As digital marketing grows at a rapid pace, how is affiliate marketing changing, and what does the current data tell us? In the first of a two-part series, Owen Hewitson, Client Strategist, Affiliate Window & buy.at, takes a closer look at three recent industry surveys, to see where affiliate marketing is heading.
The past few months have produced no fewer than three large surveys of the affiliate industry. The first, published by Econsultancy in conjunction with a4u, looks mainly at the publisher community, with contributions from agencies and advertisers providing just under a quarter of all responses. It follows previous surveys in 2009 and 2007. The second, by Bigmouth Media, was published within a few days of Econsultancy’s and focuses solely on affiliates. It is conducted annually. The third and most recent looks at advertisers only and was conducted by the IAB’s Affiliate Marketing Council.
Although each is rich with insight, these two articles will explore what common threads emerge between them, and how can we ‘think together’ the three sets of findings between both advertisers and affiliates.
Who generates the revenue?
That the affiliate industry has grown is clear, but which affiliates have driven this growth? According to Econsultancy’s survey, the proportion of affiliates generating the smallest revenues for advertisers has decreased markedly over the past two years. Whilst 19% say that they generate under £50 in monthly revenue for advertisers, this is a far smaller proportion than the 31% recorded in 2009. At the other end of the scale, the proportion of affiliates generating the largest revenues has greatly increased, with those contributing over £10,000 in monthly revenue up from 25% to 37%.
This is undoubtedly good news, but which affiliates are responsible? It could be that the affiliates that formerly produced the least revenue are now making more; but it could equally be that they are actually making less. Perhaps they have abandoned their affiliate ventures altogether and therefore did not participate in the survey in 2011. After all, those making the least money in 2009 have the least to lose by leaving the field. An interesting indication of this comes from the sample size. Given that in 2011 the sample was over 300, far fewer than the over 1,000 that took part two years earlier, we are clearly not talking about the same affiliates. Whilst the sample is still large enough to be representative, it is interesting to wonder why there were so fewer participants in 2011 than two years earlier.
The 2011 Census attracted a very different demographic. Many more affiliates were full-time compared to 2009 (46% versus 34%), and there were also falls in part-time affiliates responding (from 46% to 36%) and those describing themselves as ‘hobbyists’ (from 20% to 18%). If the sample is so much smaller and the affiliates in it so different, it could be that the revenue growth was not driven by the affiliates who were at the bottom in 2009 – by far the largest group – making more in 2011. Not all affiliates will grow with the industry itself. After all, affiliates describing themselves as full-time (being almost half of 2011 respondents) cannot be so if they are making less than £50 in monthly revenue (especially considering commissions are a fraction of that).
Although we would need to know exactly which affiliates responded in 2009 versus 2011 (and vice versa) to say for certain, the picture presented might show a new bottom and an old top. Those that were top revenue-drivers then are still at the top but making more; those who were at the bottom have dropped out, stayed at the bottom, or been amassed into a new bottom by new entrants.
What affiliates themselves report anecdotally supports this: that it is tougher for new and smaller affiliates to make money. Many have spent 2011 recounting how they have had to weather the effects of Google’s Panda algorithm changes on their position in the natural search results, at the same time as watching costs in the paid search environment rise.
Attitudes and Expectations
Nevertheless, given that 93% of respondents to the IAB survey said that they were ‘Likely’ or ‘Very likely’ to recommend affiliate marketing to a colleague in a similar position, it is clear that many still see opportunities for profit.
Mobile and location based marketing were viewed as such by 32.6% and 40.7% respectively of respondents to Bigmouth Media’s survey; 82% of respondents to the Econsultancy survey listed mobile as either ‘Highly significant’ or ‘Quite significant’. However, it is interesting to note that the Bigmouth survey records exactly the same percentage of respondents in 2010 and 2011 testifying to the potential they see in mobile. Given that 2011 was often hyped as the ‘Year of Mobile’, should we not have seen this grow? There is no doubt that mobile itself has grown: at Affiliate Window we have watched transactions through mobile devices grow from 1.5% of all sales to over 5% during 2011. The fact that the survey shows no growth in eagerness might therefore reflect certain technological or logistical difficulties mobile promotional methods present. Perhaps that it is more suitable for some methods of promotion than others (for example, location-based incentives account for a larger proportion of mobile sales than other calls-to-action); or the fact that advertisers themselves have been slower than expected in 2011 to roll-out m-commerce sites.
By Owen Hewitson
Client Strategist
Affiliate Window & buy.at
www.affiliatewindow.com
