Affiliate Marketing - Merchant Survey Report 2007

[Tyson Pearcey]

Hi All,

E-consultancy has conducted a comprehensive survey into how merchants use affiliate marketing. The report was sponsored by the good people at buy.at, the survey reveals growth figures about the channel. The full report will be available on Wednesday 26th but here is the heads up. It does have buy.at and e-consultancy quotes peppered through it but that is because its via our press release.

The full Affiliate Marketing UK Merchants report will be available from E-consultancy free to subscribers and anyone who helped with the survey on 26th. We’ll have copies on the buy.at stand at ad:tech.

It would be great if you could add some of your initial thoughts to this thread as you're the main drives behind this sector and your feed back is needed.

Cheers
Tyson


Affiliate Marketing Growing Fast

78 per cent of brands set to increase their investment in affiliate marketing over the next 2 years
78 per cent have already increased their spend over the past two years
23% of UK marketers have more than doubled their investment since 2005
Research report by E-consultancy.com to be released on 26th September




Affiliate marketing is growing with strong opportunities for further growth according to research from E-consultancy. Sponsored by buy.at, the UK’s largest independent affiliate network, the survey, to be released next week, found that a resounding 78 per cent of respondents said they had increased their spend on affiliate marketing compared since 2005 and the same percentage said they plan to increase it further in the next two years. Nearly a quarter of those who are spending more in the channel say that they have doubled their spend in the channel in the past two years and a further one in 12 advertisers (merchants) had increased it by 200% more.



Two thirds of respondents said the number of sales generated by affiliate marketing has increased over the past two years. Furthermore, 40% of respondents have more people employed to manage their affiliate marketing activity compared with two years ago and half of those surveyed expect this team to grow over the next two years.



Linus Gregoriadis, Head of Research at E-consultancy, explains, ‘We believe this is the most comprehensive UK survey into how companies are using affiliate marketing. The findings reveal an industry that is still expanding rapidly, with further growth expected as merchants seek to get maximum returns from this channel.”



Kevin Cornils, CEO of buy.at adds, ‘As broadcast advertising has started to decline, performance marketing has emerged as the silver bullet of the marketing industry. Within that search marketing has reached its peak, but affiliate marketing is still in a high-growth phase. This represents a huge opportunity for both affiliates and marketers that understand the channel and appreciate the benefits of true pay-for-performance advertising.



Barriers to success

The survey highlights a consistent message that brand owners think they could still get more from their affiliate marketing activity with four out of five merchants saying ‘I wish I could get more out of this channel’ and 31% of merchants saying they wish they could get more out of the combination of affiliate segments they use. The biggest barrier to success however is considered a lack of internal resource with a third of merchants citing this as an issue. Problems with tracking are seen as a barrier by half the sample. A third of merchants surveyed agreed that spend in the channel is held back because they simply don’t know how much incremental volume it will deliver. Respondents also saw ‘difficulty attracting affiliates’ and ‘websites which don’t convert traffic very well’ as barriers. Only 13 percent of merchants say they have good communication with all their affiliates and a network’s relationship with its affiliate base is deemed the most important consideration when choosing a network with almost half the respondents ratings it ‘extremely important’.



Kevin Cornils, CEO of buy.at continues, ‘The research reveals huge potential for growth in the affiliate marketing and most of the ‘barriers’ to further success are easy to overcome by understanding what makes a programme attractive to affiliates, improving communication with them and using technology to service them better and ensure the sales they generate can be tracked and analysed properly. There is a need for more education in this market, but those that understand the channel and invest in it are doing very well. As a result, it is a buoyant time for the affiliate marketing industry.’



Evidence of the increased professionalism of the channel is borne out by respondents with 38 per cent of them saying ‘the affiliate marketing channel is becoming more mainstream and professional’ with half of the sample say, ‘it’s changing but there is still some way to go’



Vertical growth

68 per cent of marketers in the financial services sector said they had invested more in affiliate marketing with half of them more than doubling their spend in the channel in the past two years. 72 per cent of them plan to increase this over the next two years. 75 per cent of gaming companies have increased spend since 2005 along with 62% of retailers and 64 per cent of telecoms companies and 71 per cent of travel companies. Twenty per cent of telecoms merchants had at least doubled their spend on affiliate marketing as had over a third of travel companies, but charities, utilities and gaming merchants had all increased their spend by at least 100% over the past two years.



A total of 239 UK merchants, completed the survey in August and September this year, and 76 per cent of them were business which operate both on and offline. Half of the respondents who were aware of their company’s turnover said it was in excess of £50 million per year.



The full results of the research will be available on 26th September at ad:tech. Research reports are available to subscribers at E-consultancy.com: Internet Marketing Strategy | Training | Online Marketing Research and buy.at will have copies of the sample report at stand number 471.



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Research methodology
In September 2007, E-consultancy analysed over 700 responses to its research request, which was emailed to its database. Of these 239 were UK merchants, i.e. “working in the UK for a company which sells online through the affiliate channel”.