Feature: Buying into affiliate marketing

Marketers are often wary of any new concept that enters the market and can be reluctant to test it until it has been proven to work by other firms. Yet while affiliate marketing is still a young model, with many marketers unaware of the benefits it can offer, it is starting to come of age and grab the attention of even the most sceptical of marketing directors.

Affiliate marketing in the UK grew by an estimated 45 per cent in 2007 and generated more than £3 billion in online sales, according to a study undertaken by E-Consultancy. And with marketing budgets coming under increasing scrutiny as a result of the current economic climate, companies across all sectors are being forced to make every marketing pound work harder. So it seems affiliate marketing could be perfectly placed for its own boom period.

David Hall, communications director at Affiliate Window, explains: “The beauty of affiliate marketing is its resilience and as we talk ourselves into a recession merchants will be encouraged to do even more with it as the retailer only pays if a sale is made.”

In addition, more people are spending increasing amounts of time online and the number of websites and their quality is also rising, making affiliate marketing an attractive option for many marketers. So how can affiliate marketing work in conjunction with promotional marketing to boost sales?

Most online retailers now have some form of affiliate programme in place but Tom Morgan, managing director of Affiliate Future, believes many still need to be educated on how to get more out of them. “Affiliate activity is another distribution channel for sales promotion. Websites can distribute vouchers, coupons and promotional literature, for instance,” he says.

However he notes that while the distribution of specific offers to be redeemed online is popular, driving customers into stores via affiliate activity is less common. He adds: “The tracking for this kind of activity isn’t as robust or as accountable and in many cases the advertisers which have driven the growth of affiliate marketing are online retailers who are not looking to drive people in-store.”

There are ways however of ensuring affiliate and promotional activity can be used in tandem. Louise Green, client services director at affiliate network buy.at, explains that the company gets visibility onto above-the-line or direct mail campaigns so they are aware of big drops which are about to happen. “We can then get affiliates to carry out geo-targeting around this,” she says.

Green also concedes that affiliate activity is not being used as much as it could be in conjunction with in-store promotions, however, and this is something buy.at is keen to address. She explains: “We want merchants who are opening a new store, for example, to use affiliates which can target specific locations, enabling users to link through with a couponing system which has a barcode on it which can be recognised in-store.”

Thus if a customer receives the voucher online and this leads to a purchase in-store it can be tracked back and the affiliate can be rewarded.

More complex layers of technology are continually being added which need to be properly understood in order for them to be used effectively. Hall comments: “The joined-up nature of in-store promotions and affiliate activity is not always obvious.”

He too believes many online retailers are not seeking to drive customers into stores but he says that for those that are, affiliate is a great tool. He cites Comet as a good example of a retailer taking advantage of the model. “You can reserve a product online and pick it up in-store. This works well as once the customer is in-store it may be possible to up-sell or cross-sell to them.”

In order to be successful affiliate marketing needs to be used as part of the overall marketing mix. Green notes: “It is important for the creative to be integrated with that used on other channels so it all reflects the same messaging and branding.”

Meanwhile merchants must keep their affiliate partners up to date on any promotions that are taking place so they can ensure their affiliate activity is working effectively.

While the channel has enjoyed huge growth it still has a long way to go. Shopping via mobile phones has not taken off in the UK, for instance, but Hall cites an example of US mobile price comparison site mShopper which enables consumers to go into stores, look at a product and type it into mShopper to compare prices. “If this took off in the UK,” he argues, “we could see coupons and discount codes being sent via mobile phones as part of a sales promotion campaign.”

There certainly needs to be more widespread understanding of how affiliate activity can be integrated with promotional activity before it reaches its true potential. Morgan declares: “Sales promotion is at the heart of the affiliate model with its offers, promotions and distribution of voucher codes.” Thus merchants that fully embrace the medium and ensure their affiliate activity is properly integrated with all other activity will be sure to reap the rewards.