Affiliate marketing delivers the most cost-effective customer acquisition Wednesday 26 September 2007 PDF Print • 95 per cent of brands say affiliate marketing is ‘very cost-effective’ or ‘quite cost effective’ • An average of 18 per cent of the online marketing budget is spent in the channel • Travel companies using affiliate marketing most effectively Affiliate marketing is revealed as the most cost effective channel for driving customer acquisition in research out today from E-consultancy. Sponsored by buy.at, the UK’s largest independent affiliate network, the comprehensive research into how UK brands use affiliate marketing found that the majority of UK advertisers (merchants) say that it is either ‘very cost-effective’ or ‘quite cost-effective’ for acquiring customers. 44 per cent of merchants named it as ‘very cost-effective’ for driving customer acquisition compared with 34 per cent for paid search and just seven per cent for display advertising. Paid search is the second most cost-effective followed by email marketing with these marketing channels viewed as ‘very cost-effective’ or ‘quite cost-effective’ by 90% and 82% of merchants respectively. Affiliate marketing is also a highly effective channel for driving volume, with three quarters of respondents (73%) saying that it drives either ‘high volume’ or ‘medium volume’. However, the best channel for driving volume remains paid search, with more than half of respondents (53%) saying that PPC generates ‘high volume’ for their businesses. Email marketing is the third biggest driver of volume, with 65% saying this channel drives high or medium volume. Mobile Marketing is still very much in the embryonic stage, with only 6 per cent of merchants saying that it drives high or medium volume. Linus Gregoriadis, Head of Research at E-consultancy comments, ‘The merits of affiliate marketing are increasingly being recognised, with the overwhelming majority of marketers surveyed believing this to be a cost effective way of acquiring customers. We will see continued growth from this channel as it becomes more strategically important for merchants. Almost 80% of brands say they are expecting to invest more in this channel and they will reap the benefits of this increased investment.’ Kevin Cornils, CEO of buy.at explains, ‘Affiliate marketing has proven itself as the most cost effective online channel to drive incremental volume. It works for marketers because they only pay for activity that generates genuine sales. I think that because of this we will continue to see a shift from other forms of media with less accountability and effectiveness into the cost-per-acquisition (CPA) area where affiliates operate. This research has helped to highlight key trends within the sector, which we hope will make the benefits of the channel clearer to advertisers who have yet to invest significantly in affiliate marketing. We want to increase the understanding of the channel to enable advertisers to drive even better performance from their marketing campaigns.’ The survey shows that UK merchants are spending an average of 10 per cent of their overall marketing budget on affiliate marketing, which then delivers an average of 16 per cent of their online sales. The majority of the merchants surveyed claimed they generate at least £1 million of revenue from online sales per year and 42 per cent turnover at least £10 million online. More than a third of merchants view their affiliate spend as a cost of sale rather than part of their marketing budget. Vertical expertise The research identifies industry sectors which optimise their use of affiliate marketing. The telecoms industry is the heaviest investor spending 24 per cent of their online budget on affiliate marketing with 100% of respondents from this sector describing it as very or quite cost-effective. Financial services companies spend a fifth of their online marketing budget in the channel and 97 per cent consider it very or quite cost effective for acquiring customers with an above average 80 per cent of the respondents said it drives high or medium volume. 93 per cent of retailers see the channel as very or quite cost-effective for bringing in customers and the sector invests an average of 19 per cent of its online budget in the channel. 100 per cent of marketers involved in travel describe affiliate marketing as very or quite cost-effective and 85 per cent claim it drives high or medium volume. Travel merchants spend an average of 16 per cent of their online budget in the channel to drive 18 per cent of their online sales. Kevin Cornils, CEO of buy.at summarises, ‘The benefits of affiliate marketing are clearly applicable across all of the major e-commerce segments. What is most important is that it represents a totally accountable method of advertising with a guaranteed positive ROI if managed correctly.’ Affiliate networks The research reveals that 90 per cent UK merchants use an affiliate network to manage their affiliate marketing. The ten per cent of businesses who don’t use one have lower online revenues. The most important criterion for merchants when selecting an affiliate network is deemed to be the network’s relationship with affiliates with 47 per cent of merchants rating this as extremely important. Technology, including tracking and analytics is identified as extremely or very important by 82 per cent of merchants when choosing a network and a further 16% per cent say it is quite important. Three quarters (73%) cite account management as extremely or very important and a third of respondents also consider sector expertise extremely important. A total of 239 UK merchants completed the survey in August and September this year, 78 per cent of whom were from businesses which operate both on and offline. Half of the respondents who were aware of their company’s turnover said it was in excess of £50 million per year. The full results of the research will be released at ad:tech. Research reports are available to subscribers at www.e-consultancy.com and buy.at will have copies of the sample report at stand number 471. - End - Research methodology In September 2007, E-consultancy analysed over 700 responses to its research request, which was emailed to its database. Of these 239 were UK merchants, i.e. “working in the UK for a company which sells online through the affiliate channel”. About E-consultancy E-consultancy is an online publisher of best practice internet marketing reports, research and how-to guides. E-consultancy, named Publisher of the Year at the 2006 AOP Awards, also publishes buyer’s guides and has a directory of 100,000+ third party internet marketing white papers. Subscribers pay from £149 per year to access the exclusive and highly practical content. E-consultancy has more than 100 events lined up for 2007, including roundtables and monthly Supplier Showcases, where six suppliers pitch to an audience of pre-qualified buyers at a Central London venue. E-consultancy has 58,000 registered users and more than 145,000 unique user sessions per month (audited by ABC Electronic). It is popular among internet professionals because of its time-saving advice and insight. The company also provides a range of public and in-house training programs, such as seminars and workshops. If you would like to know more about our training options then please visit our website or contact Craig Hanna on +44 207 681 4078 or email him at Craig@e-consultancy.com. http://www.e-consultancy.com/about/ About buy.at Established in 2002, buy.at is the UK’s largest independent affiliate marketing network. buy.at drives online sales growth for 200 of the biggest brands across all sectors through its leading network of 6,000 good quality affiliates, supported by industry leading commercial and technical innovations. A pioneer of the open network, buy.at encourages merchants (advertisers) and affiliates (publishers) to communicate directly, to ensure the success of affiliate programmes. Clients include AA, Butlins, Carphone Warehouse, Capital One, Egg, John Lewis, M&S, Powergen, T-Mobile and Virgin Media. buy.at has experienced 250% growth in turnover year-on-year since 2004. In March 2006, buy.at secured its future growth following a £7.3 million investment from Esprit Capital Partners. Bruce McLaren, renowned for leading Advertising.com as International CEO to a successful sale to AOL Time Warner, was appointed Chairman. Former match.com MD Kevin Cornils was recruited as CEO. www.buy.at For further information please contact: Joanna Burton Head of PR and Marketing buy.at T: 020 7299 8380 E: Joanna.Burton@buy.at Anna Barry Marketing Manager buy.at T: 0191 222 9720 E: Anna.Barry@buy.at Linus Gregoriadis Head of Research E-consultancy T: 020 7681 4051 E: Linus@e-consultancy.com This press release was distributed by ResponseSource Press Release Wire on behalf of buy.at in the following categories: Media & Marketing, for more information visit http://pressreleasewire.responsesource.com/about.