Back in the day, as they say, affiliate marketing was all about affiliates creating microsites (before blogs were a thing) to sell a wide range of products for merchants. Today's landscape is, of course, far more complex and has many more players -- from agencies and OPMs to networks to all kinds of third-party entities bringing further sophistication to the segment -- not to mention the thousands of mainstream products finding success through the channel.
Affiliate marketing is no longer a tiny element of the marketing ecosystem. It's now a $4.2 billion-dollar business set to grow to $6.8 billion by 2020 with 80 percent of advertisers allocating 10 percent of their marketing budget to affiliate marketing. As for its increasing role in e-commerce, predictive analytics e-commerce firm Custora found affiliate marketing will affect 14 percent of all e-commerce purchases in the United States. Couple that with Forrester's prediction that 2016 U.S. e-commerce sales will hit $279 billion and you've got affiliate marketing affecting $39 billion in sales.
There's another element that is growing within the affiliate marketing space as well. Social networks and mainstream media are now both integral components of the affiliate marketing ecosystem. The growth of social networks gave rise to the social media influencer. These people, celebrity or otherwise, have built up huge followings on Twitter, Facebook, Instagram, Pinterest, Snapchat, and elsewhere and have become an important tool for merchants to leverage to move product.
According to MarketLive, social media increased its contribution to e-commerce referrals by 200 percent between Q1 2014 and Q1 2015. About 2 percent of all e-commerce traffic in the U.S. now stems from social networks such as Facebook, Pinterest, and Twitter. And according to Burt Media, consumer brands earned $11.33 for every $1 spent on influencer marketing programs in 2014, and apparel brands earned $10.48 for every $1 spent.
While social networks have grown, mainstream media (both offline and online) has struggled with declining revenue from traditional advertising models, ad blocking, and general fragmentation. But these challenges have forced publishers to seek out new and more effective revenue streams to stay afloat, and one such source is affiliate marketing.
The decline in revenue generated from traditional advertising led to the growth of native advertising and content marketing. That shift opened up huge opportunities for affiliate marketing-related activities. Content, always a staple in the affiliate landscape, is now at the forefront of every brand's marketing efforts. This shift from traditional online advertising to more of a content marketing approach has vastly expanded the possibilities for affiliate marketing-related solutions. Where there is marketing-focused content, there is opportunity to sell product, and where there is opportunity to sell product, there is room for affiliate marketing to make it happen.
As an example of the injection of affiliate marketing tactics into native advertising and content marketing, Gawker Media, according to Business Insider, generated $100 million in gross revenues, bringing in $10 million from its e-commerce operations in 2015. Much of that revenue came from Gawker's in-house native advertising group which, much like bloggers curating and sharing news items, curates retail and other deals and posts them as stories on Gawker. In those posts are Amazon affiliate links and Skimlinks.
According to a Business Insider report, Gawker's conversion rate ranges from 8 percent to 12 percent, much higher than the average 2 percent to 3 percent. In that same report, it was noted that Gawker ran an Amazon Prime promotion which netted 25,000 subscriptions for Amazon. Similarly, online publication Slate launched an e-commerce program that features a curated page of product listings connected to Amazon inventory.
According to Curata, 60 percent of companies now have executive-level personnel within their organization who focus on content marketing strategies, and 80 percent of B2B marketers have a content marketing strategy in place with 76 percent planning to increase investments in the area. With the increased focus on content as a form of revenue among brands and mainstream publishers, the future is bright for the growth of affiliate practices within this space. This, coupled with the explosive growth of social media, has resulted in a very bright future for everyone in the affiliate marketing space.