What’s New in Affiliate Marketing for 2013?

Four affiliate marketing experts give their view on key developments in 2012 and their predictions for 2013

With 2012 coming to a close I wanted to look back at the past year. Understanding the changes we have seen helps to outline potential growth areas for 2013. To get a good perspective I asked a number of leading experts in the affiliate marketing field to give me their views on where they see affiliate marketing developing in 2013. A big "thank you" to:

• Fiona Robertson, Head of Performance at agency LBi;
• Kevin Edwards, Strategy Director for Affiliate Window;
• Geno Prussakov, author, consultant, founder and chair of Affiliate Management Days conference
• Matt Bailey, Commercial Director at Performance Horizon Group

Question 1. What for you has been the biggest development in affiliate marketing in 2012?

Fiona Robertson (FR): The continued progression away from a standalone channel to one that is fully integrated with other digital and offline media has been significant in 2012. As the industry has continued to grow its presence in budgets has become a higher proportion and thus considered with more strategic planning and development than ever before. I have found this across the board with our clients and within the LBi business – with higher recognition for the worth and importance of affiliate marketing much more prevalent.

Geno Prussakov (GP): If I had to single out just one thing it would be the wide(r) adoption of the channel attribution. Many were saying that it is inevitable. Before 2012, however, very few platforms were allowing for it (Impact Radius being one of the first ones that comes to mind). In the course of this year, though, we have witnessed many new developments in this direction.

To name but a few, AvantLink launched AvantMetrics, Google Affiliate Network focused on a deeper look at attribution, while ShareASale introduced their Tags & Rules functionality. As mentioned in a video here, channel attribution is something that everyone involved in affiliate marketing should be doing. It is great to see newer tools coming up. We’ll be moving at a much steadier pace in this direction in 2013.

Matt Bailey (MB): We’ve seen new paths to market such as retargeting and cart abandonment technology companies establish a foothold in the space, using performance as a basis on which to monetise their offerings which is a great endorsement of the concept. However I don’t think we’ve seen a great deal of innovation elsewhere.

From a personal perspective, the rise of performance technology platforms (such as PHG’s ExactView) is a key development in the space. We see more and more brands wanting to take control of their own destiny and work more closely with their partners, something long overdue.

Kevin Edwards (KE): I think the mobile tipping point just about scrapes into 2012. We anticipated there would come a point whereby advertisers would start talking to us about mobile plans. It’s a trickle of interest at the moment but I’m sure when the Christmas numbers are counted and we track handset acceleration we’ll be able to put a very substantial revenue total behind mobile. I think in hindsight we’ll look back on 2012 as the point at which networks, publishers and advertisers alike starting proper contingency planning for the mobile revolution.

Question 2. What has been the greatest challenge faced by the industry in 2012?

KE: Following on from the last point, we’ve spent the past twelve months trying to raise awareness of mobile marketing within the performance space. There tends to be a natural assumption that there is no additional work required and this is misguided on a number of levels. The key one is that retailers launching transactional m-commerce sites need to add affiliate tracking. Without it, sales won’t track. We put an early warning out in the Spring that affiliates stood to lose out on millions as a result. This has been brought home by the huge ramp in sales through handsets we’ve seen in the run up to Christmas. Some advertisers are running at a third of their sales coming from Smartphones.

FR: The desire for more data and information has undoubtedly become more prevalent and the majority of what is sought after is still a little beyond our reach. We are starting to get lots more data on the presence of affiliate(s) within a customer journey, but using this information to make solid decisions is far off for most brands. There are of course a few exceptions, but for most it is still an item on the wish list rather than right at our fingertips. This is the case for brands t themselves, but also across our industry as a whole – everyone wants affiliate marketing wide statistics but they simply don’t exist in a reliable format as yet for the UK market. Thankfully the upcoming IAB study should help with this.

MB: Continued justification of the channel. With the overall economic outlook being so gloomy, marketing budgets tend to get cut back and so everyone is under pressure. The pay on performance model is a huge benefit in this, but the wider context has led to increased scrutiny on affiliate activity.

The introduction of the EU Privacy Directive didn’t have as much impact as we may have anticipated but I fear that this kind of legislation will continue with the industry having to navigate ways around it.

Question 3. From which areas do you expect to see the biggest growth in the market in 2013?

