Why affiliate marketing is coming into its own
Precision Marketing
28/01/2008
With a number of big name brands including RBS Insurance, Littlewoods, Eurostar, BT and LOVEFiLM embracing affiliate marketing, the technique is now gaining a major foothold within the marketing community.
And a recent report by E-consultancy claims it has grown by an estimated 45 per cent in the last 12 months in the UK - generating an estimated £3.13bn in online sales. But this is, according to some, a conservative figure (precisionmarketing.co.uk).
Affiliate network Buy.at, whose clients include John Lewis, Marks & Spencer, 02 and Virgin Mobile, has seen its turnover soar by 70 per cent over the past year. Buy.at chief executive Kevin Cornils feels the increase in affiliate marketing can be attributed to companies' seeking more growth at a lower cost.
In an earlier report carried out by E-consultancy and Buy.at, 95 per cent of brand owners stated that they found affiliate marketing to be 'very cost-effective'. He comments/ "Affiliate has proved itself as a particularly cost-effective way to drive a volume of customer acquisition, resulting in increased investment in the channel."
Newaz Islam, head of affiliates at digital agency i-level, agrees: "We are finding more and more senior marketers are investing in affiliates and taking advantage of the transparency and cost effectiveness this brings to the overall online strategy. The very essence of the channel is paying on performance."
Sectors continuing to profit from the discipline include retail, travel and financial services, with both blue chip companies and SMEs now ramping up their investment.
E-consultancy's head of research Linus Gregoriadis believes the market will continue to expand due to the popularity of its performance-based model. He comments: "When the biggest consumer-facing brands in these industries do not have a well defined affiliate strategy, it now tends to be an exception rather than the rule." The packaged goods and automotive sectors have not performed as well in this channel due to their lack of online transaction.
Also, UK agencies now manage more affiliate marketing for brands, 85 per cent handle more than they did two years ago and a further 92 per cent believe they will deal with extra affiliate marketing in two years' time.
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