Affiliate marketing is rapidly growing worldwide. Since affiliate marketing is based on a revenue-sharing model where affiliates get paid according to their performance, it is quickly being adopted by both small and big sized companies. Affiliate marketing has particularly been a great success for smaller sized companies or startups, as it requires very low investment and it is much cheaper compared to other forms of marketing.
With growing regulation and scrutiny of digital advertising and e-commerce sector, companies are facing hostile environments to operate in. However, the affiliate marketing sector is set to capitalize on these problems.
Here we look at the top 5 predictions for the affiliate marketing industry, according to the 2019 Awin report.
Table of Contents
Change in how online tracking will work
Monopolization of the industry
Trade disagreements can hinder e-commerce growth
Emphasis of customer value over customer acquisition
Automation will enhance level of service
It is the technology companies that are leading the current revolution in online tracking. A great example is Apple's Intelligent Tracking Prevention initiative, which led to tech providers in the industry desperately seeking to ensure that their tracking is compliant.
This action demonstrated the benefits and dangers that the actions of these gatekeepers can have on the industry. With a growing number of browsers announcing tracking protection, this indicates that the view on online tracking by people has turned increasingly hostile. Therefore, advertisers, affiliates and networks will have to respond accordingly to these growing changes in the industry.
In the past couple of years, there have been headline grabbing acquisitions in the affiliate marketing industry. This indicates that more number of established players have started to consolidate their positions.
With examples such as GoCompare.com purchasing MyVoucherCodes at the end of 2017 or Groupon purchasing Vouchercloud's parent Cloud Savings Company in May. This trend will lead to consolidation of power which in turn will result in lack of competition and can also lead to price hikes.
Streamlining affiliate partnerships for advertisers and providing them access to a wide variety of tools can be helpful in a growing monopolization in the affiliate industry.
According to a study by Accenture and AliResearch, suggests that over 45% of consumers will be shopping internationally on the web that is buying from overseas retailers by the year 2020. This growing trend, however, can get halted because of the ongoing global trade disputes.
With the ongoing US-China trade war, Brexit and slowdown of economies all over the globe, can impact the e-commerce growth. This will also affect affiliate partnerships that involve cross-border activity. Affiliate marketing has played a key role in popularization of cross-border activity, since it allows businesses to tap into international markets.
With growing competition, where retailers provided consumers with eye-catchy discounts, it has diluted the market. Due to the increasing availability of such discounts, consumers have learnt to exploit such conditions to their advantage. This has also led to feeling of general weariness or indifference for consumers.
However, affiliate marketing programs have helped retailers move from the short-term tactic of customer acquisition to loyal-high value customers with more focus of lifetime values and higher basket values. This also showcases the advantage of affiliate marketing, which is flexible enough to adapt and experiment based on the specific goals of a company.
This can be done by tinkering with tiered commission groups for inciting more valuable purchases, establishing basket value thresholds for affiliates to hit specific targets or by using post-transaction data to identify partners delivering the right kind of customer
Even though affiliate marketing has seen double digit growth for years, companies are steadily finding affiliate campaigns to be less commercially viable. This brings focus on alternatives to improve efficiency.
Automation has been seen less attractively in the field of affiliate marketing because of the wealth of manual tasks involved and also because it is an industry built on cultivating relationships. However on the topic of internal efficiencies, automation through data aggregation and algorithmic learning should be embraced by the industry to do its heavy lifting.
This can help in removing labor intensive tasks for account managers, which can then be directed at campaign optimization and relationship building. By providing the correct tool-set to account managers, can help in better decision making and will ultimately enhance the level of service.