Why You Should Focus On Affiliate Marketing in 2013

Five factors to consider to grow your market share in 2013

Affiliate Marketing is an area that doesn’t always get as much focus as some other digital areas, but for people that take the time to embrace it, there are rich rewards available. I thought I would look at some of the key things that should make you think about investing more time or budget in the channel. This graphic shows the range of options it gives you to increase your online footprint across multiple digital media channels.

A £5 billion industry

In 2009, Econsultancy predicted that the industry was worth £4.13bn, and that it would be worth £4.6bn in 2010. The IAB are currently conducting research into the size of the UK industry which is expected to value the industry at £5bn. Within the affiliate market you have a wide range of merchants, from Sky to Marks and Spencer, but also business-to-business retailers such as Euroffice. With creative thinking you can make it work for any business, as long as you understand the different promotional levers available to you.

Can account for 30% of your online sales

A well-managed programme can contribute to up to 30% of your online sales. Even companies as large as Sky have seen affiliates account for 14% of their overall online sales. For a company that spend £10.1m in ad spend per month, this is an impressive figure, and perhaps gives you food for thought when planning your online growth strategy for 2013.

Matt Swan of Affiliate Window commented: “For some of our most engaged retailers we see affiliate sales accounting for upwards of 20% of their total online sales. A more realistic target to aim for is 15%. A well-managed programme helps to get your brand in front of a wider audience.”

You only pay on performance!

Affiliate Marketing is unique in the sense that you only pay when a sale is made. This means that before you begin, you can decide your cost per sale. Affiliate Marketing is sometimes known as performance marketing, due to the payment modelling taking away some of the elements of risk that you may have with other marketing channels.

The payment method also means that affiliates share a common goal with you. They only get paid when you make sales, so they will be working with you to send the best traffic possible. If you make yourself available, you will also find that you will regularly get feedback from your affiliates with improvements to your onsite customer journey.

You can pay different commissions on different products/customers

As well as only paying when you make a sale, you can also define different commissions for different products, or different customers, depending on your set-up with the tracking provider. This means that you can create bespoke commissions for different product lines that you want to sell at particular times, in order to encourage affiliates to push them more. Alternatively, if the objective of your campaign is to attract new customers, you could weight your commissions towards that.

This opportunity to pay a pre-defined commission on different sales means that you can take into account the different margins you might have on different products. For electrical retailers, if hardware has no margin but software does, you can adjust your commissions accordingly.

Chance to test new things on a CPA

With Affiliate Marketing being more performance-based, it can be a good place to test new ideas and technologies. Areas such as offline vouchers through mobile apps have been tried, tested and embraced by the affiliate community, expanding the reach of the market to the high street. Other areas such as behavioural retargeting have been tested by major retailers under a CPA model as opposed to the usual CPM or CPC associated with the channel.

Owen Hewitson, Associate Director at Starcom MediaVest agrees:

“The richness and diversity of the affiliate field emanates from its ability to embrace any actor willing to work on a pay-on-performance basis.

The industry encourages and nurtures innovation which has driven the impressive growth seen since its inception. This openness to new opportunities, coupled with its pay on performance model, makes affiliate marketing a proving ground for publishers more closely associated with other channels."

Summary

Affiliate Marketing offers the chance to get even more coverage for your brand across online channels. With affiliates working in different areas, such as PPC, retargeting, incentive and email, you can look to supplement and support your current marketing activities. You get the opportunity to test new areas safe in the knowledge that you pay on a pre-defined commission in line with your margins.

Image credit: Bite