Affiliate Marketing is Growing Fast in the UK

Affiliate marketing in the UK is experiencing strong growth, according to research from E-consultancy.

Sponsored by buy.at, the UK’s largest independent affiliate network, the survey, to be released next week, found that a resounding 78 per cent of respondents said they had increased their spend on affiliate marketing compared since 2005 and the same percentage said they plan to increase it further in the next two years. Nearly a quarter of those who are spending more in the channel say that they have doubled their spend in the channel in the past two years and a further one in 12 advertisers (merchants) had increased it by 200% more.

Two thirds of respondents said the number of sales generated by affiliate marketing has increased over the past two years. Furthermore, 40% of respondents have more people employed to manage their affiliate marketing activity compared with two years ago and half of those surveyed expect this team to grow over the next two years.

Linus Gregoriadis, Head of Research at E-consultancy, explains, ‘We believe this is the most comprehensive UK survey into how companies are using affiliate marketing. The findings reveal an industry that is still expanding rapidly, with further growth expected as merchants seek to get maximum returns from this channel.”

Kevin Cornils, CEO of buy.at adds, ‘As broadcast advertising has started to decline, performance marketing has emerged as the silver bullet of the marketing industry. Within that search marketing has reached its peak, but affiliate marketing is still in a high-growth phase. This represents a huge opportunity for both affiliates and marketers that understand the channel and appreciate the benefits of true pay-for-performance advertising.

Barriers to success

The survey highlights a consistent message that brand owners think they could still get more from their affiliate marketing activity with four out of five merchants saying ‘I wish I could get more out of this channel’ and 31% of merchants saying they wish they could get more out of the combination of affiliate segments they use. The biggest barrier to success however is considered a lack of internal resource with a third of merchants citing this as an issue. Problems with tracking are seen as a barrier by half the sample. A third of merchants surveyed agreed that spend in the channel is held back because they simply don’t know how much incremental volume it will deliver. Respondents also saw ‘difficulty attracting affiliates’ and ‘websites which don’t convert traffic very well’ as barriers. Only 13 percent of merchants say they have good communication with all their affiliates and a network’s relationship with its affiliate base is deemed the most important consideration when choosing a network with almost half the respondents ratings it ‘extremely important’.

Kevin Cornils, CEO of buy.at continues, ‘The research reveals huge potential for growth in the affiliate marketing and most of the ‘barriers’ to further success are easy to overcome by understanding what makes a programme attractive to affiliates, improving communication with them and using technology to service them better and ensure the sales they generate can be tracked and analysed properly. There is a need for more education in this market, but those that understand the channel and invest in it are doing very well. As a result, it is a buoyant time for the affiliate marketing industry.’

Evidence of the increased professionalism of the channel is borne out by respondents with 38 per cent of them saying ‘the affiliate marketing channel is becoming more mainstream and professional’ with half of the sample say, ‘it’s changing but there is still some way to go’

Vertical growth

68 per cent of marketers in the financial services sector said they had invested more in affiliate marketing with half of them more than doubling their spend in the channel in the past two years. 72 per cent of them plan to increase this over the next two years. 75 per cent of gaming companies have increased spend since 2005 along with 62% of retailers and 64 per cent of telecoms companies and 71 per cent of travel companies. Twenty per cent of telecoms merchants had at least doubled their spend on affiliate marketing as had over a third of travel companies, but charities, utilities and gaming merchants had all increased their spend by at least 100% over the past two years.

A total of 239 UK merchants, completed the survey in August and September this year, and 76 per cent of them were business which operate both on and offline. Half of the respondents who were aware of their company’s turnover said it was in excess of £50 million per year.

Linus Gregoriadis, Head of Research at E-consultancy, will be delivering the keynote address at Affiliate Summit London 2007 on Trends in Affiliate Marketing.

Affiliate Summit London 2007 is taking place September 28, 2007 at the Olympia Conference Centre. More details at http://www.affiliatesummit.co.uk.

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1. Affiliate Marketing – Merchants Survey Report 2007
2. Commission Junction Powers 50% of Fastest Growing e-Retailers’ Affiliate Marketing Programs
3. Affiliate Marketing Budgets are Shrinking
4. AffiliateBenchmarks 2009 Results
5. Performance Marketing: How To Build An Effective Affiliate Program