4. Affiliate marketing now a £5bn industry in the UK Experienced 12% growth from 2009-2010 ? Accounts for 8% of all online sales in the UK +90% of programmes run via an affiliate network 10-15% of programmes are managed by an agency Vast majority of brands have large and mature programmes ‘True’ content affiliates are the most common, but incentivised traffic generates the most revenue 2004 2005 2006 2007 2008 2009 2010 2011
5. Keys to Success in the UK:1. Be prepared to treat publishers as brands
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7. Keys to Success in the UK:2. Awarding commission on value, not just volume
8. Type of product sold Retention rate Latency rate Customer persistency New or existing customer Sales volume Average order value
9. Keys to Success in the UK:3. Re-categorise your affiliates to mobilise the long tail
11. Keys to Success in the UK:4. Understand the customer’s path to purchase
12. Price Comparison Paid Search Voucher and Content sites Loyalty, reward and cashback Around 80% of affiliate sales are single interaction Loyalty, reward and cashback stand alone
Affiliate Window is the oldest network still operating in the UKPhysically the largest network in the UK – the most advertiser clients and staff, over a third of which are client-facing.£1.5bn/€1.74bn is the amount of online trade we tracked last year – this represents a third of all affiliate sales in the UKIn 2010 we joined the zanox family.
General introductory remarksGood programme management in France not dissimilar to that in UK. The same housekeeping points apply – approving affiliates, providing good range of creative, having competitive commissions, etc. So focus will be on particularities of the UK market: the practices and debates that are peculiar to the UK and that differentiate the UK market from the French.
First, an overview of the UK market – some key statistics, characteristics and trends.Affiliate marketing now a £5bn industry in the UK – this makes it the largest market in EuropeExperienced 12% growth rate from 2009-2010Accounts for 8% of all online sales in the UK – estimated that online sales accounted for £56bn in 2010The vast majority of programmes (90%+) run via a network – Digital Window comprises the two largest networks in the UKBetween 10-15% of programmes are managed by an agency – But amongst these a number of large accountsVast majority of brands have an affiliate programme and these are both large and mature – Few large brands launching campaigns now – at the stage of optimisationMost affiliates content-based but incentive-based traffic dominant revenue-drivers – UK consumers extremely deal-savvy. Rise of incentivised traffic has paralleled, or caused, this trend.
Understanding that some publishers are brands This is a list of the top 100 retail sites in the UK, as compiled by Experian. Not just advertisers – many publishers in this list as well (highlighted here). Indeed, many publishers are bigger than the brands they promote. Customer loyalty has also shifted from advertiser sites to publisher sites. It is habitual to shop through these brand publishers rather than the advertiser directly.This has produced a shift in the balance of power between advertisers and publishers. Rather than advertisers dictating to affiliates how they should promote, advertisers now compete amongst each other for exposure on these brand publisher sites.As such, advertisers starting to work in the UK should expect to organise their promotional activities around their key publishers. Be flexible with exclusive offers, and utilise different creative and messaging – co-branded banners, video content, etc. These are used in the UK but not yet widespread or refreshed often enough.
Value attribution An important difference you might find to the French market is that the UK does not generally implement different cookie hierarchies for different affiliate activity. Part of the reason is that it is only in the past year that the UK has begun working with behavioural re-targeters; display networks are generally speaking outside the affiliate channel. So commission settings are the main way in which advertisers attribute value to the sales that different affiliates are bringing them.There are a number of potential value metrics that advertisers may wish to look at when determining their commission rates. These will be different for each advertiser, but it means that advertisers can make a better assessment of the quality of the sales their publishers are bringing, rather than just on volume.
Some of these are displayed here. For example, for a high street chemist we track new and existing customer orders into different groups, as this advertiser wants to pay more for new customers than existing ones. These value metrics could change to take into account everything that sits around the click – e.g., traditionally ‘free’ branding element that affiliates contribute but are not directly remunerated for.For certain metrics we are dependent on the advertiser being able to pass us back certain data that only they can see after the sale has been received.
