Find out why affiliate marketing has rapidly evolved and become a major force in the digital space.
When affiliate marketing was conceived over a decade ago, the premise was simple: this was a chance to market on a true performance basis, a channel where you would only pay for what you get and as closely aligned with the sales function as it was to the marketing function. However, this is only half of the story. The other half is in the word 'affiliates' which very much implies a connection between merchant and website publisher greater than a purely commercial arrangement.
So, that was what affiliate marketing was created to be, but the infancy of that vision didn't last very long. Soon a whole raft of affiliate business models sprung up as online marketing progressed, including SEO and PPC affiliates. Affiliate marketing became more about the payment structure than about affiliation in its truest sense. Remembering that CPA was radical at that point, perceptions were that it was too good to be true, that if you 'pay peanuts, you get monkeys' and to an extent, in some situations, that was true. The industry was not well regulated, there was a definite sense of learning on the job and a lot of marketers didn't know what it was at all.
This has led to now, where the burning issue in the U.K. affiliate marketing sector is the value of what you get. The major networks have made great strides to very quickly safeguard the value of the channel, putting regulatory measures in place and allowing transparency for their clients, however, 'does affiliate marketing bring incremental revenue' (or iterations thereof) is still a hot topic at online marketing conferences. Some marketers are still very dubious about some aspects of the channel.
At the same time as championing the industry, some networks, working in an extremely competitive market (particularly in the U.K.), have been guilty of over-selling to merchants. This has set some very unrealistic expectations amongst marketers hoping for miracles in a time of shrinking marketing budgets (rather similar to the expectations around social marketing). So what we are left with is polarised opinion amongst marketers. Affiliate marketing is as largely misunderstood as it was ten years ago, just in a different way.
Before we go any further as an industry we need to stop and take stock of where we are. A litmus test is required and finding where neutral is would be a good start. After that, we can start to talk about the finer details of balance (voucher code sites, in-house versus agency, etc) and complete the maturation process of affiliate marketing.
2010 should be the year to re-educate merchants accurately and honestly so that they know what to reasonably expect from the channel. Only then can they effectively form an integrated plan, which includes affiliate marketing. As it has always been for us, the focus across the board should be on long term as opposed to short term successes.
The encouraging news is that the increased focus on affiliate marketing due to the recession has already caused positive change. There are many merchants who are running pitch-perfect affiliate marketing programmes. As well as this the IAB's Affiliate Marketing Council is currently seeing an unprecedented level of activity and most of the networks are involved. So the learnings are there and this collaboration amongst all educated parties in the industry will be key to cementing the value of affiliate marketing in marketers' minds.
Alison Guise is U.K. managing director at Commission Junction and Mediaplex.