Affiliate Survey 2011

Exploring Online Affiliate Marketing Trends

An LBi/bigmouthmedia Insight Autumn 2011

AFFILIATE SURVEY 2011 Exploring Online Affiliate Marketing Trends

LBi/bigmouthmedia

Executive Summary

Bigmouthmedias annual affiliate survey is now complete. Weve taken in the views of hundreds of affiliate marketers and analysed the responses revealing some interesting insights and trends in to how this market has shaped up over the last year. The survey of UK based affiliates shows that 71.5% of respondents, in comparison to 56% in 2010, believe that Google has designs on becoming the largest affiliate. This increase is likely to be based on the high profile projects launched this year by the search engine giant including the credit card price comparison and the flight search engine tool. Googles Panda algorithm has also had an effect on the affiliate industry with 31.4% of respondents seeing an impact on their business (both negative and positive) particularly around lost ranks, traffic and revenue. There is however some consensus that Panda has impacted duplicate and thin pages and that ranking drops can be overcome by the introduction of good quality content. Digital Window remains the most popular network with 57.97% picking itas their first choice in 2011. Affiliates cited its straightforward interface, simple tracking, transparent reporting, speedy payment and responsive staff amongst the reasons for selecting it as their network partner of choice. Digital Window was followed by Tradedoubler and Commission Junction. Analysing the value of each affiliate that has contributed to a sale is not a simple task. Commission attribution modelling seems some way off as a fair and accurate solution with 50.8% of respondents agreeing that modelling threatens the affiliate industry - this is up from 34% in 2010.

The report also reveals the extent to which affiliates are embracing other channels to drive business. Thanks to the major growth on smart phones, tablets and the mobile internet, 32.6% of respondents see opportunities in mobile marketing. Elsewhere, video advertising is still seen as an opportunity by 13.3% of respondents (down from 15.2% in 2010). But, by far the biggest growth is in location-based marketing which has leapt up 12.4% to 40.7% since 2010. Finally, although half of affiliates surveyed believe that it is better to specialise in a single sector, there is a rise in the number of affiliates that work across multiple sectors. Retail remains the most popular at 42%. The mix of methods (SEO and content marketing, price comparison and social networks) that are used to drive revenue also shows some interesting movement with SEO and content marketing remaining the most popular at 63.2% but a marked increase in social networking from zero on 2010 to 27.2% in 2011. Moreover, affiliates are increasingly adopting a blended approach with 40% opting for combining two or three different methods and 28% using four or more.

AFFILIATE SURVEY 2011 Exploring Online Affiliate Marketing Trends

LBi/bigmouthmedia

Just like in 2010, this years survey shows that the most useful tools a merchant can provide to best support the affiliate channel are, in order, merchant sites that convert better, higher commissions and better performing creative executions. When asked about the potential areas of improvement, affiliates are quick to point out the importance for merchants to provide up-to-date, better quality feeds which include images and good category descriptions. Respondents also believe that the content provided by merchants has a lot of room for improvement, not only in terms of quality and regular updates, but also with regards to the voucher codes used by affiliates. This is possibly a reaction to the impact of Googles Panda update as explained below. The good news is that agencies are getting better at providing enough creative tools for affiliate campaigns, whereas in 2010 68% of affiliates highlighted the fact that most digital agencies failed to provide enough effective creative material to affiliate partners and called for improved communications, in 2011 this has fallen by ten points to 57.8%.

Affiliates and agencies: improving support

CONVERSIONS........... HIGHER COMMISSIONS... BETTER CREATIVES............. BETTER COMMUNICATIONS.... MORE INCENTIVES..................... VALIDATE SALES MORE OFTEN.....

AFFILIATE SURVEY 2011 Exploring Online Affiliate Marketing Trends

LBi/bigmouthmedia

Affiliates who responded to this years survey are increasingly aware of Googles influence in the affiliate space. 71.5% of respondents say that they believe that Google has designs on becoming the worlds largest affiliate, whereas in 2010 this figure was only 56%. This year Google has tested a number of projects which overlap the traditionally affiliate space. These range from price comparison of credit cards through to a fully-fledged flight search engine.

However, respondents agree Panda had a huge impact on duplicate and thin pages, and any drops in ranking can usually be counteracted with the introduction of good quality content. One direct consequence of the Panda update is that more high street names are gaining page 1 positions, which in turn has meant that some affiliates have seen a drop in traffic from generic keywords, other respondents report an increase in traffic from specific long-tailed keywords and phrases, which is consistent with the improved results reported by affiliate partners that have focused on quality content. Another area where opinions differ is data feeds. Whilst some affiliates are confident that accurate and timely data feeds have become more important since the Panda update, others see them as a hindrance. Typical anecdotal feedback that we uncovered as part of the survey demonstrates this disparity: feed driven sites are now ranking lower in SERPs, but with added content still perform. Working with data feeds helps to keep the sites genuine and unique, generating a lot of traffic and sales.