Affiliate categorisation Just as we advise UK advertisers to judge their publishers on the basis of value rather than volume, we also advise them to question the traditional methods of categorising their affiliates based on promotional method, and perhaps look to re-categorise their publisher base according to measures more relevant to them. Promotional methods are diversifying, blurring traditional methods of categorisation. UK advertisers think in terms of methods of promotion – but is it any longer serviceable to look at affiliates as cashback sites, content sites, email affiliates, etc? There is a recognition that the best affiliates – those that have build brands in their own right – do a bit of everything.
Long tail engagement Re-categorisation can also help you in your efforts to mobilise the long tail.This is how one advertiser in the UK has chosen to look at their affiliate programme. They are taking into account not just sales volume, on the Y axis here, but whether or not the affiliate is a good brand fit, on the X axis.The numbers in the orange here represent the number of publishers that fall into each quadrant.Advertisers can go further and decide what criteria represents a good brand fit. What might be good measurements of branding beyond the sale? E.g., bounce rates from affiliate traffic.
Understanding the customer’s path to purchase Another key to a successful UK programme is in understanding how your affiliates affect one another. All UK advertisers ask to what extent their publishers are contributing incremental sales, and this means studying the customer’s path to purchase.
So what does the typical customer journey look like? We find certain types of affiliates more likely to appear at certain points in this journey. A customer may start their journey with an idea of what they want, but not knowing what the best price is or where to buy it. Therefore we see price comparison and paid search providers sitting early on in the user’s journey.However, an important caveat - we in the Strategy team at Digital Window have studied the customer’s path to purchase within the affiliate channel and have found that the vast majority of transactions are single referrer – there is only one affiliate involved.We say that loyalty, reward and cashback affiliates are a channel in and of themselves because where there is an incentive-based affiliate involved (cashback, voucher code, etc) they are most likely to be overwritten by another affiliate using the same promotional method (another cashback or voucher code site, for example).
The UK market also has a number of pitfalls or risks that advertisers need to be aware of and decisions that have to be made on key areas of debate.
Legislation and Regulation Whilst the affiliate space in the UK is by no means heavily regulated, the IAB’s Affiliate Marketing Council is a proactive body and has introduced some important pieces of legislation, regulation and best practice. As advertisers you should be aware of these and your publishers should be compliant with them.Advocacy versus compliance The tension here is between: publishers who are able to represent your brand in a tone of voice that speaks to an audience you as an advertiser can’t reach (example of fashion blog); and the level of compliance you expect from your publishers, the control over what your publishers are saying about your brand. The key question to ask here is: are you happy with an affiliate introducing a customer to your brand?Plurality versus control I said earlier that the majority of brands in the UK have large and established programmes. Many of these programmes number hundreds, if not thousands of publishers. Only a small number are active in referring sales, and whilst mobilisation of the long tail is a key aim for them there is a debate around whether a plurality of publishers provides inherent risks, and whether this gives advertisers enough control over their programme. Are these numbers worth the resource needed to manage them?
Finally, the UK market is seeing a number of interesting new opportunities developing that publishers and advertisers are taking advantage of. I want to say something specifically about mobile, as this is one trend we are particularly excited about.We have seen mobile transactions through the Affiliate Window network – the largest network in the UK – grow from 1.3% of total network transactions in December last year to over 5% in August.I want to show you a case study from Debenhams, a high street department store in the UK, and an award-winning campaign they ran using mobile through the affiliate channel.Debenhams had 3 objectives. First, they wanted to be able to track the voucher codes used at an individual customer level, to see who had redeemed them. Second, they wanted to lower the amount that they were spending in offline advertising for these codes (for example, the printing costs). Third, they wanted to increase footfall, the actual number of people who were coming into their high street stores.Now the execution. They worked with Vouchercloud, a mobile geo-targeted voucher code affiliate. Vouchercloud boasts 1.5m downloads of its app so far; 2.5m vouchers downloaded since launch; and 1.4m redeemed.
If a customer was on the high street they would be able to launch the Vouchercloud app and get an exclusive 10% off. This was a single-use code, redeemed by staff at POS. This was then tracked back into Debenhams’ internal database and attributed to the affiliate channel, and to Vouchercloud as the affiliate. So they were able to close the loop so that the redemption was tracked in store, reported back to the Debenhams sales database, and then attributed to the affiliate channel.Now the results: Affiliates drove 43% of total sales in store and online. 57% were redeemed in-store rather than online, so a great way in which online customers can translate to offline. 70% of the new customers the campaign produced were driven through affiliates.
