Affiliate Marketing 2014

Affiliate experts share their frustrations from 2013 and expectations for 2014

Affiliate Marketing had a big year in 2013 with the industry now estimated to be worth a staggering £9bn. With that in mind I asked some thought leaders in the Affiliate Marketing industry for some of their thoughts on 2013 and what they think will change in 2014.

A big thanks to Kevin Edwards, Strategy Director at Affiliate Window, Helen Southgate, UK MD Affilinet and Owen Hewitson, Associate Director Acquisition from Starcom MediaVest Group.

2014 is fast approaching. Where do you think we will see the biggest changes over the next 12 months?

Helen Southgate (HS): I’m not sure we’ll see any big changes as such, more a development and progression of the current channel. There will be some regulation areas to look out for though. The RMR comes into effect from 1st Jan meaning cashback cannot be used in the utility sector. The “cookies” legislation is still ongoing and is not likely to be resolved soon. The FCA will likely want to show their worth since taking over from the FSA so I wouldn’t be surprised if we see some potential impacts there in the financial sector. The IAB AMC is keeping tabs across all of these changes and will keep all relevant stakeholders updated.

Owen Hewitson (OH): The biggest challenge in our industry lies in how we represent ourselves. Collectively, affiliate marketers have been guilty of far too much naval gazing and talking to ourselves about ourselves. As a result we have taken our eye off the ball when it comes to how those outside of our channel see us, and where we fit in the multi-channel mix. The challenge for 2014 is to recognise this and reposition our industry as an acquisition-focused delivery mechanism. I offered my view on how we can do that earlier this year.

Kevin Edwards (KE): I would like to think we’ll see the industry working with third parties to crack the cross-device challenge if individual companies cannot do it themselves. We’re way past the tablet and handset tipping point and all research shows us consumers are interacting with multiple devices in order to purchase online. Without additional insight into what this journey looks like the affiliate channel, like any other digital channel, will effectively be working blind.

I’m sure individual companies must be assessing what they can do, so the challenge will be whether they innovate or they rely on piggy backing someone else’s technology to understand consumer behaviour.

The other change will be a further move towards granularity. The industry has been working to drill down and down into data, and we work reasonably effectively on a granular level, but more and more affiliates will recognise the power of their data and use this to build better client relationships - as well as to create additional complexity and sophistication in our understanding of the channel.

How have you seen mobile impact the channel and how do you expect this to evolve?

HS: I always find the question of mobile entertaining as mobile has affected us much the same as most other digital channels. I read a lot of reports in the industry about the growth of mobile and always wonder why we are surprised at this and why it is headline news. It’s a change of consumer behaviour that’s not limited to the affiliate channel, and one pioneered by the genius of Apple! Despite talking about it a lot and releasing lots of data, I don’t think that anyone in digital or the affiliate channel has totally embraced mobile, probably because it’s moving so fast.

If I think about my Christmas day at home the room will have 3 iphones, 3 ipads, 1 kindle, 1 Hudl and a smart TV. I think the industry has struggled to keep up with the rapid change and growth of technology in this sector, but when we do get it right it will be hugely valuable. It’s about getting the right message, to the right person, at the right time and in the right format. There are so many opportunities going forward which not just the affiliate industry needs to embrace but also the broader digital industry. Once they catch their breath that is!

OH: I think that some of the developments in mobile such as receipt scanning apps could help ease the introduction of many FMCG advertisers into industry where traditionally it’s not been clear what their place could be. Looking ahead, there are some interesting technological developments on the horizon that have immediate applicability to our industry. Apple’s iBeacon technology, which use Bluetooth Low Energy (BLE) to transmit or receive with an app to offer micro-location awareness may not be immediately applicable for publishers’ apps but provides a huge opportunity for app download campaigns as retailers start a land grab to get their apps on consumers’ devices.

But in the latter part of 2014 there will be one major new development that I foresee as revolutionising mobile: Glass. With Apple hardly innovating in mobile technology it’s only Google that has the capability to produce a game-changing device. I’m not convinced by any of the wariness around Glass and expect that its extraordinary features will outweigh concerns around looking stupid when wearing it. This time next year I expect that when we talk about ‘mobile’ we’ll mean much more than just phones and tablets.

KE: It can’t be understated how much of an impact mobile is having and will continue to have but few people have crystallised the opportunity well. I think we’re all confused by what we’re supposed to be focusing on and that lack of vision has led to a scatter gun approach with some companies throwing everything at mobile in the hope that some of it will hit the target.

For me the focus has always been about evolving e-commerce into m-commerce. It’s frustrating that we’re still talking about tracking as being a challenge: that a network can make a statement that 75% of their mobile sales track and pass it off as a positive news story is pretty damning when some clients are seeing one in three or one in four sales through handsets. Let’s not run before we can walk: app download campaigns, mobile wallets and Display are all well and good but if we’re haemorrhaging revenue that should, by right, be ours, then we’re doing a pretty poor job.

I want 2014 to be the year when we stop talking about the ‘tracking challenge’ and we start talking about clearly defined mobile opportunities for both existing and new affiliates.

What has been the biggest development in 2013 for you?

