Digital marketing continues to expand and is at the forefront of almost every brand’s marketing strategy. While the digital ecosystem is comprised of many different channels including search, social, display and many more, there has been one that continues to make a lasting impression. Affiliate marketing, which boasts impressive ROI, brand awareness and relatively minimal risk, has proven that it is a viable, growing industry.
Since its inception in 1994, affiliate marketing has come a long way. It has overcome obstacles such as fraud and lackluster analytics, to eventually introducing innovative concepts such as attribution and targeting.
Below is an infographic highlighting important benchmarks, trends and themes as affiliate marketing has progressed over the years.
The Early Days
The Cost Per Acquisition (CPA) format utilized by most affiliate marketers was very appealing as there was relatively no risk involved for the advertisers, thus the concept of affiliate marketing quickly gained traction. However, as the rapidly evolving affiliate landscape grew, issues such as fraud, unreliable data and an overall lack of transparency transformed the industry into the Wild Wild West of digital marketing.
Some of the most common fraud tactics employed included:
- Affiliates not properly vetted
- High-profile cookie stuffing
- Sophisticated botnets
- Teams dedicated to faking conversions, often times with stolen credit cards
One such unlucky company hit hard by affiliate fraud was eBay when their affiliates billed the company nearly $35 million. In 2009, the Federal Trade Commission began to operate with a tighter grasp on the industry as affiliate marketers started to provide incentivized offers without advertiser approvals in addition to CPA offers overpromising on “lotions and potions.”
THE INDUSTRY BEGAN TO TRANSFORM
The affiliate industry slowly began to evolve. However the uninspiring tools available and poor business models at the time still made it difficult to accurately and efficiently manage affiliate programs. Affiliate marketers had to deal with:
- Unreliable, high-profile outages
- Missing data granularity
- No incentives for higher-quality traffic
- Networks without exclusive offers, no differentiation
- Networks without direct affiliates, only working with networks
- Affiliate payments occurring before conversions were confirmed
When the industry took a shift towards focusing on data and optimization, marketers were quickly generating higher revenues by “acting on their data.” In order to do this, affiliate marketers needed robust platforms that could provide the infrastructure to track an affiliate campaign from first click to final conversion and every touchpoint in between. In fact, affiliate marketers were not the only ones utilizing data. In larger companies CMOs, CIOs and CDOs were all being held accountable for reporting on their digital spend as well.
Over time, implementing technology was no longer a nice to have but a necessity, so much so that nearly 61% of marketers in North America believed that seamless integration of existing technologies would allow them to make better use of their data.
In addition to the rise of technology platforms, other notable trends that quickly gained traction during this time period:
Campaign Targeting: transformed from a one-size-fits-all approach to more segmented targeting. Affiliate marketers could now target with unique creatives, country-specific landing pages, device-specific landing pages and click scoring.
Real-time Tracking: eliminated poor-quality traffic, identified top-performing affiliates and enhanced buyer/advertiser relationships.
Attribution: increased visibility crucial to understanding affiliate interactions and consumer touchpoints.
Mobile: revolutionized conversion rates as the majority of transactions are completed on smartphones.
As the industry shifted towards implementing technology and evolving to embrace these new trends, the affiliate industry underwent a makeover. No longer considered the Wild Wild West of the Internet, marketers coined the term “performance marketing” referring to the concept of affiliate marketing. During this time the U.S. Affiliate Industry was forecasted to grow from $1.9 billion in 2009 alone to $4 billion by 2014.
While affiliate marketing has encountered set backs, the future looks brighter than ever. Forrester Research predicts the affiliate industry will continue to expand and is expected to generate $4.5 billion in spending in 2016. What’s driving the growth? The answer is simple – revenues. By leveraging accurate data, real-time metrics and robust technology, affiliate marketing enables digital marketers to generate consistent year-over-year growth.