend. As CPIH increased, retail conversion rates slumped, most notably in October 2022, CIPH peaked at 9.6%, resulting in a sharp decline in the number of conversions. Traffic indicates consumers were still searching for products, but felt far less inclined to convert. This trend was somewhat expected, as consumers mitigated reductions in disposable income and considered product value versus price.

2. Content is king

With consumer confidence hitting an all-time low, influencers and content creators accrued great responsibility to remain authentic and relatable to their audiences. Whilst 2022/23 year-on-year performance growth can be attributed to a limited 2021 performance (as result of the pandemic), nano and micro influencers now play a greater role than ever before. The uniqueness of the influencer publisher category not only boasts a diverse creator portfolio but consists of smaller, niche influencers who have an audience base of highly engaged, highly trusting and highly influenced followers. As a result, the influencer content share on Awin’s platform between 2021 and 2022 increased from 15.5% to 17% and has not slowed in 2023.

3. Sustainability has taken a back seat

A sector that has borne the brunt of reduced consumer spending perhaps more than others is sustainability. Since the outbreak of the Ukraine-Russia conflict, performance from green-eco brands has seen a downward decline in light of increased inflation. Whilst there is evidence to support that consumers are intent on returning to their sustainable ways once the cost-of-living crisis is over, 48% of UK consumers now state that they simply cannot afford the increased associated costs that come with a sustainable lifestyle, resulting in a temporary slowdown for the up and coming industry.

4. Brands are less likely to offer discounts

Content creators and editorial affiliates are eating up the publisher vertical share, bringing into question the value and importance of discounting in 2023. With increased supplier and production costs, general trends suggest that brands are far less likely to discount overall. In fact, Awin data revealed Cyber Week retail sales in 2022 saw a 20% reduction in the number of discount code or vouchers redeemed versus 2021. Whilst retailer discounts are seemingly less prolific - especially around key periods - as margins return, discounting and promotions will undoubtedly remain an important staple in any marketer’s repertoire.

5. Affiliate remains robust in an unstable market

The cost-of-living crisis has undoubtedly introduced new challenges for marketers, however, affiliate marketing remains a growth driver. A recent UK survey that consisted of all major affiliate networks revealed how the channel is used and valued. It comes as little surprise that brands expect affiliate ad spend to grow well into 2023, given the incredibly strong ROI the channel achieves in comparison to other forms of digital marketing. The transparency of the channel and the low-risk, pay-on-performance model allows marketers to make clear and decisive decisions around spend, especially at a time of increased scrutiny of everyone’s marketing budgets.

6. Tech transforming the affiliate space

The channel has witnessed the proliferation of technology partners; an innovative, pioneering vertical driving growth throughout the cost-of-living crisis. In 2022 alone, Intent.ly, Envolve, Uniqodo, Upsellit and Revlifter generated nearly 1.5m sales across the Awin platform and saw +60% increase in sales year-on-year. To a certain extent, the current economic crisis is the perfect storm to utilize these partners; enhancing the online consumer experience by delivering personalised experiences, driving on-site interaction, increasing conversions and keeping ROI high on a low-risk performance model. With these factors considered it is unsurprising to see that technology is transforming the affiliate space.

Navigating 2023 as marketers

2023 will continue to present unprecedented challenges, and the cost-of-living crisis is unlikely to diminish anytime soon. Trends that appeared last year are likely to carry into 2024. However, marketing is in a new state of flux, whilst comparisons to the economic recession of 2008 are common and just, the world has changed dramatically. Affiliate marketing continues to diversify and strengthen its partner portfolio, prepared to ride out the inflation wave.

By Alfie Staples, global insights manager

Inflation Technology Partners Digital Strategy

Trending

Industry insights

View all
Add your own content +