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Matt Bailey is chair of the IAB's affiliate marketing council and head of affiliates at i-level which was named best digital media agency at the a4uAwards earlier this year. He talked to us about the latest trends in affiliate marketing and why some well known networks might struggle.
The affiliate sector is still in rude health, driving more than £4 billion a year in UK online sales, according to our estimates. But do you think that the sector still has an image problem which is restricting investment in this channel?
I don’t think it’s an image problem so much as a lack of understanding amongst senior marketers. This is understandable as the channel often does not generate enough revenue to be taken as seriously as it should be. If you contrast the UK market with the US, where affiliate marketing is taken extremely seriously, you can see in which direction we will head.
In the US the majority of large clients will have an affiliate manager and their affiliate strategy will be well defined. Over here we are still reaching that stage, although it is changing.
With large, reputable brands such as eBay suggesting that their affiliate channel will be on a par with their paid search within three years, we see signs that the channel is being taken more seriously.
What is being done within the industry to make sure that affiliate marketing is taken as seriously as possible by senior marketers?
I admit that previously, there has been a lack of cohesion amongst the various stakeholders in pushing affiliate marketing as an industry. I hope that the work of the IAB’s Affiliate Council demonstrates that people are now coming together to progress the affiliate agenda. I have been really pleased with how parties who are rivals have demonstrated that they understand the requirement to work together to push a collective goal.
The judges at the a4uAwards were impressed by the way that i-level has helped its clients to understand the true value of different types of affiliate. Can you explain how you build this fuller picture?
We are lucky at i-level to have an incredibly well-advanced data team who utilise their “pistemap” customer journey analysis to understand how the path to sale works within the online channel. This advanced level of analysis across multiple online channels (PPC, SEO, display, social media, email etc.) has enabled the i-level affiliate team to test out various hypotheses and understand not only the impact that the affiliate channel has when compared to other channels, but also how groups of affiliate partners and even individual affiliates impact on the holistic sales process.
Can you explain a bit what you mean when you say that affiliate marketing should not be seen as a single marketing discipline?
Traditionally we have viewed affiliate marketing as a single channel and I think that historically there has been a “one size fits all” approach taken. Three to four years ago giving affiliates a fixed CPA (cost-per-acquisition) and a few banners was all that was required. However the methods that affiliates use have evolved and so now you have so many different methods that affiliates utilise to drive traffic that a standard approach is now out of date.
If we look at the very obvious examples of cashback and voucher code sites, we can see very clearly that the different methods of promotion used by affiliates require different tools, different communication and different commission structures. I think we must now view a series of marketing channels all operating under the affiliate/CPA umbrella.
Is it possible to divide up commission among different affiliates who have played a part in a customer's journey towards a sale?
Rather than seeking to attribute across multiple affiliates, I think the initial goal should be for merchants to understand how every aspect of their online mix impacts on the journey and where the value is added. We must remember that the affiliate “channel” is only a small part of what happens during an online sales journey and should not be viewed in isolation.
I think that the majority of merchants are still a long way from understanding how search, display etc. interact with each other so to introduce a system of dividing commission between affiliates would not address the problem. Once the value of different channels and different elements within each channel can be established more clearly, then these discussions can begin.
Do you think that voucher code and cashback sites are here for the long-term and an area which will continue to be popular among merchants?
They will be around for as long as consumers continue to use them. Whatever your views on how they operate the one thing that cannot be denied is the continuing increase in the use of cashback and voucher code sites by the general public. Therefore the challenge for all merchants is not to decide whether or not to work with them, but how to get the most out of these relationships.
How do you see the role of networks evolving and are they an indispensable part of the process for your clients?
At i-level we are constantly striving to improve our relationships with the networks. I think it is quite naïve to think that the ability to bring in a third party tracking solution allows you to compete with established affiliate networks who have invested considerable resource over the years in innovation and driving the affiliate channel forward.
That said I think that the networks need to be much more proactive in defining their role going forward and the next year or so will be a very interesting time to examine how networks position themselves and which way the market goes. I feel that there may be a few established networks who fall by the wayside within the next 12 months.
Matt Bailey will be speaking and answering questions about the lAB Affiliate Council on the second day (14th October) of the a4uexpo affiliate marketing conference in London next week.