I got it from a friend of a friend…

Affiliate marketing is experiencing a boom as e-tailers see its worth

It’s time to revisit affiliate marketing. Like so many other new forms of internet marketing, this area dropped off the radar in recent years but now seems to be making a comeback.

Affiliate marketers were out in force this month at an afternoon networking party, held at Kensington Roof Gardens and hosted by new media agency Wheel. Companies in attendance included Alliance & Leicester, B&Q, Comet, Dixons, Figleaves, Marks & Spencer, MFI, and Opodo.

Talking to a number of marketers, e-volve was quickly disabused of the notion that affiliate marketing is no longer a hot issue. Retailers in particular waxed lyrical about its impact on their online sales.

Affiliate marketing involves websites being promoted on other sites (affiliates) but only paying for this promotion if the affiliates’ visitors actually click through to the site being promoted and buy something. When this happens, the affiliate site is paid a commission.

Some companies specialise in creating affiliate networks. These companies include Commission Junction, TradeDoubler and UKAffiliates.

Comet e-commerce business development manager Sam Bain says the electrical retailer is stepping up its affiliate marketing activity. She says: “We want to treat our affiliate sites more like a virtual salesforce.” This means tailoring commissions and promotional activity more individually, depending on the needs and positioning of the affiliate site.

Retailers say affiliate marketing now accounts for ten to 25 per cent of their total online sales, and performs particularly well in the run-up to Christmas.

Interestingly, this form of online marketing is not seen as a threat to other areas, such as advertising. The staff responsible for affiliate marketing do not need to compete for budgets with advertising or e-mail marketing, since affiliate marketing is totally self-funding. It has a branding element, but is essentially a sales tool.

John Lewis online partnership manager Miranda Agnew says affiliate marketing accounts for at least ten per cent of the retailer’s online sales. The company works with about 3,500 affiliate sites – “something we could never do manually”. These relationships are managed instead by TradeDoubler and UKAffiliates. The former handles the majority of the websites, while UKAffiliates is used for “our larger partnerships, which require more creative input from us”.

TradeDoubler is paid by percentage of revenue, while UKAffiliates receives a fee per acquisition.

Agnew believes affiliate marketing “will become a core area of our marketing strategy. It’s crucial for driving new customers to our site. We get a lot of feedback from our affiliates, which allows us to develop the right marketing tools for them. This is a very strong revenue driver for us and our partners.”

Game Group, the video games retailer profiled in e-volve last month, has just signed up for its first major affiliate marketing deal, with TradeDoubler.

Game new media director Dave Evans says: “We’re already seeing a great deal of interest from affiliates.” Because Game already has a large customer database in the UK, Evans is keen to use affiliate marketing to expand sales internationally.

Affiliate marketing is likely to become even more seamlessly integrated into website content in the future – as witnessed by this month’s launch from a company called Affiliate Window. It bills its product, IPS, as the first product system which can be fully integrated in sites.

Comet, Domino’s Pizza, Boystuff and Oddbins are some of the companies taking part in Affiliate Window’s scheme.

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