Affiliate Marketing Blog - a Traffic Junction Blog

eMarketer has released its UK Internet: Users and usage report that shows some very positive numbers for businesses that can benefit from people going online. Highlights include:

• Last year, about 37 million people or roughly 60% of the population went online in a month; this figure is expected to rise to about 42.8 million (roughly 70%) of the population by 2011.
• Online sales in the UK will almost triple to reach about GBP 84 billion by 2011 from about GBP 30 billion in 2006.
• Almost 40% of online sales in Western Europe will come from the UK; while UK’s share of the overall online sales will continue to drop over the next few years as e-commerce takes off in other parts of Europe, it will continue to be the leader in online sales for some time to come.
• Books, grocery and travel are probably the three biggest categories that shoppers spend their money on (at least based on the top online shops they are seen to visit).
• The average spend per e-buyer is likely to be close to GBP2000 this year, which is a 20% growth compared to 2007. This figure should be exciting to affiliates who are more likely to be interested in the near-term possibilities.
  Of course, as I said in a recent post related to the projections for affiliate marketing from e-consultancy, I would be a bit wary of being too optimistic this year.

Interestingly, the eMarketer report points out that online shoppers seem to be very satisified with their online buying experiences. Security also seems to be less of an issue. Both of these contradict most other studies that have come out in recent times, related to security of online transactions and the satisfaction levels of online buyers.

What does that mean? Your answer is as good as mine..

Despite the continuous and often unbelievable growth rates experienced by the online retail sector in the UK, it continues to face threats from online fraud. Cybersource has released its Fourth Annual UK Online Fraud Report, based on a survey of about 165 UK merchants of varying sizes.

The report says that merchants are having to invest heavily to ward off the threat of online fraud, with annual expenditure in the vicinity of GBP160,000 for mid-sized companies! The main issue seems to be the lack of a coherent effeort to tackle this problem. Currently, the responsibility for overcoming the problem seems to rest with the retailers, ISPs and card schemes, with very little proactive assistance from the regulators or the police. The need for a single, independent body to track organized fraud and handle it appropriately is very obvious; question is when and if it would happen.

As affiliates are mainly dependent on successful online transactions, anything that impedes e-commerce is an issue. The last thing affiliates need is a lack of confidence or doubts amongst online shoppers about security of their credit card information; unfortunately there is very ittle in their control to prevent or reduce these fraudulent activities.

Amidst all the excitement about booming online shopping in the US following Thanksgiving [Black Friday & CyberMonday], Yahoo Stores’ outage for almost the entire day on CyberMonday (about 12-14 hours, depending on who you hear the news from) generated quite some news.

Yahoo was left with a lot of ill-will from the tens of thousands of merchants that were affected at the worst possible time as far as these retailers were concerned and considerably negative PR, not just for the outage but also the manner in which the entire episode was handled.I believe that the outage may not have affected affiliate marketers significantly, though some of these merchants have been running their own affiliate programs. Yet, it is a good enough reminder/ warning for affiliates that send traffic to merchant sites to be fully aware of what is happening on their merchant sites, detect anything undesirable and take appropriate action accordingly. If it can happen to the best of Internet companies with top-notch infrastructure, and fairly robust systems and processes, the probability of something like this happening to other merchants that may not have capabilities anywhere close to that Yahoo possesses is only greater.

More often than not, instances such as these are exceptions over which an affiliate has very little control. However, precautions can and must be taken– the least of which would be to monitor the merchant site regularly and watch one’s conversion rates. While conversions can drop due to any number of reasons, at least the number should trigger some alarm for a closer look.

Another thought that occurs to me is: what kind of performance guarantees can merchants offer their affiliates? What kind of compensation can they offer to affiliates if the site falls below a certain performance level. Definining these key performance indicators and benchmarks may not be easy, but the merchants could certainly consider compensating affiliates for potential loss of commissions proportional to their past traffic volumes and conversion rates? There may be other fool-proof solutions available, which I’d be interested to know about. The idea is to have a fair mechanism that will ensure that affiliates who incur significant costs to drive traffic to merchant sites do not end up paying a heavy price for no fault of theirs.

Of course, the easy option for affiliates would be to move on to another merchant whose website is not facing problems, but my suggestion is in the spirit of building checks and balances and an environment in which both the merchants and affiliates feel the stake in ensuring success of their affiliate marketing program.

Internet Retailer reports that Wal-Mart.com’s site-to-store service is successful in attracting new customers, with more than 50% of those using the service being first time buyers on the site. This service, which is akin to online ordering for a ‘food takeaway service’, allows shoppers to order online and pick up the items ordered from their nearest Wal-Mart store. It’s a simple concept and is even entirely new, but has made quite an impact for the company [by cutting down on transportation/distribution costs and riding on consumers’ tendency to buy more when they are at the store] as well as to consumers [who save on shipping costs].

