How will Affiliate Marketing Change in the Next 5 Years?
According to a recent forecast post by Forrester Research, affiliate marketing spend should reach over $100 billion by 2019. This market share is speculated to topple spending on broadcast and cable television altogether as more brands transition to digital advertising as their primary method of consumer outreach. What can active players and newbies in the affiliate expect in the next few years?
Redefining Payable Actions
One of affiliate marketing’s primary draws is that it allows participants to only pay or be paid on a predefined action. This especially attracts companies who want to avoid investing too much into their advertising efforts without the ROI to show for it. Traditionally, affiliates have been paid on the cost-per-action (CPA), cost-per-click (CPC), and cost-per-mille (CPM). Cost-per-lead (CPL) and cost-per-sale (CPS) are other common payment structures, all of which depend on a completed action to warrant payment. While affiliate marketing will remain performance-based, the definitions of a conversion will evolve as more companies realize that even though a completed sales transaction or lead submission didn’t occur, the affiliate provided value by driving traffic that contributed to a company’s overall revenue.
For example, affiliates can expect to come across merchants who run online storefronts and will pay when a consumer chooses ‘add to cart’ but doesn’t complete the sale. Although the payout may not match what an affiliate would receive for the actual sale, they will still be credited for taking a potential customer that far along in the buying process. This consideration is important because it highlights how intertwined online window shopping is with in-store purchases. In other words, it acknowledges that although the consumer didn’t buy the item online, they could have gone to the store or found it on another site to complete their purchase; in this case, the affiliate’s attribution ranking increases because they contributed to the sale even if the final action didn’t happen through their channel.
The Mobile Takeover
In the affiliate space, mobile traffic initially meant that a campaign was mobile-optimized and advertisements could be viewed from a mobile device without any visual disruptions. However, mobile has evolved into its own channel as more consumers search, buy, and steam on mobile devices more than any other method. Brands have started buying ad placements that are exclusive to apps and browsers accessed on smartphones and tablets. Furthermore, some companies are constructing their own apps in anticipation of traditional browser searches falling behind as consumers initiate more in-app purchases, downloads and views every day. Soon, brands may be forced to build apps to remain relevant as their websites receive less and less traffic from users accessing information stored on their devices.
One of the more exciting developments affiliates can look forward to is the opportunity to partner with companies they wouldn’t have otherwise considered without the assistance of affiliate tracking tools and practices. This not only allows affiliates more flexibility, but also creates growth potential for brands that had previously limited themselves to partners in their industry. Consider, for example, fitness trainers who partner with schools, hospitals and even restaurants to push each other’s services. With the use of promo codes, links and social media tools, brands will work with other companies that aren’t traditional affiliates but can still increase sales through advertising for them. Charities and schools running fundraisers can also capitalize on the larger participant pool to get maximum exposure for their causes.
Taking the non-traditional evolution a step further, affiliate marketing is growing at rapid rate largely due to globalization. Merchants and affiliates are not only partnering with companies outside of their industry, but also outside of their geographic regions. Companies that once operated in only one or very few countries can now receive exposure across multiple continents, boosting revenue potential and brand recognition. Even more, countries are gaining access to products and services that were once off limits due to their location. Globalization is not a new development, but its positive effects on affiliate marketing are quickly becoming undeniable. Brands are gaining a larger global presence and publishers are enhancing their deployment tactics to remain competitive on a mass scale.
New and Revised Legislation
Not surprisingly, as the affiliate marketing space grows, legislation has become more stringent and better enforced. The FTC has remained diligent on filing high-profile suits against brands and their affiliates who blatantly disregard their CAN-SPAM, deceptive pricing, telemarketing and other relevant guidelines that govern consumer-driven advertising activities. The outcome of recent lawsuits, especially in the weight loss supplement industry, has emphasized that just because an affiliate hasn’t manufactured the product, doesn’t mean they won’t be penalized for marketing a product or service that violates consumer protection laws.
Participants in the affiliate marketing space can expect to see additional legislation as well as revisions to previous guidelines as the industry grows and new practices emerge. Although some companies will fail due to new enforcements, others will benefit from the credibility the industry gains by weeding out the brands and their partners that deceive consumers on a daily basis.
Affiliate marketing has come a long way since its inception in 1994. When a majority of consumers started using email communication and online browsing in their day-to-day lives, the unsolicited advertisements they received were mostly unwelcomed. Fortunately, technological advances, enforced legislation and an industry-wide push for higher quality performance have allowed affiliate marketing companies to flourish despite the industries once-tarnished reputation. As the affiliate space continues to grow, the use of multiple affiliates will likely become a mainstream practice for brands attempting to maximize their online exposure and capitalize on an audience outside their current pool.
Do you anticipate any other big changes in the affiliate marketing over the next few years? Tell us your thoughts here.