As digital media develops at a frantic pace, what does the future hold for affiliate marketing? Owen Hewitson, Client Strategist at Affiliate Window & buy.at, offers five key predictions for the industry…
Many people, both from within the affiliate industry and outside it, have written previously about the future of affiliate marketing. Some even have not perceived a future for it. We now have some hindsight with which to judge their predictions, as we will shortly with what will follow.
Here are five predictions for the trends, if not the actual events, that we can expect to see in the affiliate marketing industry here in the UK in the next few years.
Networks will have to be more than platforms
Probably the three most crucial core responsibilities of an affiliate network are to track, report, and handle payment for sales. Of all the things a network does, these are considered the most important by advertisers and affiliates alike. But what is the difference then between an affiliate network and a platform provider? Why would advertisers want to pay an affiliate network if they could develop or acquire an out-of-the-box solution that did all of these things in-house?
For this reason, affiliate networks will need to show that they are at the centre of affiliate marketing, rather than just the intermediary between advertisers and affiliates. Practically, this means that as well as providing unrivalled campaign management expertise and technological innovation, networks will need to be a source of solutions for industry problems, the place to find and nurture new affiliate opportunities, and the advocates for the affiliate model more generally.
The biggest affiliates of today will be bigger tomorrow…
The recent launch of TV ad campaigns by both Quidco and Topcashback, two of the largest affiliates in the UK, demonstrate that affiliate marketing is not only maturing but consolidating, with the largest affiliates pulling away from the broader mass that constitutes the networks’ memberships. I and others have written about what might be considered an ‘affiliate divide’ or a ‘two-tier’ industry.
… But advertisers will be less willing to rely on them
Whilst this progression should be welcomed, advertisers do not want to become overly dependent on a few top affiliates. Most large brands in the UK have affiliate programmes, which have in the most part reached the point of maturity. Their affiliate managers know who their top affiliates are, and most programmes are likely to share the same affiliates amongst their respective top revenue-drivers. These are the affiliates that advertisers will always want to work with, and in some respects will have to, but are not necessarily considered key to long-term growth.
The demand for new affiliates, with new ideas, will be immense, and with this, affiliate networks will be charged with identifying and catalysing these new opportunities.
The longtail will be tested
Can the longtail – however an advertiser chooses to define it – be engaged with well enough to produce volume? Diversifying an affiliate programme so that the top few revenue-drivers constitute a lesser proportion of overall sales is the desire of many advertisers, and content-based sites are most often looked to in the hope of achieving this. At present, it is not that the mobilisation of the affiliate longtail has been tried and found wanting, but that it has been found difficult and left untried. That the longtail will be tested is to some extent obvious; whether it will pass the test remains one of the biggest issues for the future of the affiliate industry.
Mobile and display are the biggest sources for new opportunities
Mobile is driving many of the emerging trends we are witnessing today in affiliate marketing, from the incorporation of social elements to the monetisation of the ‘offline’ space, to the use of geo-specific consumer incentives. At Digital Window, we have seen mobile sales as a proportion of total network sales increase rapidly, from 1.5% in November 2010 to over 5% in June this year. The fact that existing affiliates are in many cases ahead of advertisers in producing mobile apps, and mobile-ready sites can be taken as evidence of the promise this trend holds for the future.
With as much as 40% of display inventory unsold, the possibilities for this to be used on a CPA basis are vast. This may necessitate the increased use of post-impression cookies, weighted differently from post-click cookies, in the same way as is standard in the UK affiliate community for behavioural retargeting companies (which themselves have only in the last year started to work as affiliates on a CPA basis). With some exceptions, publishers have had great difficulty attempting to monetise content itself, and it is extremely challenging to do this on a large enough scale to be viable. Running display opportunities on a CPA also offers the ability to treat affiliates as much as a branding force as a sales force, something I have presented on previously as a neglected factor in what affiliates can offer their advertisers.
I am not a ‘futurist’ and am dubious of the descriptive value of such a title, to say nothing of the role itself. In an industry as fast-moving as affiliate marketing at least the accuracy of the above predictions will be borne out before too long.
By Owen Hewitson
Client Strategist
Affiliate Window & buy.at
www.affiliatewindow.com/
