The affiliate channel has undergone immense change since its inception in the mid-1990s. The latest figures from the IMRG Capgemini e-Retail Sales Index revealed shoppers in the UK spent a total of £5.2 billion online in April 2010, 19% more than in April 2009 and equivalent to £84 per person.
The change in the way consumers are searching for and engaging with brands and products online is driving diversity throughout the affiliate channel with affiliates branching into new areas such as group buying and comparison shopping engines as well as making footsteps into social media and mobile.
As a result, the performance marketing channel has become more professional with affiliate networks and super affiliates investing in technology platforms and diversified with the emergence of micro affiliates catering for the longer tail specialised search terms of the web.
There has also been a longer-term shift towards online discounting, with consumers increasingly engaging with vouchers and discount offers. This has meant marketers need to ensure their products appear on sites that offer discounts and value for money. Recommendation sites are also becoming increasingly important for merchants. A recent survey by Havas Media Social and Lightspeed Research found that 53% of consumers were more likely to look up a brand if a friend had recommended it.
The boom in user-generated content and the power of recommendations has led to the emergence of micro-affiliates. This term describes the sites that form the web’s ‘long-tail’ of niche search product categories. Historically, the micro-affiliate stream was perceived as uneconomical in terms of the administrative burden in managing a huge number of tiny commissions. The tide is turning though as merchants begin to appreciate their ‘collective’ influence in driving click-through activity.
Indeed, merchants now recognise long-tail search terms as a huge opportunity to drive traffic back to their sites, generate buzz and spread messages virally. For example, an affiliate focused on long-tail search terms – e.g. ‘digital camera’ + ‘brand’ + ‘colour’ + ‘key features’ – will most likely see lower traffic volumes but a higher rate of conversion, whereas those bidding on generic search terms – e.g. ‘digital cameras’ – will drive higher traffic volumes but have a lower rate of conversion.
For affiliates, the change in consumers’ online behaviour means they have more ways in which to drive and monetise traffic. Organic or ‘natural search’ traffic via SEO remains one of their preferred methods, while Pay per click (PPC) is also popular.
Other widely-adopted models include loyalty and reward schemes, email marketing (affiliates that build their own data lists to target a merchant’s potential customers with newsletters or dedicated email campaigns), co-registration, voucher-code and group-buying affiliates. Notable examples include Nectar (loyalty and reward schemes), Groupon, Livingsocial and Dealster. Each affiliate stream results in a different quality and quantity of leads, which impacts on the incoming revenue they can generate.
What remains constant however is the affiliate’s aim to drive performance by bringing merchants closer to their visitors, and ensure the incremental revenue generated as a result is greater than the amount invested initially to build and promote the site. Based on this premise, selecting the merchant to partner with becomes a question of scale, efficiency and lowest cost for the affiliate.
On the flip side, this proliferation of streams within the affiliate channel makes it much harder for merchants to work successfully across them all. This is why development of rich product level data feeds and innovative tools for their creation, distribution and management are so important. High-quality data feeds allow merchants to create a single platform of distribution under which brand consistency and product visibility is maximised, while affiliates can more easily tailor rich product information (i.e. promotional text) into higher-converting consumer-facing content. The sooner affiliates and merchants can get to grips with how data feed technology can enable them to optimise theses new channels of online consumer engagement the more profitable they will become.
FusePump creates, manages and integrates product data feeds to maximise revenue from online marketing and e-commerce applications. High-quality data feeds increase product visibility and sales conversion for clients and enable consumers to find exactly what they’re searching for online. FusePump provides an end-to-end service meaning their technology doesn’t demand any technical knowledge or management time on the part of their clients. Visit: www.fusepump.com