Internet sales are soaring in the UK despite fears of a High Street recession
Internet sales are soaring in the UK despite fears of a High Street recession. The total internet spend this year was £26.5bn, up 38% on the same period last year, according to e-commerce group IMRG
and consultancy Capgemini. The ad spend in the UK at the same time reached a total of £2.8bn.
Affiliate Marketing was responsible for a considerable amount of the total online consumer spending but the main concern I feel is that there is too much emphasis on the short tail position and insufficient investment in the long tail strategies. PPC ad spend is up yet the number of organic growth affiliates does not seem to be increasing. It seems as if there is a distinct lack of new affiliates getting involved in affiliate marketing.
I believe this can be answered in two ways. First many affiliates have significantly ramped up their commercial expertise and are far more professional than years ago. Many affiliates have successful companies and are geared towards intensive marketing of a specific merchant, product or service as a campaign. Secondly the demands of merchants generally answerable to their shareholders creates an expectant demand for immediate returns.
What does this do for the organic growth seen in the past? I feel that organic affiliate marketing is now seen as more difficult by affiliates under continual pressure to deliver sales to a merchant and that many affiliates who would at one time have taken an almost emotional bonding with their creation of websites, now face the stark reality that performance is the overriding goal in a highly competitive market. Is this detrimental to affiliate marketing in general? Certainly from a perspective of traditional marketing online, it has forced many affiliates to either move into paid search and compete with the others already in that sector or to look at ways of retaining customer returns by updating creative and content more frequently. I believe that by the emphasis on the short tail, affiliate marketing is deterring potential affiliates to an extent.
Two for the Money With a definitive shortage of affiliates capable of delivering instant returns for eager merchants, affiliate marketing is entering an interesting phase. Now affiliates capable of delivering quickly can pick and choose whom they shall promote and it is not uncommon for affiliates to operate a rota or schedule specific promotions as and when they are available to do so. Yet what does this do for the brand? How does this help the small merchant?
Certainly the larger merchants can rely on intensive short term campaigns from a select number of affiliates and the short tail returns are maintained. However smaller merchants have to generally accept a longer approach. Affiliates like to see that a merchant can perform without relying on affiliate marketing. Conversion is one of these factors. This is where a good reputable agency can come into its own. By offering advice and support and by steering a smaller merchant to build their brand, an agency can significantly and positively impact on the long term fortunes for a small company. A small merchant starting out needs brand awareness and organic affiliates certainly play a significant role in customer awareness and recognition.
Is this causing a two tier approach within affiliate marketing? Certainly the high performing affiliates will still look at smaller merchants and in many cases can ramp up sales quickly if the product is just right. However it has to be something special to tear them away from the demands of the larger merchants. Smaller affiliates without the ad spend either concentrate on just a handful of products or trust in organic longer term promotional activity. It is the demands by merchants to see almost immediate returns which I suggest discourages smaller affiliates from either expanding or even starting in the first place.
I would like to see more people become affiliates. However in such an intense market place, has the market got room for small affiliates to start up at all? The industry has become so professional it is almost unrecognisable compared to a decade ago. Surely now that we have a professional affiliate organisation there should be more done to offer support to people wishing to become involved in affiliate marketing. Without affiliates, merchants will not get the returns they expect and with the demands of instant performance, there seems to be little being done to nurture the next generation of affiliate marketers.
Article by John Gilbert-Jupp
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Comments
Hi John
Great article in which you know we both share the same opinion about affiliates, firstly the volume of fresh blood coming into this industry (we will have a better idea of numbers re the affiliate census), I also share the concern that some affiliates are not looking at the long term. One major difference between US affiliate marketing and UK affiliate marketing is the fact that because of the sheer size of the US, the % of US content rich affiliates is still relatively in balance pitted against ppc affiliates and coupon sites. In other words, even though PPC is still one of the main sales generators, there is still volume of content affiliates for long tail and because of the sheer volume of affiliates they can absorb coupon sites, in essence, there is a good balance across all the different types of affiliates. The UK by contrast is a lot smaller, perhaps this is where in the problem lies? The balance is not there in terms of volume of content rich revenue driving affiliates. In some cases the 90/10 percent rule, where 10% of the affiliates generate 90% of the sales, of this 10% and half of that are paid search affiliates, ok that example is not representative across the board but it’s not unheard of either. If new blood does not come into the industry en mass over the next year or so, we may well see the day where 5% of the affiliates generate 95% of the sales, then 3% and the question on merchants lips will be, why do we have an affiliate program? The writing has been on the wall for some time now and perhaps its time for this industry to sit down, collectively and we all take responsibility in getting new affiliates through the door. How ever, as John Lamerton points out http://www.lammo.net/affiliate-marketing/157/what-happened-to-all-the-affiliates
Will financial directors release budget for recruitment and education for affiliates? Should this even be affiliate network lead? Why don’t affiliate networks promote their own affiliate program, why don’t they have budget for recruitment of affiliates? Is John right when he says, that Fd’s wont want to pay out just so they can educate newbie’s to go off and join competitor affiliate networks? Is the industry relying too much on organic growth of new blood? All food for thought, nice article John G-J.
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