Affiliate marketing is on the rise amongst retailers in Australia, with three in five indicating they have increased their spend on the digital channel in the past year, and the same number saying they will continue to do so next year. 

The findings come from the Australian Affiliate Marketing Benchmarking Survey, released by dgmAustralia last week.

The report examines the current engagement and intentions of Australian companies utlilising affiliate marketing, as well as revealing marked differences in usage and approaches across the market.

What is affiliate marketing?

For the uninitiated, affiliate marketing is a type of performance based marketing in which a business rewards one or more affiliates for each visitor or customer that is brought to their site by the affiliate’s own marketing efforts.  

Results can be measured in a few ways: by a sale that comes about after a visit from the affiliate’s site (cost-per-sale), a lead where a customer might visit the page from the affiliate’s site and leave their contact details or subscribe to a newsletter (pay-per-lead) or simply a click that comes off the back of the affiliate’s page (pay-per-click). 

Who’s using it

Eighty-one percent of respondents are currently using affiliate marketing but the report found retail and finance sectors to be the biggest users, with 82% of finance and 76% of retailers currently using the channel. 

Finance also allocates the largest proportion of their budget towards affiliate marketing, with 52% spending upwards of $26,000 per month and 64% dedicating at least 10% of their spend towards this channel. In comparison, only 40% of retailers spend upwards of $26,000 a months on affiliate operations and only 46% dedicate 10% of their online marketing budgets to the channel. 

Retail was the sector with the least experience in affiliate marketing, with almost half of the respondents using the channel for fewer than three years, but despite this, John Matthews, general manager at dgmAustralia, said retail is the space to watch.

Retail is one sector where there is enormous scope for growth. It’s possible a shift in attitude towards capping budgets and treating it like a sales channel with help retailers connect with the unique benefits of affiliate marketing. 

Retailers are also using a wide range of affiliate marketing techniques to achieve their results, including comparison sites, content, coupons, loyalty and rewards programs, cash back and brand bidding PPC.

Australia is still in infancy

Affiliate marketing is still clearly in its infancy in Australia, with 76% of those surveyed saying they had only begun using the channel in the past five years.

When Australian retailers are compared to foreign competitors they also fall drastically behind with only 4% of our top 25 retailers currently using affiliate marketing. This is in direct comparison to the US and UK where 100% of the top retailers are using this channel.  

But one of the reasons for our lag could be the fact that only 1 in 5 media agency CEO’s are confident in their knowledge of what exactly affiliate marketing is, and only 1 in 10 direct client CEO’s believe they have excellent knowledge.

Respondents suggest the solution to this is simply better education, especially around defining affiliate marketing as a channel and more importantly, how it can help businesses increase their audience reach and annual revenue.

[Image credit: Libelul]