2010 will see retailer investment in affiliate marketing reach record highs

Liane Dietrich, MD of LinkShare UK, talks about the main drivers behind the growth of affiliate marketing and how performance marketing techniques are going to influence the industry in the coming year.

Liane Dietrich
Liane Dietrich

The IAB’s online ad spend report for 2009 named affiliate marketing as one of the big winners of the year, with spend in the sector rising by 38.2% to a total of £72.6 million across the nation. The indications from the first four months of 2010 suggest that this year will, if anything, only be more exciting than the last. But what does this mean for retailers and what are the factors triggering this increased interest in affiliate marketing techniques?

The economic challenges that have been with us since 2008 (and perhaps even earlier) have had their effect on the marketing industry. Budgets have had to work harder and be more transparent; demonstrable return on investment is crucial at every stage. The watchwords today are efficiency and transparency; every pound must work harder to prove its value.

As a result, performance marketing is more than just an attractive option – it is an essential part of today’s online toolkit. This was showcased by research we conducted at this year’s TFM&A conference, where we spoke to 115 marketing professionals about their priorities and concerns for 2010. Over half of the people we spoke to (59%) told us that they believed 2010 would bring an increase in performance based marketing; in addition, 34% pointed to measurement and ROI as a key motivator for marketing campaigns over the year, while 25% felt that targeted campaigns would win out over mass-marketing techniques.

Overall the research suggested a positive outlook for the marketing industry this year; 69% of respondents said they expected budgets to start to increase as the year progresses. Consumers, however, will not be shrugging off their new bargain-hunting habits; 66% of marketers agreed that consumers were likely to maintain their new ’bargain hunting’ (repetition here, can we change?) habits even in a post-recession environment. For marketers this means a need to demonstrate value to consumers to incentivise purchase in a more intelligent way, working with new media channels to access this savvier, value-driven shopper.

The online formats that received the strongest support from marketers included social media (75%) and vouchers and promotions (17%). Affiliate campaigns can help respond to these trends by working with brands to ensure placement on publisher sites that offer consumers the best value for money – for example, voucher sites like Vouchercodes.co.uk or cashback sites such as Quidco.

The rise in interest of vouchers and social media is also driving more innovation in the use of affiliate marketing. Campaigns are going beyond ad placement to incorporate a range of promotions, vouchers and creative communications designed to support a brand’s identity and ethos. In the retail market companies like Lipsy, Oasis, Sweaty Betty and Karen Millen are all proof of the positive impact an affiliate campaign can have. The right strategy and approach allows marketers to target customers in a relevant manner and by doing so, to draw them back to the retailer’s main site.

Today’s performance marketing is more transparent and easier to use than ever before, whether it is those planning, purchasing or even on the receiving end of affiliate marketing campaigns. One of the strongest reasons for its success and growing popularity is that it is highly measureable and helps marketers to achieve Return on Investment (ROI). Clever tracking links monitor traffic movement from one website to another so that both advertisers and publishers can see who is clicking through to visit their websites and from which websites they clicked through from.

In a world where the next change is always just around the corner, marketers must move with the customer. Today, that means shifting budgets online and implementing measurable campaigns that deliver the desired returns. Online channels allow businesses to respond more quickly to what consumers want and engage with larger audiences, for businesses looking to maintain their competitive edge and continue to be profitable affiliate programmes should be high on the agenda for every marketer. By investing the time to develop and maintain a truly collaborative relationship, both advertisers and publishers will find it easier to achieve success in today’s competitive environment.

The figures speak for themselves and as many retailers fine tune their online initiatives we expect to see affiliate marketing go from strength to strength throughout 2010.

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