The annual report of the state of Affiliate Marketing in the UK, as conducted by E-consultancy in association with R.O. Eye has just been released.
The report is based on a survey of 150 agencies and 259 merchants and as such is aimed fair and square at this audience. However as a UK affiliate it also makes very interesting reading. Here are some of the key highlights as I see them:
1. Since the 2007 merchants’ survey, the average proportion of online marketing budget designated to affiliate marketing dropped from 18% to 14%, while the proportion of sales ascribed by merchants to affiliate activity has decreased from 16% in 2007 to 12% in 2008.
Not a good start, not only has budgets dropped in this sector but sales have too. Or maybe sales have dropped because budgets have been cut?
2. The proportion of merchant respondents saying that affiliate marketing drives high volume has decreased from 26% last year to 15% in 2008.
Wow, that’s a huge drop. It could maybe be attributed to people’s perception of what “high volume” actually means, but still, not a positive outlook at all.
3. The proportion of respondents saying that PPC drives high volume has decreased from 52.5% in 2007 to 44% this year, although it is still the biggest driver of volume.
To be honest this is probably a good thing. I among many other affiliates I know have branched out into other areas and actively tried to lower our dependence on PPC. By investing a tiny fraction of what I used to pay for PPC into content creation and link building I’m seeing some fantastic results.
4. Communication between merchants and affiliates has not improved since 2007. The proportion of merchants reporting good direct communication with all affiliates has fallen from 13% to 12%. The percentage of those with good direct communication with top-tier affiliates has also dropped, from 29% to 25%.
Not good. But merchants/agencies, why don’t you do something to address this?
The report authors sum my feelings up about these numbers very well. Here’s a direct quote from the report:
During a worsening economic downturn, it is surprising that less money is being invested in affiliate marketing when it is purely performance-based and therefore inherently low risk for merchants. Part of this decrease may also reflect the fact that companies are getting better at tracking their sales and deduplicating across different channels.
Whatever the reasons, these figures represent something of a wake-up call for the industry and highlight the importance of well-managed affiliate marketing campaigns in ensuring that the channel is driving incremental sales.
The good news for affiliate marketing is that merchants continue to regard it as a cost-effective channel for driving customer acquisition. Some 46% of merchant respondents now say that the channel is very cost-effective compared to 44% last year.
Great to see that 2% more of merchants think that the affiliate channel is cost-effective, but this still doesn’t ring true based on the above survey results.
Some more key facts and figures:
5. A third of merchants (34%) say that five or fewer affiliates are driving 80% of their affiliate sales or sign-ups. A further 23% say that between six and 10 affiliates account for 80% of sales.
We can take this to mean that 10 or less affiliates account for most sales (80% or more) of the merchants polled. Very interesting, and something which I have suspected for a long time now.
6. According to merchants, the most valuable affiliates – as a group - are SEO / content publishers, deemed to be driving a major contribution by 42%. This compares to 36% for paid search affiliates, 26% for loyalty / cashback sites, 20% for price comparison sites / aggregators, 17% for email affiliates and 10% for affinity sites.
Very good to see that merchants recognise content affiliates as more valuable than PPC affiliates.
You can get a copy of the report in full here. It makes for fascinating reading, as you can see from some of the highlights above.
What are your thoughts on the state of the Affiliate Marketing sector in 2008? Is it really as bad as the report suggests? Or are we just suffering from the economic downturn, the same as everybody else? Please share your opinions in the comments below.
What I’m listening to right now: Mario – “Applebottom”
Post from: Affiliate Marketing Blog Here.org.uk
Affiliate Marketing Report 2008 - not a great year for Affiliate Marketing
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Original post by Kieron