is affiliate marketing just an alternative? (basics, size, trends, opportunities)

Is Affiliate MarketingMerely an

“Alternative”?Geno PrussakovCEO & President, AM Navigator LLCwww.amnavigator.com Founder & Chair, Affiliate Management

Dayswww.affiliatemanagementdays.com

(+1) 888-588-8866geno@amnavigator.com

@ePrussakov .

Affiliate Marketing is…

State of the Industry

Trends & Opportunities

Outline

Affiliate Marketing is…

The Definition...performance-based marketing, whereby affiliates

promote your product/service & get compensated for every customer/lead referred.

Who Are “Affiliates”? “The term ‘affiliate’ means any company that

controls, is controlled by, or is under common control with another company” /Compilation of State and Federal Privacy Laws, 2002, p. 76/

“The term ‘affiliate’ can be used as a generic word to indicate either a subsidiary or division” /Business information: how to find it, how to use it, 1987, p. 38)

Terms “affiliate and subsidiary” are “used synonymously” /International dimensions of management, 1989, p. 2/

Who Are “Affiliates”?Affiliates:

Independent marketers who may choose to promote a business, and be paid on performance-based arrangement.

Types:i. Content (Answers.com)

ii. Coupons (RetailMeNot)

iii. Data feeds (Shopzilla)

iv. Display (Forbes.com)

v. Email

vi. Loyalty (TopCashBack)

vii. Mobile

viii. SEM (SEO & PPC)

ix. Social Media

x. Video

So Affiliate Marketing is…

... “the art of doing a merchant’s marketing better than they can,

and profiting from it.”Chris Sanderson, AMWSO

How Much Do They Make?

Source: Darren Rowse, The Ultimate Guide to Making Money with the Amazon Affiliate Program,

ProBlogger.net, 4/24/2013

Note: The y-axis reflects shows earnings in USD

January-September: 13,000 UVs/mo

October: 95,000 UVs

November: 2,000,000 UVs

How Much Do They Make?

“Amazon ...derived about 40% of its sales from partners participating in their “Associates”

program.”

Source: Siegel M. & Gibbons F, 2008, Stanford University,Amazon Enters the Cloud Computing Business, p. 6

How Much Business They Bring?

Our experience: 20%-40%

Affiliate Marketing ≠ Channel

“…but, rather, a way of remunerating a marketer… hence, affiliate marketing really exists on the crossroads of a number of online marketing channels and works with nearly all of them.”

Source: Affiliate Program Management: An Hour a Day (p. 24)

It is a marketing context, based on the principle of performance-based compensation.

Affiliate Marketing ≠ Channel

It is integral to understand this for ensuring proper/healthy co-existence (not conflicting, or cannibalizing, but complementing) of affiliate program with all channels of marketing that the merchant is employing.

State of the Industry

Size of the Industry (US)

• Advertiser/merchant count: 10,000+

• Publisher/affiliate count: 1,000,000+

• Spend: ≈$3,000,000,000

Size of the Industry (UK)

• UK advertiser/merchant count: ~3,000-4,000

• UK publisher/affiliate count: ~10,000

• Impact scale: ~100 million transactions, and ~70 million leads

• Scale: 7-9% of UK online marketing spend; ~6% of the UK Internet economy; .6% of GDP

• Growth: since 2008 UK affiliate marketing has registered an average 12% YoY growth

Source: PriceWaterhouseCoopers study commissioned by the Internet Advertising Bureau UK, January 2013

Size of the Industry (Russia)

Source: AdLabs.ru estimates & forecast, as quoted by a CPA Club Russian Facebook group member

$2.4 million 2003 → $65.6 million in 2012

Trends & Opportunities

From hype to reality:

Attribution (improvements in tracking & reporting; e.g.: AvantMetrics, ImpactRadius, PHG, TagMan, etc)

Video (tools; e.g.: ShareASale, Coull, Viewbix)

Offline (bridging the online/offline gap; e.g.: RingRevenue, mobile-to-store campaigns, etc)

Trends

Opportunities in EvolvingAffiliate Marketing Landscape

See video from:

http://www.youtube.com/watch?v=5f6ievv-70E

Opportunity #1: Mobile

Opportunity #1: Mobile

Set to eclipse desktop by 2014

71% of smartphone owners shop on mobile

Opportunity #1: Mobile

Mobile sales = 11% of e-commerce sales (2012), 15% (2013), 18% (2014) 21% (2015), 24% (2016)

Sources: Morgan Stanley, Skava, Branding Brand, eMarketer

Opportunity #2: Social

Source: BIA/Kelsey, April 2013

Social shopping

Opportunity #2: Social

Social shopping

Opportunity #2: Social

Social shopping

Social gaming (warning: doesn’t work w/ PPL)

Podcasting

Q&A and review websites (in US: disclosures)

Social media ads

Proactive conversation design

Opportunity #2: Social

“The total value of the global real-time mobile location-based marketing and advertising market will grow from € 192 million in 2011 at a CAGR of 91 percent to € 4.9 billion in 2016.”

Source: Berg Insight, Location-Based Advertising and Marketing, May 2012

Opportunity #3: Local

Offline performance marketing (e.g. PPCall)

Opportunity #3: Local

Source: RingRevenue.com

Offline performance marketing (e.g. PPCall)

Local search

Geo-targeted advertising

Mobile- and social-related opportunities (e.g. proximity-based location marketing, check-in services)

Opportunity #3: Local

Key: be relevant (here and now)!

Instead of a Conclusion

Perhaps the most important part of offensive basketball is the part played by each man without the ball.

~ John Woden, Naismith Hall of Fame Coach

One of the most difficult coaching tasks is to teach players to carry out actions that don’t involve the basketball — the magnet of the game.

~ Krause, Meyer & Meyer, Basketball Skills & Drills

Moving without the ball requires you to be adept at starting, stopping, faking, and changing directions. You must have excellent court awareness and vision…

~ Ralph Pim, