Affiliate budgets set to rise or fall in 2009?

In September E-consultancy conducted a survey into the state of affiliate marketing in the UK – what proportion it made of budgets in 2008 vs 2007.  The survey dealt with 259 merchants and 150 agencies and came up with some rather interesting and surprising information.

The first thing which struck me was this stat:

‘Merchants reported that 5 or fewer affiliates are driving 80% of their affiliate sales or sign ups’

This was particularly interesting in combination with the fact that:

‘..almost 70% of merchants are spending less than two hours per week communicating with their affiliates…’

We also recently conducted a survey of some of our advertisers and agencies recently on communication style and effectiveness. The results told us something which was perhaps unsurprising – that generally you get out what you put in – the more personal the style of communication the more effective it is.

However, what was most interesting from the report was the following stat which we really did not expect:

‘…the average proportion of online marketing budget designated to affiliate marketing has dropped from 18% to 14%, while the proportion of online sales ascribed by merchants to affiliate activity has decreased from 16% in 2007 to 12% in 2008.’

Given that this survey took place in early September, before the full scale of the economic crisis which brought with it an absolute need for proven ROI,  we thought we would ask a couple of Commission Junction merchants if they have a) noticed these trends in the own affiliate marketing and b) have refelected these figures in their plans for 2009:

“The first thing to mention is that our affiliate performance completely contradicts the survey findings.

The current economic climate has only made us analyse our activity more carefully and ensure that we maximise the return on specific campaigns.

2008 has shown considerable growth in sales generated through affiliate activity. Affiliate marketing has delivered approximately 4.33% of our total online sales in 2007 and yet for the last six months affiliate activity has made up, on average, in excess of 17%.

The advantages to our business are that the results from affiliate marketing are 100% measurable. Any allocated spend can be accounted for and therefore demonstrate clear ROI.

Due to the success of the programme, the online marketing budget has been apportioned accordingly, allocating over 18% of total spend for 2009 to affiliate marketing, and by the end of this period I would predict affiliate marketing to account for 22% of all online sales.”

Stacey Alexander, eGroup

“in the current economic climate there is even more emphasis on growing those channels that deliver a significant ROI. Our affiliate marketing budget continues to grow in light of the performance it delivers and continues to be one of Argos’ core online channels in our online marketing strategy for 2009.”

Dave Harding, Argos

“The recent economic conditions have brought more customers online looking for the best prices. We are supporting our affiliates during this time by securing the best deals to maximise traffic and conversion. For 2009 we are focused on maximising growth in the affiliate channel and will continue to build our already successful programme by introducing more tools and promotions to support our partners.”

Lina Patel, Lastminute.com

It will be very interesting to see the year on year growth from 2007 to 2008 when E-consultancy release their figures in a few months. With the IAB’s growing involvement in the affiliate marketing sector I also look forward to seeing how they break their research down and if this gives us any additional insight into the success of this channel.