Affiliate marketing is a unique marketing tactic. In fact, to go further, it is probably fair to say that it is uniquely unique. Every digital advertising model has its own individual characteristics, but what sets affiliate marketing apart is the fact that it has no universal template that is rolled out across the world at scale. When you compare it to the more uniform models offered by huge advertising platforms such as Google or Facebook, you can see there is a crucial difference. Whether you’re paying Google to appear in search listings in Brazil or Australia, the model is fundamentally the same.
By contrast, affiliate marketing is inextricably local. Rather than the model being transposed onto other ecommerce cultures and dictating its own terms upon that environment, affiliate marketing tends to grow organically out of the specific conditions of that local context. Each market’s character is essentially derived from its constituent parts; its affiliates, brands and consumers.
The recently launched Awin Report is a definitive guide to affiliate marketing. As content analyst in the strategy team responsible for researching and writing the report, it was fascinating to learn more about these local differences and why they manifest themselves.
It was notable, for instance, that the Awin network tracks a far higher amount of commission via comparison site affiliates in our Benelux territory than anywhere else in the world. Behind that statistic lay a combination of local factors including the high quality of data in product feeds available there, the development of several third-party technology platforms that allow other affiliate sites to more easily feature comparison widgets within their content, and also a well-established local consumer habit of always comparing prices before committing to purchase.
By contrast, in Spain, the effects of the global recession over the past decade have been particularly biting, and consumers have adapted to their challenging economic circumstances by seeking out the best possible deals from incentive-based affiliate sites, such as those offering discount codes. As a consequence, such affiliates make up a larger proportion of the publisher landscape in Spain than in any other market.
These types of local nuance are essential insights for any advertiser or publisher seeking to break into new territories successfully. However, as much as these differences are apparent, it was equally interesting to notice those key factors that are mirrored by all markets. The Awin Report discusses seven of these themes that are shared by the entire global affiliate industry, regardless of location, and which give a good indication of the current state of the market.
1. Smartphones have radically altered the way we track and attribute value
It is 10 years since Apple launched the very first iPhone, and in that time the device has completely changed the way in which we access and interact with the internet. For the affiliate world the consequences have been immense: network tracking technologies have been forced to adapt, advertisers and publishers have had to review the fundamental structure of their sites, and consumers have shifted their buying habits in an ‘always connected’ world.
2. The importance of global retail events
Black Friday is just around the corner again and with it comes the annual explosion of online discounts and sales, which affiliates are primed to help promote. Historically, the event resonated only with certain markets beyond the US, where it originated, such as the UK or Brazil. However, last year every single Awin market around the globe saw an increase in revenue on the day, with an average global growth of over 50% from 2015. The adoption of such events around the world is an emerging trend that we expect to continue apace.
3. Brand safety and self-regulation
Digital’s reputation has taken a bit of a battering over the past 12 months, with fake news distribution and question marks over viewability standards. Brands around the world are scrutinising their ad spend more than ever. Affiliate’s robust performance model ensures it offers advertisers a lean, efficient mechanism for driving sales transparently. Combine that with a proactive self-regulatory practice that has anticipated potential ethical pitfalls and you have a model that has successfully sidestepped the kinds of controversy engulfing other channels.
4. The rise of influencers and measuring their value
The channel has warmly welcomed the current influx of influencer affiliates. However, while the appetite for working with them is a persistent theme around the world, finding a means of measuring and rewarding their efforts remains difficult on a last-click reward model. It is clear that if these fresh talents are to retain their interest in monetising their content through affiliate marketing, then the model must adapt and provide a viable income for them.
5. New publishers are always emerging
Innovation is the lifeblood of the affiliate industry. A constant stream of new business models and ideas entering the channel mean it is always evolving and keeping pace with the latest digital trends. Scouring our local markets, we unearthed some true gems that promise to disrupt the status quo – from Spott, an app that syncs with the TV show you’re watching to show you the products featuring in it, to Snatch, a mobile-based augmented reality game where players grab virtual parcels from each other and win prizes for protecting them until the end of the day.
6. Can voucher codes drive incremental value?
A question that has dogged voucher-led affiliates since their inception, this is one that has been asked of all our markets. Digging deeper into the data it is revealing to find that many of the assumptions made about these sites are patently untrue and that, depending on your objectives, there is a great deal of incremental value to be garnered from such partnerships.
7. Delivering lifetime value in the affiliate channel
The affiliate industry has come a long way in its 20-plus year history and the concept of ‘value’ has evolved right alongside it. Simple clicks, sales or revenue targets are not enough for brands now and, with more data-sharing occurring, we are better able to assess the value of those conversions. Our final theme in the report looks to the future of analysing affiliate sales and how, for those brands at the cutting-edge of the industry, understanding the lifetime value of the customers driven by affiliates gives a true insight into their most effective partnerships.
Given that the global affiliate industry is thought to be worth around £12bn now, it seems only right to try to provide a global view on its workings. Awin’s global reach across more than 6,000 brands and over 100,000 affiliates positions the network well for providing that assessment.
Robert Davinson is global content analyst at Awin. The Awin Report can be downloaded for free at www.awin.com/awinreport.