Despite the big number affiliate marketing still has lots of convincing to do

A rather infamous interview with ASOS co-founder Nick Robertson dating back to 2007, referred to some of its early affiliate partners as “grubby little people… growing their income at our expense” that demanded “silly commissions”.

Ronan Shields

This perfectly sums up the historic battle for mindshare faced by the affiliate or online performance (OPM) marketing sector.

To further its rehabilitation in the eyes of brand-side marketers (its initial attempt to rebrand ‘affiliate’ as OPM) was this week’s debut IAB study to assess its contribution to the wider UK digital economy.

In its study, it found that OPM generated £8bn in sales in 2012 - on the back of £814m being spent in the sector - constituting nearly 5-6 per cent of all UK e-commerce retail sales.

Massive numbers, I’m sure you’d agree, especially when you think that OPM essentially doesn’t charge brands up front for a sale or a sales lead. In the face of such ‘overwhelming’ evidence, it begs the question: ‘Why aren’t brands investing more on OPM?’

Affiliate marketing veteran and current senior online marketing manager at Sky, Helen Southgate told me despite evidence pointing to handsome returns of using OPM, a lack of education in the industry still reigned.

Although education was improving among mainstream marketers, the fact affiliate networks involve a very complex structure often intimidates the uninitiated rendering them unwilling to spend more on such modes of customer acquisition.

Hence, this lack of education is stifling investment in the discipline from those who make the decisions and ultimately have to defend how their media budgets are spent.

To address this situation, we can expect the parties involved in producing this study to launch a major charm offensive this year but what’s clear is that they’ll have to address the allegations of ‘stealing traffic’ and skimming links’ if they are to get more than just a foot in the door.

Readers' comments (14)

  • Wow, that quote is still being dredged up is it? I would recommend speaking to advertisers such as Sky about the amount of their digital spend they invest in affiliate and the quality of customers they generate. In many instances the channel can comfortably account for 20-30% of online spend and engage with the most valuable consumers. I would recommend a crash course in understanding affiliate marketing in 2013 rather than harking back to an off the comment that has no relevance in the modern affiliate market. 'Skimming links'? Really?? Oh, and by the way, ASOS run an affiliate campaign - clearly they don't hate it that much anymore.

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  • "the fact affiliate networks involve a very complex structure"

    What do you mean? What fact? Affiliate networks are very straightforward. A group of marketers who work on a commission only basis. If you have a product they'll promote it for free! Simple

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  • Have to completely disagree with the underlying message of this post.

    "they'll have to address the allegations of ‘stealing traffic’ and skimming links’ if they are to get more than just a foot in the door."

    Perhaps you might want to consider speaking to the likes of Sky, Marks & Spencer, BT, British Airways, Vodafone, Tesco and many other leading brands in the UK about incremental sales, increased lifetime value, and additional brand awareness that they've gained from utilising OPM.

    Whilst education within a specialist industry is naturally something that's needed, a huge growth in advertiser spend along with c. £9bn sales, shows those involved must be doing something right thus far.

    The fact that one sweeping statement in 2007 has managed to rear it's head yet again from a then CEO of ASOS (who re-launched their affiliate programme in 2009 by the way) just shows how much of a struggle it is to find a simliar tone of negativity on the market at current day.

    Some people like to live in the past, I guess.

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  • The argument that affiliate marketers need to do more to educate advertisers about their proper role and value is a fair point. It’s one that I think few affiliate marketers would argue against. The education of clients is key to the growth and development of any industry, particularly one as young as affiliate marketing.

    However, like other commenters, I take issue with your implication that affiliate marketers must address allegations of “stealing traffic” and “skimming links.” While there are no doubt some unscrupulous affiliate marketers that take such unethical actions (just like there are bad actors in every industry), the fact is that the vast majority of affiliate marketers do no such thing and operate above board in all of their operations.

    Taking that point a step further, if you are in need of affirmation from the US market of affiliate marketing’s value to major advertisers, look no further than major brands like Home Depot, Sears, Nielsen, Discover and CarpetONE. Each has utilized OPM in one form or another in recent years and each has experienced significant growth and improvements in lead generation, customer acquisition and brand awareness as a result.

    The reality is that the affiliate marketing industry that you try to paint a picture of from 2007 nothing like it does in 2013. This week’s IAB report reaffirms that point.

    Keith Trivitt
    Director, Marketing and Communications
    MediaWhiz

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  • Agree with my friends Keith & Chris, that this article is absurd. What convincing, especially in the UK does performance marketing need to do? It's grown substantially in the last 10 years and a large percentage of major companies have affiliate programs.

