As digital marketing grows at a rapid pace, how is affiliate marketingchanging, and what does the current data tell us? In the second and final part of this series, Owen Hewitson, Client Strategist, Affiliate Window & buy.at, looks at the fears and threats that performance marketers believe they face.
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.
In part two of these observations on the latest set of affiliate industry surveys, we look at the fears and threats that performance marketers believe they face.
Contradictions and uncertainties around attribution
The IAB advertiser survey has demonstrated that de-duplication of affiliate sales against other online channels is the norm, with 51% of advertisers de-duping and 64% of those de-duping against 3 or more channels. By far the most common is paid search, de-duped by 92%. However, looking across the three surveys reveals a good degree of uncertainty from affiliates about how this affects them. The Econsultancy study shows that the largest proportion of affiliates surveyed about this – 45% – had no idea what impact de-duplication was having on their businesses (only 18% thought it did not affect them for the worse), yet when asked how much revenue they thought they were losing as a result of de-duplication only 9% admitted that they did not know. What is more confusing is that just 26% of the affiliates surveyed by Econsultancy rated de-duplication as ‘highly significant’ to their business. These contradictions point to a knowledge gap, born either of a lack of transparency from advertisers or a lack of understanding by affiliates.
Relatedly, Bigmouth Media’s survey recorded that a majority – 50.8% – believe attribution modelling threatens the affiliate industry, a big increase from 34% in 2010. This is surprising given the absence of major advertisers choosing to roll out cross-channel attribution models to their affiliates. As if like a bulwark against the uncertainty of attribution, the proportion believing that last click should always win rose from 34 to 43%. Although some affiliates decry a dependence on incentive sites, whose business models are premised on last click wins, it appears many still see this as the least worst option.
The knowledge gap
There is a perception amongst advertisers that expertise is lacking amongst senior decision-makers. 50% of respondents to the IAB’s survey described their CEO’s understanding of affiliates as ‘Little’ or ‘None at all’. The survey found that as the size of the organisation increased the perceived knowledge on the part of its CEO decreased: in companies with turnovers under £500,000 73% rated the knowledge of their CEO as ‘Good’ or ‘Excellent’; in organisations turning over more than £10m this fell to 39%. Whilst this is a subjective assessment it suggests that performance marketing is losing out on budget due to a lack of understanding by those holding the purse strings. This is reflected in the finding that 51% of the IAB’s respondents reported less than 10% of spend is currently invested in the affiliate channel. Highlighting that the affiliate industry demands a great deal of time, the Econsultancy study offers one reason the lack of expertise: despite being traditionally seen as the preserve of hobbyists, 29% of affiliates said they spend more than 75% of their day working as affiliates.
Relatedly, the Bigmouth survey reveals 83% support for networks managing affiliate programmes. This highlights their role in filling advertisers’ in-house knowledge gaps, and the part they play in representing the channel when issues such as de-duplication are discussed. It is not therefore just the core functions of tracking and payment that networks fulfil.
The threat from Google
Two things seem to bother publishers about Google: the changes brought about by Panda; and what is seen by many as the encroachment of Google into the space as a publisher in its own right. 71.5% of respondents believe that Google aspires to become the industry’s largest affiliate, up significantly from 56% in 2010. This also poses serious questions for advertisers. Whilst the rise of ‘brand’ affiliates is a testament to the health of the industry, helping raise its profile, there has been much debate recently around whether the reliance on a small number of top publishers comes at the expense of a focus on ‘Long Tail’ engagement. Having Google increase this reliance by becoming a super-affiliate would go in the opposite direction to many affiliate managers’ aspirations for their programmes.
But Google’s encroachment poses problems for advertisers beyond the affiliate channel. If 51% of respondents spend less than 10% of their budgets on the affiliate channel, it is likely that a sizeable proportion of the rest goes on the search channel that Google dominates. Would advertisers welcome deepening this dependence by also paying Google as an affiliate or network?
Getting the basics right?
The surveys also touched more basic issues, which it is always important to get right. 68% of respondents to 2010’s Bigmouth survey complained about the lack of effective creative; in 2011 this fell to 57.8%. So is this now less of an issue? With Panda affecting so many (31.4% of Bigmouth respondents reported seeing changes in their rankings) content seems a greater need than banners – 35% of affiliates said content was their most important method of promotion. Nevertheless, banners still have a place, ranked second to text links as the most effective linking method in the Econsultancy survey. However, Bigmouth’s survey found that less potential is seen in video: only 13.3% of affiliates felt there was potential in video advertising, down from 15.2% in 2010.
Read Part One of the article here
By Owen Hewitson
Client Strategist
Affiliate Window & buy.at
www.affiliatewindow.com