HS: Personally, the growth of the UK business at affilinet. We have had a very strong year despite a slow summer period for online which has been mitigated with a strong end to year. The UK market is really dominated by one affiliate network but I think there is room for a quality network, with excellent people looking to deliver top class affiliate marketing; and this is what I intend to do.

OH: The publication of the IAB’s Online Performance Marketing Study was a major step forward in demonstrating the maturity of our industry. Whereas previously the best guess of the value of performance marketing was Econsultancy’s slightly finger-in-the-air guess, now we have a study that’s concrete, broad and properly-audited. That another is planned for publication in 2014 can only solidify the progress made by this year’s.

KE: From an Affiliate Window point of view it’s been the transformation in how we process data internally. The insights we have as a network now, compared to a year ago, have changed how we approach certain elements of the business and how we talk to clients. I think data should be about empowerment: unlocking the potential to make better business decisions. And as soon as you start to unlock one dataset, another presents itself to you.

On a more macro level, seeing how affiliate marketing is perceived in the UK by overseas affiliates and advertisers has been eye opening. We have an industry we should be very proud of and is hugely appealing. There’s great untapped potential there and we should all be working harder to bring it to these shores.

It goes without saying that Google continues to cast a long shadow and we know anecdotally some traditional affiliates continue to slip from the channel. The revenue is being replaced with new blood but it’s critical we try and ensure we support those who are struggling. This should be a USP for networks but I don’t think any of us are doing enough.

What have been your major frustrations of 2013?

HS: A lot of talk and little action. I’ve seen a lot happen in our industry over the years and our industry has definitely grown and professionalised, however I feel the industry has lost some of the entrepreneurial spirit that it used to have. I feel that some apathy has crept in at all levels of the industry from networks, to advertiser, to agency and to publisher. I hope we get some of that spark back as we need it to not only grow, but to fight to keep what we already have.

OH: Amongst budget-holders both client side and internally to organisations our industry seems to suffer from a confusion between the aim of activity and the channel through which it should be run. Very often a client request for a mobile acquisition campaign (for example, an app download campaign) will be funnelled to a mobile team or agency that will then typically run a display-based campaign. But the original requirement was to produce app downloads, which is an acquisition, the budget for which should therefore naturally sit in our channel. Likewise with email. A client’s request for an ‘email strategy’ should not be interpreted to mean simply that they want to send more emails. In most cases, there is an acquisition-based KPI behind such a request that is front-and-centre of a client’s mind as an aim, even if articulated with reference to a channel. We are better placed as an industry when we can put ourselves in a position to identify that need.

KE: Poor decisions based on perception rather than fact. This is nothing new but nothing irritates me more than the peddling of certain beliefs that are passed on as fact when little critical analysis has been done to prove or disprove them. I’m also not a fan of multi-attribution commission models and have seen a certain creep (still a trickle rather than a flood) towards them that worries me.

It’s also depressing that networks seem content to appeal to the lowest common denominator as a point of differentiation to win business: price. It commoditises a complex channel and makes us all poorer, with fewer resources to support what is still by far the best solution for most advertisers looking to run affiliate programmes.

What should brands be doing to get the most out of affiliate marketing in 2014?

HS: Working closely with their networks to understand the value of their affiliate channel throughout the customer journey. The channel is diverse and wide-reaching yet we focus too heavily on the short-tail of publishers. To have a truly sustainable and scalable programme naturally you need to focus on the short-tail, but nurturing a long-tail will drive awareness and actions and advertisers will reap the benefits.

OH: For me, the obvious answer is to focus on the post-sale story. Rather than getting bogged down in fruitless debates about cross-channel or multi-channel attribution that seek to weigh the contribution of each channel and apportion a budget on the basis of a perceived value from sitting in a certain part of the user’s path-to-purchase, we should look at what happens after the conversion. Or more precisely, what the customer referred via the affiliate actually looks like – their relative value to the advertiser against other channels, and against other affiliates, in terms of metrics that would indicate this value. This is incredibly simple to do, requires no technological trickery and does not necessarily mean interrogating huge amounts of data.

Whether the affiliate channel produces customers with higher spend than other channels can be ascertained simply by looking at AOVs; whether affiliate-referred customers are more loyal can be demonstrated simply by looking at churn/retention rates. Advertisers that have done this have generally a very positive story to tell about the affiliate channel, a fact I have argued for earlier this year and which I believe we should seek to emphasise in case studies and media packs in 2014.

KE: Challenge your network on your data. Think of all the parameters you collect when storing affiliate sales and how these can be linked to provide better insights. It goes without saying that not all affiliate traffic is equal but this understanding needs to work across the whole purchase cycle from initial interaction to longer term customer value. A network typically only captures a certain segment of that data so when brands challenge them on making informed decisions, appreciate the limitation of what they have access to in order to do so. If you don’t have the ability to challenge that data, give it to your network who might be able to do it for you.

Get stuck in and allocate more resource to it: don’t judge purely on pricing and challenge your network on who your affiliates are, where their traffic is coming from and how you can work better with them.

The basics haven’t changed over the year: there remain few shortcuts, but if it’s not already, try and make 2014 the year your programme turned intelligent.