Excerpts on how the service has benefited everyone concerned from the article:

Shoppers who have used the Site to Store service often buy additional items when arriving at a store for pickup of the online order. Since the service was launched, Wal-Mart has seen as 20% increase in the number of Site to Store customers who spend an additional $60 or more on in-store purchases, the retailer says.

The service has saved Walmart.com customers $5 million in shipping fees for more than 500,000 products shipped since the service started, Wal-Mart says. By consolidating shipments of online orders to stores instead of to consumers’ addresses, the service has also provided Wal-Mart with more efficient transportation and packaging operations, saving the retailer 1,000 gallons of gasoline each week and 20,000 packing boxes each month, it adds.

I wasn’t really thinking about affiliate marketing when I decided to write this post, but there may be some benefit to affiliates too, with its success in attracting NEW customers. I actually wrote this because I felt there’s a simple lesson for any business- online or offline: there are numerous opportunities and ways business/ sales/ operations can be optimized/ maximized, if we were to only look deeply enough. There is ALMOST ALWAYS a different, new and better way of doing things that can yield better returns at a much lower incremental cost. Can you spot it?

A new ad marketplace, AdJug, which enables advertisers and publishers to buy and sell ads directly has been launched with aspirations to be the leading ad marketplace in the UK. The platform will allow for sales of both text and display advertising on CPC and CPM basis. More details about how the network works.
Based on a quick review, i get the impression that it is a combination of a service like AdBrite and Google’s Site Targeting for Adwords, wherein advertisers can choose what sites their ads can appear and define the amounts they are willing to pay.

As I see it, the key challenges for any new network/market place of this kind are: differentiation and the value addition to the online advertising process; a critical mass of advertisers and publishers to ensure that there is sufficient ‘trading’ for everyone to benefit. On a disappointing note, the site did not offer a lot on both of these counts. For example, when I searched the marketplace to check the kind of publishers participating, I did not find any publisher for most categories. It doesn’t look like the marketplace has been able to build a good mass of publishers for the launch phase.

However, the site is founded by people with strong background in online advertising and marketing- so hopefully they willl get it right.

Not for the first time, we are hearing of results of a survey that higlights the lack of adquate attention to customer service amongst online retailers. Whether it be lack of prompt response to e-mail or telephonic calls from customers or prospects, impersonal / indifferent communication with customers, the complaints always remain the same. Is it that online retailers have become too complacent and indifferent considering the continuous boom in e-commerce? One would think that in an era of ‘activist’ users, user-generated content, viral / word-of-mouth marketing and online reputation management, companies would be more cautious and diligent about raising their levels of customer service. At least on the surface, the consequences of not doing so would seem disastrous.

As an affiliate, such a situation is worrying. Merchants are extremely alert and quick (rightfully so, I might add) to monitor the performance of affilaites– the traffic and the results they generate as well as the methods they employ to achieve the results they do. They would be a lot better off if they could spend a little bit more time on setting their house in order and improving the things only they can control– such as ensuring their website is fully functional, the content is informative and the quality of customer service is great. Affiliates don’t control these aspects other than passing on this feedback to the concerned merchant. The only other option an affiliate has is to walk out on the merchant; but if you are a large affiliate publisher with an established user base, you may be doing your own reputation some serous damage and risk alienating customers. Betterl not to get into a relationship with a such a merchant beforehand rather than let your users educate you.

On the topic of complacence amongst online retailers, they might better be forewarned — for the first time, seems that entertainment sites in the UK are attracting more traffic than online shopping sites. Hopefully, this was an aberration and that online shopping would be back to its rising best sooner rather than later, but retailers should ignore any of these exceptions at their own peril.

I know it is the era of social networking, community participation and user generated content…while I quite like the democratic nature of the web with active involvement of everyone concerned, I can’t help but be apprehensive of certain aspects. These are not new issues by any means; nor do I have any ready solution to the same [which is the unfortunate part], but I had to write these down anyway.

A new study commissioned by American Express and reported on Netimperative states that Brits are increasingly swayed by online reviews. In a nutshell, it seems that almost half of those who researched hotels online did not book a particular hotel because of a negative review. The question is, how legitimate is that kind of influence?

The same article points to a small proportion of users who actually bother to write these reviews– which potentially skews the reviews all the more. There are two distinct groups that have a vested interest in manipulating such reviews and opinions: marketers who would like to get a favorable opinion out and competitors who’d like to use such ‘user generated content’ to their own advantage. Can the end user who is being swayed by these opinions really be sure that they are not being manipulated?

I just hope there will be greater checks and balances that will enhance the credibility of these reviews/ratings so that they really serve the purpose they were designed for.

A couple of weeks ago, Google Checkout made its anticipated launch in the UK. A good discussion thread evaluating the pros and cons of this to merchants, affiliate networks and affiliates is here. From an affiliate perspective, as long as there aren’t any issues with their affiliate tracking ids being incorporated, it shouldn’t impact them negatively. Having said that, I don’t find any reason to get overly excited by the news either, as I haven’t really heard much about Google Checkout contributing to a direct increase in sales for merchants. Many of Google’s offerings have taken considerable time to mature- so we’ll have to wait and watch how this one pans out.

