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One of the key trends identified in our just-published 2006 Affiliate Marketing Buyer's Guide is the way that affiliates have raised their game to match increasingly sophisticated approaches by both merchants and affiliate networks.
The world of affiliate marketing is changing, not least because of stiff competition for organic and paid search visibility, and Google initiatives which mean that affiliates aren't ranking as highly if there is no added value or if the user experience is poor.
The upshot of this is that affiliate publishers are needing to invest heavily to make their presence felt.
There is still room for the myriad of smaller affiliates out there but they will struggle unless they are in very niche areas and/or doing something a bit different with their websites.
Three of the best known affiliates - Vinny Lingham, Keith Budden and Duncan Jennings - were interviewed for our guide and their comments make interesting reading.
Duncan, of eConversions, talks about the move to "Affiliate 2.0" which comes with higher quality websites and "closed groups of approved affiliates providing complimentary PPC with performance targets and accountability".
The co-operation thing is pretty crucial here. A good example is merchants working with affiliate networks and publishers to get us much search page 'real estate' as possible.
The industry has made big strides in the last few months and we estimate that UK sales generated by this channel will amount to just under £2.2 billion in 2006.
As well as the so-called Super Affiliates, the networks are also thriving. There are 18 networks profiled in this year's buyer's guide which shows how much competition there is in this sector.
Other trends identified in our guide (available for download to subscribers) include:
- Affiliate marketing goes ‘mainstream’ as merchants embrace cost-efficient and low-risk channel.
- Networks seek to differentiate themselves through service and specialisation within increasingly competitive marketplace.
- Rise in number of merchants using affiliate marketing for lead generation and brand building activity.
- Wider adoption of hybrid payment models, with some publishers charging advertisers on a cost-per-click (CPC) basis and cost-per-mille (CPM) basis as well as cost per acquisition (CPA).