    Just saying something doesn't make it true, no matter how many times you say it.

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  • The "needing education" part is quite accurate, but the fraudulent allegations are a broad stroke stereotype that is up there with racism. That would be like me telling Nick that he would be speaking German if the US didn't intervene in both World Wars - it is an uneducated comment at best,
    Educating advertisers has always been our top focus, as well as investing our own time, money, creative, and analytics in helping a brand or direct repsonse company generate leads and sales for their business. Coupled with a lot of technology for tracking and compliance - areas that are not invested in by the brands or traditional agencies. Huge companies like Barclay, Tesco, Target, eBay, to name a few of the thousands, have invested heavily in the OPM space to conduct their marketing efforts.
    Bottom line is that their are good and bad people in every industry, from banking, to politics, to hollywood, to religion - so you can't blame and castigate ALL for the actions of a FEW.
    .

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  • The author begins with a hugely positive report from the IAB and a comment from a marketing manager saying that more education is needed. Then he added two huge dollops of his own negativity with a 7-year old quote and a silly snark about "stealing traffic" and "skimming links". Are you sure you didn't run an opinion piece from 2007 by mistake? One really would hope that Marketing Week's writers were better informed and less inclined to trash parts of the industry about which they clearly know so little.

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  • Using the ASOS comment to me is akin to quoting someone from 1995 saying "this Internet thingy will never catch on" and then perpetuating it throughout the years as a continued, valid statement.

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  • Is there a ball park figure companies like SKY will pay for leads generated by a media owner? I was advised anywhere from £55-£110 is possible to achieve depending on the target group sought. can any experts out there confirm this range or is it wildly out?

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  • Is there a ball park figure companies like SKY will pay for leads generated by a media owner? I was advised anywhere from £55-£110 is possible to achieve depending on the target group sought. can any experts out there confirm this range or is it wildly out?

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  • Hi Kevin, George, Chris, Keith, Chris, Pace et al.

    Thanks for reading and your feedback, no matter what the sentiment, it's always welcome. However, I'd like to clarify some of the points I made.

    In terms of bringing up 'grubby-gate' I was using it as an example of the historical challenge faced by online affiliate marketers.

    Yes, it is an extreme example – and yes I am aware that it dates back to 2007 – but the fact is that was an article reporting the opinion of an influential person within the industry at the time. Not the opinion of the journalist(s) involved.

    In my defence, I did point to the fact that I did state that the 11-1 return was 'massive'.

    This prompted me to ask the question, 'why aren't more brand-side marketers willing to go on record about it?' This would make my job of reporting on the sector an easier one.

    I often get little more than a rehashed press release when I speak to them about it. Few people talk about it on record and directly talk about the measures they're taking to limit it. That's a story I'd report on.

    It's also why the Sky affiliate marketer I quoted in the piece was exceptional in that she acknowledged the 'confusing' nature of the sector. I'd also add that she did note that it was one of their best-performing channels, which I highlighted in the original news report.

    The fact that this piece has generated such discussion means it's likely they'll be a follow-up. If any of you would like to help out then I'll leave my direct contact details below.

    Also, in regards to the allegations of ‘stealing traffic’ and 'skimming links’ and your (seemingly) collective assertion that this is also an outdated matter, I would refer you to an article entitled "IAB bids to boost affiliate marketing's standing." This article, written September 2012, where a fellow reader raised these issues in the comments section.

    If you'd like to discuss the matter further then please feel free to contact me directly on the below:

    http://www.marketingweek.co.uk/ronan-shields/1044.bio

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  • I'm always happy to contribute or comment about anything affiliate related.

    Ronan, as an aside, the point that you make in your response about allegations of stealing traffic and skimming links in an earlier post was regarding someone's perception of networks, not affiliate marketing. Plus I presume, given the brands listed, it was written by someone US based.

    The US and UK affiliate markets are significantly different - the UK probably representing the most sophisticated performance marketplace in the world. The OPM report only reported on UK data.

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  • Hey did anybody see the thing on 20/20 about affiliate marketers? It was not good. My philosophy is much different. I plan on giving good content and make people enjoy it. The money will follow. There are multiple types of marketers, but this is what I am:http://wp.me/p32Y4i-L
    In this post, I talk about what i try to do with my site: http://wp.me/p32Y4i-5

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  • The performance marketing industry is a blessing to advertisers who finally have a reliable means of measuring the impact of their marketing dollars. Traditional offline advertising such as billboards, print and the "pay for it and pray" model have claimed more victims than anyone is able to measure. The transparency, flexibility and fixed-cost nature of performance marketing offers advertisers another excellent option to get their product and messaging in front of consumers.

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