In an unrelated news, Yell.com, has introduced an affiliate program. From what has been described in their press release, the affiliate program still seems to be a work in progress. It looks very much like Google’s “AdSense for Search” program— affiliate publishers place the Yell.com branded search boxes on their websites and get credit for users submitting search queries, which are displayed on Yell.com (of course, they do mention that there are other custom / tailor-made programmes available). The main difference is the option for a fixed monthly fee offered to publishers (like traditional online advertising) instead of just an action-based rewards program (like typical affiliate programs). It’s good to see different models emerging/ raising its head every now then and stir the affiliate marketing pot.

Another trend I expect to see now is a change in the format used for creatives —- I’d have expected to see audio/video in the creative mix. There are some interesting developments happening in this area, but more of it later. However, even if merchants/ networks haven’t gotten used to incorporating these formats in their creative mix, there is nothing stopping affiliates from using those..

“The 2007 Search Attitudes Report, commissioned by search marketing firm Tamar, indicates that consumers lack trust in paid search and are turning overwhelmingly to natural search results when making purchase decisions.
2007 Search Attitudes Report,” says a report on Netimperative (emphasis mine).

If that were indeed the case, how does one explain the continuing growth of paid search? It is fairly obvious that more advertisers seem to be channeling money into paid search now more than ever, and this trend cannot be out of sync with the search user’s behaviour. Such a statement makes me sceptical and distrust the study that is being reported; particularly since we rely on paid search marketing to a great extent for our own business.

Two aspects of the study might still be of interest to affiliate marketers: (a) consumers depend natural search results more — I think this is more due to where/ how the results appear rather than any distrust in paid search results and (b) consumers are influenced by negative views appearing in search results.

For a), the obvious action for affiliates is to put more effort in getting organic search traffic; but that decision depends on the affiliates’ overall marketing strategy and priorities. For far too many affiliates, depending on the search engine’s algorithms to drive traffic may be too much of a long wait. Also, being used to absolutely measurable results, many affiliates do not like the “cost of uncertainty” associated with organic search traffic and choose to ignore this option altogether (despite the knowledge that SEO will have “long-term” benefits).

Affiliates as agents of online reputation management

There is an indirect (”rather convoluted) benefit of affiliates doing more with their SEO efforts—- assuming the affiliate sites do begin to get visibilty, they are decreasing the probability of customers getting influenced by the “negative publicty”. In fact, committed affiliates are potentially a powerful tool for a merchant’s “online reputation management”, which is certainly not easy to control. While merchants will have to focus on their end-users to ensure a great reputation, affiliates have a part to play in building and projecting that reputation— be it by creating excellent content, generating their own “user-generated” content or using techinques like blogging.

2006 was a bumper year for UKonline advertising, surging by over 41% from the previous year, according to data released by the UK Internet Advertising Bureau. The internet now accounts for over 11% of all ad spend in the UK.

Some of the key details from the report are excerpted below:
“The results reveal that expenditure on the internet overtook advertising in national newspapers, which last year recorded growth of 0.2% to £1.9 billion and a market share of 10.9%. In 2006, the internet was just over half the size of the TV advertising market, which experienced a fall of 4.7% to £3.9 billion.

In 2006, online display advertising (including banners, skyscrapers and online sponsorships) rose 35% year-on-year to £453.7 million.

Traditional advertising formats, such as banners, were reinvigorated by an increase in the use of rich media, which includes graphics, audio, video or animation. Once again online display advertising is experiencing growth far greater than any other display medium.

The growth of paid-for search (sponsored listings that advertisers pay for when a consumer clicks through to their site) was sustained, increasing by 52% to £1.2 billion of total online ad spend or a 57.8% share.

Online classified advertising was also up 45% to £379 million, a share of 18.8%. This is in contrast to traditional press classified advertising, which experienced a significant decrease of 7.8% year-on-year. “

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The increase in online advertising spend can be correlated to the increasing penetration of broadband Internet in the country, with more than 50% of the country’s adult population now having access. According to a report on Netimperative, based on the Digitial Progress Report by Ofcom, “more than 13 million UK homes and small and medium-sized enterprises (SMEs) are now connected to broadband, compared with 9.9 million a year earlier and 330,000 in 2001. “

Both of the above news augur well for affiliate/ performance marketers who depend for the most part on online traffic for sustaining and growing their businesses.

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Meanwhile TradeDoubler, which has been in the news for various reasons, has had some changes in its top management. In the UK, the company has appointed Mike Glegg as its UK Sales Director to “to drive new business across multiple programmes, to further expand the UK sales team, and to build on TradeDoubler’s UK achievements to date, which have seen the company ranked as the 24^th fastest growing digital media company in the UK* with an impressive 284% revenue growth over two years.” This follows William Cooper taking over as President and CEO of the company towards the end of last month.