The growing importance of affiliate marketing

Affiliate Marketing is a marketing channel that has been in existence for nearly 25 years. It has lived through a number of enormous changes in the digital landscape predating Google, Facebook and the first iPhone. In order to survive and grow, the affiliate channel has had to be dynamic, innovative and adaptable. So perhaps the title would be better proposed as “The Continuing Importance of Affiliate Marketing”.

I believe the success of the affiliate channel has been down to its diversity and business model.  It is a channel which has touch points within every marketing discipline and can be well described as a microcosm of online marketing.  Although changing somewhat over the last few years, the predominant business model is still cost per acquisition, based on the last touch point. Advertisers only pay once a sale has been made, taking any risk out of their marketing budgets.  For that reason, it has not only been long favoured by large brands but is also an extremely effective channel for start-up businesses.  

Successful advertisers will use the diversity of affiliates within the channel both strategically and tactically to drive objectives, often centred on sales volumes but also other KPIs such as Average Order Value, Life Time Value, Quality of customer, returning customers etc.  The level of data available now through affiliate networks allows advertisers to be able to understand the value of every single affiliate within their programme and adapt strategies to attain the best return on investment from the channel. 

The next few years pose a new challenge for affiliate marketing however and that is how to support and develop the vast number of content and blogger affiliates that are abundant within the channel.  Affiliate Marketing has been successful at driving last click sales for advertisers through price comparison, cashback and voucher affiliates but the real achievement will be if it is able to drive that same amount of revenue for advertisers through content and blogging sites, which make up 70% of the affiliate channel.  This will mean a greater focus on content syndication, automation, native ads and monetisation away from just last click CPA.  Once the affiliate marketing channel cracks this, which it will, it will become and even stronger channel within the advertisers marketing mix.