Study: 3 Factors in Affiliate Marketing Will Drive Growth

In August 2015, Rakuten Affiliate Network commissioned Forrester, the research company, to conduct a study on the factors driving growth in the affiliate industry.

Forrester surveyed decisionmakers at 151 large U.S. advertisers (in excess of $200 million in annual revenue) and 151 large U.S. publishers (with traffic that ranks in the top 5,000). Forrester also conducted 10 interviews with advertisers and publishers “on the challenges and opportunities affiliate marketing presents.”

The results, which Rakuten released in February, forecast that U.S. affiliate marketing spending will increase by 10 percent annually between 2015 and 2020, to roughly $6.8 billion. It also reported three key factors that will drive this growth, according to the participants.

Consumers Want Informative Content

Consumers today are more sophisticated in how they shop. They utilize many sources to inform their purchasing decisions. As such, consumers have higher expectations for relevant, compelling marketing content. Retailers and affiliates are both seeking opportunities to use that content through the affiliate channel.

This is a notable shift, as historically high volume coupon and deal sites have dominated the affiliate channel. According to the study, retailers will increasingly partner with content affiliates — bloggers, mainly — to educate customers to new and informative product and service information in relevant environments, as well as to drive purchases and conversions.

Consumers today are more sophisticated in how they shop. They utilize many sources to inform their purchasing decisions.

“Savvy consumers have come to expect a higher standard of native content resulting in a rise of investment toward influencer marketing programs and affiliate marketing in particular,” stated Melissa Feemster, general manager and senior vice president of Rakuten Affiliate Network.

According to the study, advertisers see affiliate marketing as a way to break through the clutter of other digital channels to capture consumers’ attention. And since this is done on a performance basis, advertisers can often avoid the usual costs of new customer acquisition.

Attribution Methods to be More Sophisticated

The study notes that many of the surveyed advertisers are using forecasting and marketing-mix tools to analyze and adjust their affiliate programs. However, few advertisers are applying advanced attribution tools to analyze the multichannel impact. Instead, advertisers are relying on first-click and last-click methods to attribute revenue. (I’ve addressed attribution challenges previously, by the way, at “Affiliate Marketing: Many Ways to Attribute Sales.”)

First-click and last-click attribution approaches do not provide clear insight into the impact affiliate marketing has throughout the consumer’s purchase journey. A consumer may read a product review on one site, watch a product demonstration on YouTube, search for additional product applications on another site, and ask for further opinions from friends on social media.

If retailers consider only first-click and last-click, they may not value the intermediate influences that shape a purchase decision. The study notes that without sophisticated attribution, “Many advertisers risk overlooking the blog post that made consumers aware of available products or services, the article that laid out the options available among different competitors, or other content that helped the customer choose the accessories for their recent purchase.”

In other words, retailers that only focus on first-click or last-click attribution will not fully understand what influences affiliate sales. For example, say an advertiser pays a flat fee plus commission for a product review on a blog. If a shopper first encountered the product on a coupon site (the first click), read that blog post after seeing the coupon, and then clicked on a banner ad (the last click) to go to the advertiser’s site and complete the purchase, the advertiser will not know that the product review played a key role in the purchase decision. The advertiser might conclude that paying a blogger for a product review is wasteful, when in fact, the post influenced the consumer.

Retailers Value Expertise

According to the study, affiliates typically market themselves to retailers by emphasizing traffic and site quality. However, retailers value product and industry expertise as the most important factor in deciding which affiliates, or publishers, to work with.

“If an advertiser wants to appeal to a niche market, then a publisher with lower traffic but deeper penetration into that niche market will be much more attractive to an advertiser,” Feemster, with Rakuten, stated in the report. “In turn, publishers want to work with multiple advertisers and may aim to appeal more broadly in order to increase the potential number of advertisers they work with.”