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So we’ve proved online performance marketing is big, but what’s next? 

The headlines attached by the IAB and PwC to the ground-breaking study into Online Performance Marketing say it all: 'The UK's "hidden" £814m online economy'.

The report has provided fantastic ammunition for everyone involved in affiliate marketing and lead generation, whether talking from the network perspective, publisher or even client side, to point to the enormous value that OPM delivers.

We can see where the 12% average growth per year over the last five years has come from and where the potential for future growth might be. Financial services accounts for 45% of total spend retail 20%, media and telecoms at around 10% and travel and leisure at 9%.

Most large brands in the UK are involved in affiliate marketing and the study also signalled continued rapid growth with an average increase in investment of 25% this year.

All of this is great news, but the trouble with any industry report however robust and timely, is that one wonders whether the majority of those poring over the findings aren’t already OPM evangelists. 

The reality is that while all the evidence screams out to marketers “invest, invest” OPM is still a relatively small part of the online economy, albeit one that the IAB/PwC report shows accounts for 5-6% of UK online ecommerce and 0.6% of UK GDP.

The truth is that although the number of marketers that appreciate the value and on-going potential of affiliate marketing is growing, this is still a sector overshadowed by display and search.  

Reporting on the publication of the report one senior journalist on Econsultancy’s sister publication Marketing Week, responded with a commentary that couldn’t resist dredging up a six year old quote dismissing affiliate marketing as an irritating sideshow. 

The piece did however report a fundamental truth: the sector must continue to fight for the share of voice and spend it deserves. 

Part of the issue is that affiliate marketing is seen as complex and let’s face it the general marketing community quite understandably likes what it knows i.e. advertising, direct response and display media spend.

Increasing awareness

From the affiliate marketing perspective, a central challenge then is how to enhance awareness of the channel so that it is understood and recognised by key decision makers.

I think part of the answer is to start talking about affiliate marketing differently and position it as a strategic investment that should be integral to any business aiming to tap into the growth of online retail and purchase planning.

It’s increasingly clear that brands that work directly with networks and develop their own internal teams that are expert in affiliate marketing strategies and tactics and who have a detailed understanding of the consumers they wish to engage and the cycles, trends and values attached to their products or brand, are those that get most out of affiliate marketing.

To persuade more brands to invest in internal resource as well as external expertise, affiliate marketing should present itself as a strategic sales channel, not just another branch of the complex digital marketing world where spend is divvied up by agencies traditionally orientated to display.

Yes, we should continue to encourage planners to integrate affiliate marketing strategies with display and social media campaigns for ecommerce brands. But perhaps it’s time that we more consistently highlighted the return on investment and transparency of affiliate marketing as a strategic sales tool.

The importance of digital marketing and sales strategies have been highlighted repeatedly in the last few weeks. Blockbuster and HMV’s demise have been attributed to a failure to embrace digital delivery and ecommerce. 

Lack of retail spend on OPM

And yet the IAB/PwC report reveals that spend by retail on total OPM is half that of the financial services sector. Retailers that are not taking a strategic approach to the dramatic growth of ecommerce, product search and mcommerce are missing out on a share of the market that is already huge and growing fast. 

An important part of the challenge is to engage decision makers with language that they understand. There’s always a time and a place to talk with fellow specialists about the attribution debate, the need to continuously nurture publisher relationships; to understand the specific stimuli or incentives that work best for a particular brand’s customers, the integration of mobile and social media, the list goes on.

But at the end of the day, what we deliver is measurable actions by consumers that directly impact a brand’s bottom line.

It’s this bigger message about harnessing the power of the internet to drive sales that should be front and centre of our communications going forward and that will help inform board level decision makers.

Let’s talk business not technology.

Florian Gramshammer

Published 13 March, 2013 by Florian Gramshammer

Florian Gramshammer is Country Manager at Commission Junction UK /Valueclick and a contributor to Econsultancy.

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Comments (1)

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Tom

I really like your idea of making affiliate marketing part of teh strategic investment of a company to tap the online market.

over 3 years ago

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