In part one of this two-part affiliate marketing series, we covered key challenges and significant milestones that impacted the affiliate channel since its inception in 1994.
Now, in part two we’ll explore how affiliate marketing continues to evolve and important trends that are shaping the future of the channel.
What’s trending in 2022
The COVID-19 pandemic put a spotlight on the resilience of the affiliate channel, accelerating the rate at which marketers are integrating it into their digital lineup. By 2022, affiliate marketing spend is projected to reach $8.2 billion in the U.S, while globally the industry is currently valued at $12 billion.
Let’s dive into four trends transforming the affiliate marketing industry that will influence your revenue potential in 2022 and beyond.
Channel growth: Affiliate verticals traversing a “k-shaped” recovery
Forging a path of steady growth or decline, affiliate verticals are navigating a “k-shaped” recovery on the heels of the economic downturn ignited by COVID-19. Verticals like nutraceuticals, health and beauty, and gaming (both casual and iGaming) are growing while other verticals such as gym subscriptions, travel, and hospitality are not faring as well. For marketers operating in the growing verticals, many are shifting towards bringing their affiliate program fully in house to increase their profits and further emesh the channel with their holistic digital strategy.
Consumer behaviors shift: Affiliate ecommerce average order values (AOV) are increasing
Bundling online orders together is now a top priority among savvy shoppers. With exorbitant shipping costs and supply chain backlogs combined with a scarcity of “free shipping” discount codes available, ecommerce AOVs are increasing while the number of unique sales are decreasing. Fortunately for marketers, this means that as revenues climb through more sizable AOVs, their fulfillment costs decline, and as a result, their profit margins widen. AOV is a useful metric that enables marketers to more accurately forecast future earnings, investments, and the necessary resource requirements.
Long-term view: The affiliate channel expands from acquisition to customer loyalty
Incentivizing customer loyalty rather than a one-time sale is refocusing marketer and affiliate efforts. While 40 percent of ecommerce marketers cite affiliate as their leading customer acquisition channel, 79 percent of marketers are using the affiliate channel to capture the ongoing interest of existing customers. Marketers are realizing the significant impact the affiliate channel can have on customer lifetime value. As a result, affiliate payments are evolving from a standard cost per acquisition (CPA) model to a hybrid approach of a CPA on the initial customer acquisition combined with a revenue share for additional purchases by that same customer. Marketers are working closely with their affiliates to ensure they are receiving lucrative loyalty traffic, while affiliates are reaping the benefits of evolving payment models.
Measurement evolves: Server-to-server tracking overcomes cookie challenges
Ongoing and emerging privacy regulations such as the General Data Protection Regulation (GDPR), Brazilian Data Protection Law (LGPD), and the California Consumer Privacy Act (CCPA) are changing how marketers collect consumer data. While web browsers like Chrome, Safari, and Firefox are blocking both first-and third-party cookies. This is leading to a dramatic shift in how marketers approach accurate campaign measurement without cookies. This fluctuation is fueling anxieties over tracking platform instability as the affiliate industry ventures into a future without cookie tracking. Fortunately, marketers who collect first-party data and leverage affiliate software with Server-to-Server tracking can maintain accurate campaign measurement without cookies.
Expanding your affiliate marketing opportunity
Throughout this two-part series, we’ve uncovered how the past and present trends are impacting the future of the affiliate industry and the enormous opportunity that exists for marketers. As the industry continues to evolve, one thing is certain, the growth and maturation of the affiliate channel has earned itself a prominent spot in both a marketers’ digital strategy and their bottom line.
Other content you might be interested in:
- Blog: Performance Marketing – An Affiliate Marketing Glossary
- Blog: How To Prepare For Growth By Relying On Stable Technology
- Blog: How to Start An Affiliate Marketing Program – 5 Tried-and-True Tips