How 2012’s Rise Of The Affiliate Channel Will Impact The $300B E-Commerce Industry

For years, affiliate marketing has provided a steady stream of traffic and sales to online merchants while publishers reaped healthy yet steady commissions. As a staple in the online marketing toolkit, the affiliate channel continues to play a critical role in driving brand awareness and online revenue. And that role is about to expand significantly as the affiliate channel is projected to reach $4 billion by 2014.

There are several factors driving the increased interest in performance marketing. The three biggest drivers are the rise in affiliate deal sites, advances in technology and the overall evolution of affiliate marketing. These influences are prompting strategic online retailers to increase their intellectual and financial investments in the affiliate channel.

Consumers In Search Of The Best Deal

To better understand this shift, let’s first look at the proliferation of affiliate deal sites. Every day there are hundreds of fresh online deals for the price-conscious consumer. Whether it’s group buying, comparison shopping, flash sales, or coupon clipping, today’s online shopper has been conditioned to not pay full retail price. Why should they when there always seems to be a better deal available?

This “best deal” mindset has reached both the casual and the frequent online shopper. It’s actually very common for today’s online shopper to keep several websites open before making a purchase. One of these sites is usually the well-known retailer, while the other sites they’re simultaneously viewing are open to make sure they’re getting the best deal.

Interestingly, a December 2011 report from Forrester Research finds that consumers perceive deals offered on affiliate sites as superior to those on the merchant’s website. Even when the offers are the same, the conversions are more likely to come through the affiliate sites.

New Horizons For Affiliates

In terms of the latest technologies, today’s affiliates are able to apply sophisticated algorithms and more effectively track every click in the online sales process. Online opportunities are now being identified according to higher targeting and tracking standards that complement a global e-commerce strategy. In fact, many well-known online retailers are striking deals with affiliate sites to uncover opportunities in new geographies.

SurfMyAds for example recently launched Coupons.ca to help a wide range of advertisers drive sales in Canada.

These technology advances also enable affiliates to more effectively vet and monitor publishers and present compelling offers that drive consumer awareness, loyalty, and more importantly, sales.

Now consider the way the affiliate channel has evolved. It’s no secret that the early days of affiliate marketing consisted of a few shining stars among a mass of less-than-sophisticated operations. The bulk of affiliates lagged in terms of SEO skills and depth of reporting capabilities, and they failed to present fresh content and offers. Those days are very much in the rear-view mirror.

Today’s affiliates are well versed in SEO and are focused on providing valuable content that draws readers in and brings them back. Guest posts from celebrities, exclusive site deals, and the ability to quickly swap out ads that are dated or not effective for a particular market segment further boost traffic and site stickiness.

Smart Marketers Embrace The Channel

Since consumers will continue to shop at the merchant’s site as well as the affiliate sites, e-tailers should embrace the rise of the affiliate channel. It provides a low-risk opportunity to test new offers, clear outdated merchandise and reach bargain-savvy shoppers. Additionally, a flexible pay-for-performance model can provide additional incentive for affiliates to entice consumers to buy from the online retailer, rather than from the competition.

To make the most of these burgeoning performance marketing opportunities, however, will require e-tailers to more closely engage with their affiliate channel to ensure:

• Mutually beneficial commissions based on sales volume, price, source and the length of the sales cycle, along with other relevant pay for performance metrics.
• Consistency of the retailers’ brand across affiliate sites.
• Delivery of detailed reports quantifying the affiliate’s delivery of new customers.

With the continued growth of the affiliate channel and the rise of e-commerce, which is expected to reach $278.9 billion by 2015, now is the time for online retailers to build strong relationships with their performance marketing partners as they capitalize on the latest trends in consumer behavior.

Some opinions expressed in this article may be those of a guest author and not necessarily Marketing Land. Staff authors are listed here.

About The Author

Scott Allan

Scott Allan is Rakuten LinkShare’s senior vice president of marketing. He has more than 15 years experience in corporate and product marketing with an expertise in the performance marketing channel.