Affiliates and the impact of Google

Over the last year Google has had a remarkable impact over the industry with the introduction of its Panda algorithm back in February 2011. As a direct result 31.4% of affiliates have seen a change since, although there are mixed views as to whether this impact has been positive or negative, some sites report lost ranks, traffic and revenue but others claim exactly the opposite.

This indicates that there is still an importance for good quality product feeds with relevant and appropriate information, however on its own it is not enough for an affiliate site to stand out and be recognised as being useful to a user. A product feed shouldnt be used in isolation but surrounded with other content that is unique to that site, adding value to the customer journey.

AFFILIATE SURVEY 2011 Exploring Online Affiliate Marketing Trends

LBi/bigmouthmedia

Affiliate networks still reign

In 2011 Digital Window (which includes Affiliate Window, Buy. at and Zanox) remains the favourite network of UK affiliates and the number one choice for 57.9% of respondents, up from 50% in 2010. Affiliates like its straightforward interface, simple tracking, transparent reporting, speedy payment and responsive staff. Also mentioned are Digital Windows mixture of programs, the adaptability of its customisable content and the wide range of affiliate tools, resources and creatives that it offers. Tradedoubler is the second most popular, praised for its good communication, response time, reliability, product feeds and user-friendly tracking. Third most popular was Commission Junction with a wide choice of merchants and clients, global opportunities, quick reporting and excellent customer service. It is also seen as very reliable, which some affiliates value particularly highly. Other networks mentioned by respondents are Affilinet, perceived as approachable, down to earth, honest, proactive and ethical; Affiliate Future, which is seen as having a wide range of clients; OMG, particularly relevant for niche affiliates and praised for its versatility and supportive team; and Webgains, commended for its support, honesty, response times, flexibility and feed quality. Affiliates also mention Tradetracker, oneNetworkDirect, Cupid PLC, Silvertap, and ClixGalore as affiliate networks they enjoy working with. Affiliates clearly value the role of networks within the industry, with 83% of them believing that brands should not discard traditional affiliate networks in favour of tracking-only solutions. Whilst this suggests affiliate networks absolutely still have a place in the mix, the question relates very specifically

to stand alone tracking solutions, demonstrating that other services that networks offer besides tracking are still regarded as highly important by affiliates. It will be interesting to see how other technology solutions are received by the community if they do offer more than just tracking alone, for example communication, payment methods and a stable management.

AFFILIATE SURVEY 2011 Exploring Online Affiliate Marketing Trends

LBi/bigmouthmedia

We asked our respondents what they viewed as the main threats and opportunities for the affiliate industry going forward. 50.8% of respondents indicated that they perceived commission attribution modelling as a threat. This is up from just 34% in 2010, highlighting the fact that a fair and accurate solution via the attribution model seems some way off. With regards to opportunities for affiliates in the coming years, 32.6% of survey respondents believe in the potential of mobile marketing thanks to the rising popularity of smart phones, tablets and other mobile devices. This figure was identical in the 2010 survey. Interestingly enough, a minority of affiliates see mobile more as a threat than an opportunity, which probably reflects the wide range of existing affiliates and the disparity of their opinions. Video advertising also shows promise for 13.3% of affiliates, slightly down from 15.2% in 2010. The most striking difference however is for location-based marketing, which soars from only 28.3% in 2010 to the top spot in 2011, with 40.7% of respondents agreeing that it holds the most potential for the sector in the coming years. Other areas which respondents see as full of potential for affiliates include unique content, producing niche focused content and cross platform content, social media marketing, behavioural targeting and email marketing. Last but not least, the number of affiliates that believe that ad exchanges are beyond their reach is increasing this year, with 65.9% agreeing in 2011 compared to only 46% in 2010.

The future, threats and opportunities

AFFILIATE SURVEY 2011 Exploring Online Affiliate Marketing Trends

LBi/bigmouthmedia

The LBi/bigmouthmedia survey was conducted during August and September 2011 and it was open to all UK affiliates. 54.4% of those who responded to the survey are full time affiliates, with 41.8% making up to 500 a month, 38.9% making between 500 and 5,000 a month, 12.7% making between 5,000 and 50,000 a month and 6.7% making more than 50,000 a month.

Although half of affiliates believe that it is better to focus on a single sector, compared to last year we detect a rise in the number of affiliates that work in multiple sectors. This trend is particularly evident when it comes to the most popular methods of generating revenue: whereas 32% of affiliates rely on one method only (true content/SEO being chosen by a third of respondents), 40% opt for combining two or three different ones and 28% use four or more.

Survey audience: blending to deliver results

In 2011 63.2% of respondents to the survey said that their main method of generating revenue was through SEO and content marketing, up from 61.2% in 2010. This is followed by price comparison, chosen by 30.9% of affiliates - a substantial increase from last years 8.2%. It is also worth highlighting the rise in the number of affiliates that generate revenue through social networks, which reaches 27.2% in 2011 up from no presence at all in 2010. The survey respondents work in different sectors as per the graphic below:

Affiliate survey respondents by sector

Number of methods used by respondents to generate revenue

AFFILIATE SURVEY 2011 Exploring Online Affiliate Marketing Trends

LBi/bigmouthmedia

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