Affiliate marketing experiences dramatic growth

Affiliate marketing is experiencing dramatic growth in the UK, according to figures out today from E-consultancy1. The findings are echoed by the UK’s largest independent affiliate network, buy.at, which has seen turnover increase by seventy per cent.

Kevin Cornils, CEO of buy.at explains, ‘Performance marketing has grown as marketers increase their knowledge of new marketing channels and demand greater efficiencies from their online activity. Search engine marketing has arguably reached its peak but affiliate marketing is still in a high-growth phase with 78 per cent of merchants planning to increase their spend. Merchants and their agencies are gaining expertise and becoming increasingly strategic in their use of the affiliate channel. We have seen investment increase by approximately 70 per cent on our network over the past year with brands such as John Lewis, M&S, Egg, Virgin Media and British Telecom adopting our innovative technology, such as dynamic product feeds to affiliates, combining different affiliate segments to maximise CPA and improving their tracking and analysis of the results. This represents a huge opportunity for both affiliates and marketers that understand the channel and appreciate the benefits of true pay-for-performance advertising.’

Today’s report from E-consultancy follows research sponsored by buy.at2 which discovered that 78 per cent of merchants had increased their spend on affiliate marketing between September 2005 and September 2007 and the same percentage planned to increase it further in the next two years. 75 per cent of gaming companies said they had increased spend since 2005 followed by 71 per cent of travel companies, 68 per cent of financial services companies, 64 per cent of telcoes and 62 per cent of retailers.

85 per cent of the UK agencies surveyed by E-consultancy3 confirmed that they now manage more affiliate marketing for clients than they did two years ago with the channel representing 20 per cent of turnover. 92 per cent of agencies expected to be managing more affiliate marketing in two years’ time, and 90 per cent of them see affiliate marketing is a way of growing their agency or differentiating it.

One reason for growth is because the channel is the most cost-effective channel for driving customer acquisition. The research2 found that 95% of UK advertisers (merchants) said that it is ‘very cost-effective’ or ‘quite cost-effective’ for acquiring customers. Paid search was seen as the second most cost-effective followed by email marketing with these marketing channels viewed as ‘very cost-effective’ or ‘quite cost-effective’ by 90% and 82% of merchants respectively.

Affiliate marketing was also revealed as a highly effective channel for driving volume with three quarters of respondents (73%) saying that it drove either ‘high volume’ or ‘medium volume’. The travel industry was found to be making the most successful use of affiliate marketing.

A total of 239 UK merchants completed the survey in September 2007. Half of the respondents who were aware of their company’s turnover said it was in excess of £50 million per year. 100 agencies completed the Affiliate Marketing Agency Survey.

Kevin Cornils, CEO of buy.at concludes, ‘Affiliate marketing has proved itself as a particularly cost-effective way to drive a volume of customer acquisition which has resulted in increased investment in the channel. We have had a particularly successful year at buy.at with new customer wins including Match.com, dial-a-phone, Seatwave, O2 and BT. We have also developed new partnerships with Atlas and Doubleclick, launched new technology, acquired a lead generation company, recruited industry experts such as Louise Green from OMG and expanded our network into the US. We expect this growth to continue even faster in 2008 as technology and account management become more sophisticated and affiliate marketing becomes an increasingly strategic marketing channel for UK businesses.’

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