Affiliate marketing is one of the least understood areas of all promotional activity due to its reliance on complex technology and payment structures. But over the coming months, the sector,which sees businesses rewarded for bringing online traffic to other companies, could see a boom.
Cash-strapped shoppers want to save money in any way possible. They are looking away from high streets that appear pricey in a recession towards online services that publicise discount codes and offers. Keen not to miss out, brands are increasingly approaching affiliate networks to help drive traffic to their online operations.
Jace Tyrell, head of communications and operations at New West End Company, which markets shopping districts in London, describes the scramble as a “much-needed battle”.
“Online and offline, the shops are pulling out all the stops and it can only be good for consumers. We can expect much more of this – the battle is on,” he says.
The e-coupons industry is already worth 600m in the UK alone, according to the latest IMRG Capgemini e-retail figures. There are around 400 websites offering thousands of free coupons on everyday services including shopping, travel and insurance.
Graham Keen, affiliate manager for online present retailer Buyagift, reveals that as much as 3m (20-25%) of his business comes directly from affiliates. He says that using partner websites is a vital way to “enhance consumer experiences” and help them save money.
While high street stores turn to guerilla sales to attract shoppers such as Marks & Spencer’s pre-Christmas “20% off for one day only” bonanza, online sales have increased by 13% year on year and brands are profiting from increased interest during seasonal campaigns.
French Connection e-commerce marketing manager Lynsey Tomkinson claims: “For us, it’s not about discounting, because we don’t offer extra discounts, but it is about incentivising customers to visit our online store. They can take up opportunities such as free postage and packaging or free gifts with purchases. It is definitely a growing part of our business.”
While French Connection might not offer discounts, consumers are certainly interested in finding them. The number of web surfers looking for online discount vouchers has gone up by 250% since 2004, according to data from Google Insights for Search.
Robert Glasgow, managing director of affiliate network Webgains UK, explains this leap: “As with product research and price comparisons, online buyers have identified a powerful new use for the internet – a search for vouchers offering further discounts – before going on to buy. For retailers and the affiliates who work with them, this is of enormous significance.”
The result of this shift in consumer behaviour is that some brands are adding dedicated sections for affiliates on their websites. With this increased closeness of relationship, however, comes new responsibilities for affiliates.
Online advertisers must now not only raise brand awareness for their clients but also build up consumer interest right to the point of purchase. They are no longer merely concerned with clicks and cash but also with creating brand value for their partners.
Matt Bailey, head of affiliate at i-level and chair of the Internet Advertising Bureau’s Affiliate Marketing Council (AMC), says that this means companies can feel more confident about placing their brands in the hands of affiliate networks in future. “There is no risk to brands to use affiliate marketing, and recent research has shown that 48 of the top 50 retailers are now using e-tailers to drive sales,” he reveals.
Even brands that do not traditionally use discount codes or vouchers to sell cut-price stock can feel more at ease. The recession means that shopping on a budget is seen as a sensible decision, rather than a downmarket move, for both consumers and brands. “Using voucher codes has a unique appeal because cash-conscious consumers will go search for them, so it is essential that offline and online ads complement this and demonstrate value to customer brand journeys,” says Bailey.
The AMC launched best-practice guidelines for online voucher codes at the start of the year and it is aiming to make publishers 100% compliant by the end of the month. The guidelines call for affiliate sites to display full details of the vouchers on offer with legitimate activation and use-by dates to help consumers better understand the offers and how to use the vouchers.
These guidelines seem particularly timely after lobby group Which? published research claiming online shoppers should not assume that discount vouchers are always the cheapest way to buy goods online.
A spokeswoman for Which? comments: “It’s a mixed bag. Some of the popular voucher websites didn’t always have the best deals and in some cases the codes were out of date but other price comparison sites were helping you to save significant pounds.”
Liane Dietrich, managing director of affiliate network LinkShare, says that the increasing closeness between brands and their affiliate networks will help lead to correctly targeted and executed vouchers. “It’s important to get a good balance of partners,” she observes. “As a network, we are constantly talking to our publishers to ensure that they only take on vouchers that are right for their audiences and will help to generate business from the right brand demographics.”
After developing a joint strategy and more effective voucher programmes, affiliates and brands must also consider how best to promote their offers. With more brands than ever clamouring for attention now that people are spending less, it is tricky to generate attention.
Ashley Highfield, managing director and vice-president of Microsoft Consumer and Online UK, says: “It’s all about keeping the customer happy. Without that, customers leave. Incentives are great at generating brand awareness and grabbing customer interest.”