Affiliate Marketing Blog - a Traffic Junction Blog

According to the annoual Affiliate Marketing Buyer’s Guide from e-Consultancy, the affiliate marketing industry in the UK generated more than £3 billion in sales last year. The industry is reported to have grown by about 45% . The commisions and fees paid out by merchants [to networks and affiliates] also grew 40% in 2007 to about £186 million compared to £133 million in 2006. Effectively, the commisions and fees account for a little over 6% of sales generated by the affiliate channel.

Four vertical segments drive the affiliate marketing channel- financial services, retail, telecoms and mobile phones and travel. Hardly surprising, since these are among the most active verticals where e-commerce is quite common. One of the trends noticed in 2007 that the report points out is that cashback and reward sites have tended to be more effective for affiliate marketers compared to “paid search” affiliates.

The growth in affiliate marketing is in line with the growth overall in e-commerce in the UK. Online sales in 2007 were over £46 billion, a whopping 54% more than in 2006, according to stats from IMRG. If we were to look at these two sets of stats which have come from different sources and put the two together, it looks like the affiliate channel is still a very small piece of the online sales pie. Question is, can affiliate marketing begin to take a bigger share?

I saw another news report that is already projecting another 50% growth in online sales in the UK next Christmas. Too early to make such a forecast, isn’t it? While I’d love for that to be the case, I prefer to be conservative for 2008. There are a bit too many dark clouds looming over the global economy this year to be overly bullish at this time….

Looks like the quest for the perfect paid search marketing optimization tool [I’ve conscioulsy chosen to use something broader than a bid management tool] is still going on, by the number of players coming up with such tools. Even as Google’s conversion optimizer got out of beta in the past few days, TradeDoubler has announced its own search management tool, td Searchware 4. The product is an evolution of BidBuddy which was a key offering from The Technology Works that TradeDoubler had acquired mid-last year.

Excerpts from company press release about the tool here

The new, market-influenced features of td Searchware 4 include: instant access to key information; navigation to most functions within two to three clicks; an end-to-end editorial process enabling more time to be spent on creative optimisation and analysis; enhanced reporting which provides key information on the customer journey for use when optimising campaigns; and a new Strategy Groups feature allowing the optimisation of key terms regardless of where they sit in engine account structure.

The new Strategy Groups functionality in td Searchware 4 enables users to fine-tune their search campaigns to achieve a higher return. Historically, users have been unable to group or isolate priority keywords in order to apply strategies targeting a particular metric. The Strategy Groups feature will allow users to apply such targeted approaches by identifying and grouping collections of keywords from any number of campaigns.
Perhaps more significant is the company’s move into Asia with the launch of TD Technology in Japan. The company has already made a couple of senior level appointments to kickstart activity in the Japanese market, which is one of Asia’s largest and most developed/advanced in terms of Internet usage and online marketing. No less significant is that Japan is the home of Rakuten, the parent company of Linkshare. Looks like more than an interesting coincidence that just as Rakuten/Linkshare is making aggressive forays into European/UK market, TradeDoubler is moving East…..

Leading up to the holiday season, there were a couple of announcements from the affiliate networks that might be of interest to the community.

First up, LinkShare reported a successful completion of its first year in the UK market, having signed up about 40 advertisers, 25 of which are exclusive relationships. The new advertisers include names like Net-A-Porter, Laura Ashley, House of Fraser and Gold Smiths in the retail segment besides properties such as Kayak and Radisson in the travel segment.

40 may not be a huge number, but it is a good start nonetheless; the coming year will most likely see a lot more activity from Linkshare as it makes its aggressive push to penetrate the UK & European market.

Meanwhile, homegrown affiliate network — and one of the first in the UK, in fact– dgm has completed a management buyout (MBO) from the parent company Deal Group Media plc. The buyout was effected by the current Chairman and the CTO of Deal Group Media plc., with the latter continuing to remain a shareholder in the affiliate network. With this buyout, the new entity dgm UK is likely to focus on expanding its affiliate business in the UK and Europe, while the parent company will focus on developing newer markets such as those in the Far East, as reported in the Netimperative article.

Both of these announcements further point to the potential of the European online advertising/ pay-for-performance market. With some dark economic clouds hovering over the US the consequent doubts on growth in the short term, the big players will only be too keen to tap into the European opportunity.