Innovation has been a trademark of affiliate marketing from the beginning. The industry has pioneered a number of strategies and technologies for campaign tracking and analysis. Today it continues to make a lasting impression in the world of digital marketing and for good reason.
With a unique pay-for-performance structure, massive data volumes and razor-thin margins, affiliate marketing boasts impressive ROI, brand awareness and has relatively minimal risk. Worth £17 billion in the UK alone, this viable industry is an area of digital marketing that continues to evolve and grow.
From the discussions that took place from the IAB’s Performance Affiliate Conference in January, we thought it would be an ideal time to take a step back and review how this dynamic area of digital marketing changed since its emergence in 1994. We have also illustrated the drivers behind the growth through the infographic below which highlights important benchmarks, trends and themes.
The Early Days
The Cost Per Acquisition (CPA) format used by most affiliate marketers was very appealing as there was relatively no risk involved for the advertisers, thus the concept of affiliate marketing quickly gained traction. However, as the rapidly evolving affiliate landscape grew, issues such as fraud, unreliable data and an overall lack of transparency transformed the industry into the Wild Wild West of digital marketing.
Some of the most common fraud tactics employed included:
1. Affiliates not properly vetted
2. High-profile cookie stuffing
3. Sophisticated botnets
4. Teams dedicated to faking conversions, often times with stolen credit cards
The industry began to transform
The affiliate industry slowly began to evolve. However, the uninspiring tools available and poor business models at the time still made it difficult to accurately and efficiently manage affiliate programs. Affiliate marketers had to deal with:
1. Unreliable, high-profile outages
2. Missing data granularity
3. No incentives for higher-quality traffic
4. Networks without exclusive offers, no differentiation
5. Networks without direct affiliates, only working with networks
6. Affiliate payments occurring before conversions were confirmed
When the industry took a shift towards focusing on data and optimisation, marketers were quickly generating higher revenues by “acting on their data.” In order to do this, affiliate marketers needed robust platforms that could provide the infrastructure to track an affiliate campaign from first click to final conversion and every touchpoint in between.
Over time, implementing technology was no longer a nice to have but a necessity, so much so that nearly 61% of marketers in North America believed that seamless integration of existing technologies would allow them to make better use of their data.
In addition to the rise of technology platforms, other notable trends that quickly gained traction during this time period:
- Campaign Targeting: transformed from a one-size-fits-all approach to more segmented targeting. Affiliate marketers could now target with unique creatives, country-specific landing pages, device-specific landing pages and click scoring.
- Real-time Tracking: eliminated poor-quality traffic, identified top-performing affiliates and enhanced buyer/advertiser relationships.
- Attribution: increased visibility crucial to understanding affiliate interactions and consumer touchpoints.
- Mobile: revolutionised conversion rates as the majority of transactions are completed on smartphones.
As the industry shifted towards implementing technology and evolving to embrace these new trends, the affiliate industry underwent a makeover. No longer considered the Wild Wild West of the Internet, marketers coined the term “performance marketing” referring to the concept of affiliate marketing. By leveraging accurate data, real-time metrics and robust technology, affiliate marketing continues to enable digital marketers to generate consistent year-over-year growth.
We look forward to hearing more on the emerging themes and predictions we gathered from the IAB’s Performance Affiliate Conference, as the industry continues to expand!