GP: I don’t know if they’ve been running the same campaign in the UK, but in the US thousands of businesses have recently received a postcard from Google. The front of it read: “Your customers are mobile. You can be too.” This is the main area of opportunity as I see it – mobile! Of course, the above-mentioned Google postcard focused on search, telling us that since 2010 “mobile searches have grown by 400%,” but did you know that regardless of the raising popularity of mobile only 4% of US websites are ready (or “clearly designed for mobile devices”)? Whether it is shopping assistant apps, mobile-friendly websites, games, or anything else mobile-related, this is the area of highest potential, in my opinion.

FR: Mobile traffic and therefore opportunity will continue to flourish. 2012 has seen significant growth in this area, not only from an advertiser side but also by affiliates themselves. The rise sees no signs of stopping any time soon giving us increased scale in this area.

KE: I think the performance sphere of influence will continue to grow and therefore additional channels and technologies will be touched by what we do. We focused on elements such as call tracking and mobile commerce in 2012 and I think this will continue with additional focus on quality feed provision, mobile call tracking and the online to offline piece. I think this is where people will start to work out who affiliate marketers are and how what they do ultimate fulfils many of their requirements.

Question 4. Are there any emerging areas of affiliate marketing that affiliate managers should be looking out for in 2013 and beyond?

GP: I am really intrigued by Pay-Per-Call, and the horizons it opens for affiliate marketers. Whether in conjunction with mobile, or offline channels, or specific online marketing methods (like paid search, for example), we are told that interweaving PPCall into other methods (i) yields tremendous CTR improvements, (ii) boosts conversion ratio to 30-50% (yes, tenfold of what good online affiliate programs show), and (iii) generated 1.5-2x higher AOVs. I also love how targeted you can get with Pay-Per-Call. I recommend that every affiliate manager looks into utilizing this type of performance marketing in 2013.

FR: Data has always been a critical element of the performance channel, but as we get increased access to it, we can get closer to being able to analyse and understand the value more than ever before, as well as looking closer at consumer behaviour within the overall mix.

MB: Brands are becoming more and more open with their data, with many opening up their APIs to 3rd party developers. I think this will facilitate the emergence of “developer affiliates” who are using their skills to develop innovative methods of manipulating client data to make it more appealing to consumers. Brands are becoming less proprietorial about how consumers interact with them, so are more willing to allow this.

At PHG we took the decision from the outset to build our own API on which all of our tech assets sit, meaning we think we’re in a good position to encourage this.

Question 5. You have been in affiliate marketing for some time, what for you have been the biggest changes since you began?

GP: The biggest, and the most important, change that I have witnessed was the evolution from flying blind to a well-thought-through strategic approach to affiliate marketing. I am referring mostly to advertisers and affiliate manager here. Most of the violations that have been commonplace ten years ago are nearly impossible in major affiliate programs today. Of course, many problems still persist, but affiliate managers have become really good at what they do, and this is good to see. There is still a lot of room for growth and perfection (as fraudsters have also become more savvy). To help the advancement of affiliate management education, in Spring 2012 I organized Affiliate Management Days, a laser-focused conference on all things affiliate management. We are holding a couple of these professional forums a year, and the newest one is coming up on April 16-17, 2013 in San Francisco.

KE: There was a point at the PMA’s(Performance Marketing Awards) this year when I looked around and realised I didn’t know the vast majority of the 600 people in the room. This is a world away from the first A4u Awards in a pub next to the Excel Centre in East London. This perfectly encapsulates how we’ve professionalised; grown up if you like. I also think it’s so much easier to talk about affiliate marketing now as many affiliates are mainstream, powerful retail brands in their own right. Scroll back to 2003 when I first worked in the channel and the few affiliate managers there were struggled to name a single one. I also remember being offered business for big brands by agencies simply because they had some spare budget and thought they maybe should be doing some affiliate ‘stuff’ as well.

Affiliate, or performance, marketing is now a completely accepted part of the online mix; a mature, measurable medium that is perfect for this grown up age when every penny spent is scrutinised.

MB: By its nature, affiliate marketing is a dynamic environment in which to work. Since I began my career in the discipline it has changed a great deal with networks coming and going and the mix of affiliates being very different now to what it was 5 years ago. I cannot highlight any specific changes as the whole landscape has changed so dramatically since I began. From a PHG perspective, we believe that the next big shift will be for brands to take greater control of their strategy within this space, forming closer partnerships with their affiliates and driving the channel forward on to even bigger and better things.