Affiliate Marketing? Oh yeah, that’s the channel that generated £9 Billion in UK sales through 2012…

Just in case you needed yet another reason to re-evaluate the affiliate channel in relation to your current online strategy, the good people at the UK IAB recently commissioned PricewaterhouseCoopers to conduct some thorough research on how the industry is currently performing. Spoiler alert: It’s doing incredibly well…

You can download the report for yourself here. The difference between this and previous research, is that PwC have included the full range of advertiser spend such as sales commission and management fees. This allows for a more in-depth look at the realities of the channel. In other words, no showboating stats used or even needed in this report – This is a true reflection of the industry.

The report uses Performance Marketing as an umbrella term for Affiliates and Lead Gen. 27 submissions were collected from 23 companies to compile the results. 31 interviews also contributed.

The following headlines immediately jumped out at me and effectively highlight just how important CPA/CPL payment models are in promoting a brand.

• 3,000 – 4,000 advertisers spending £814 million on 10,000 publisher websites.
• 100 million transactions, 70 million leads, generating £9 Billion in sales. The affiliate channel alone accounted for £8 billion.

Let’s just pause at those figures for a moment. You know, really let them sink in – A spend of £814 million, generated £9 BILLION in sales. That’s £11 for each £1 spent.

• The market has grown 57% since 2008 at an average of 12% per annum.

The incredible growth of the affiliate industry is something I’ve written about on the Tug Agency blog many times before. If you haven’t looked at the affiliate channel in relation to your digital strategy for a couple of years, then it really is time for a re-evaluation.

• CPA is the dominant payment model accounting for 86%, while CPL is second with 12%.

CPA – Cost per action. This is the genius concept that’s been driving affiliates since the mid 90’s. I have no doubt that it’s also the reason behind the impressive return.

• Who’s spending that £814 million? Here’s the pie chart from the report.

 

 

 

 

 

 

 

One of the great results here is that B2B is on a par with the Gaming industry at 5% and 6% respectively. I think this is important as it is often assumed that the affiliate channel is only suited to consumer products. Gaming has long been established in the space and is a consistent high earner for affiliates themselves. To see B2B on a par with that is a positive indicator of the opportunities available for well managed B2B campaigns.

I’m obviously a huge fan of this industry and to see it developing and improving year on year is fantastic.