Wednesday, August 13, 2008

The affiliate channel is growing up

Guest blogger post from Tom Morgan of AffiliateFuture:

So the credit crunch continues, and most analysts agree we’ll be lucky to turn the corner to recovery a year from now.  As staycations replace vacations, fuel surcharges evoke a state of panic for the public at large and airlines go bust, it seems the odds are stacked against us all.

But for those with a survival mentality now is the time to take tighter control of the marketing budget and find a way to make it work with minimal financial exposure.

Few in the travel sector running online promotions are not familiar with affiliate marketing, in fact the sector has made affiliate marketing its own while other verticals look to travel for strategic counsel.

Despite all the negatives, a recession actually bodes well for affiliate marketing; since spend is directly proportional to revenue it shouldn't be affected by a reduction in the marketing budget.

The additional good news is that any drop in overall consumer spend will be more than offset by online's increasing share of total spend, a conclusion substantiated by IMRG’s recent research.

We’re working with our travel advertisers to help them drive more sales through the affiliate channel because it's cost effective and accountable.

Search solutions enable providers of package holidays, dynamic deals and individual holiday services to return up to date deals to consumers in response to their specific searches, a service that is growing in popularity as people determined to take a break seek out the deal most suited to their requirements and budgets.

And for their part our travel merchants are adopting a ‘high exposure, low risk’ strategy by upping the ante with new incentives for affiliates and higher than average commissions.

In short they’re replicating the pattern of behaviour of direct response channels in previous recessions. Take the last downturn as an example when total advertising spend dropped by 2% DM grew by10%, demonstrating the importance of accountability and cost effectiveness in challenging times.

Which is why in the coming year I expect to see the spotlight being turned on affiliate marketing as greater responsibility is placed on the channel.

There will be an increased focus on efficiency, quality of sales and delivering incremental revenue as every penny needs to be justified.

The networks and affiliates who can deliver value under this scrutiny are set for a bumper time.

Tom Morgan, managing director, AffiliateFuture


Tamara said...

Hi Tom
Interesting post. We have had very mixed experiences with affiliate marketing. Although we persevere, the affiliate partnerships that have worked best for us are the ones we have created and managed ourselves rather than those through an intermediary.
This of course means more management, development and monitoring on our side but overall these are still much more profitable.

Anonymous said...

Hi Natasha

It doesn’t surprise me that you’ve had success running your own program, although it’s really disappointing to you haven’t achieved as much as you could working with an affiliate network.

I agree that nobody is in a better position to communicate the benefits and value of the service than the advertiser themselves and so they can build a successful in-house program if they’re truly proactive. However we believe it’s even more effective to combine the advertiser’s business knowledge and relationships with the additional distribution, experience and technology of an affiliate network.

A network can “liberate” the client to focus on the areas that deliver true value rather than the technical or administrative side as well as providing access to a community far larger (over 70,000 in the case of AffiliateFuture) and better established than they can create on their own.

Many affiliates prefer working through a network as they are very comfortable and familiar with the interface, confident in the tracking and payment schedules. It’s also time-saving for them because they are probably running several programs already through the network.

Further a network’s dedicated technology give merchants exposure they cannot achieve alone, for example AffiliateFuture’s travel search solution aggregates a huge number of products making it far more appealing to affiliates to promote than a single merchant program.

Finally networks also have far more robust tracking in place, alongside cookies we have Veracitag ™ our exclusive cookieless tracking solution that thus far has identified an extra 7% of our network’s transactions.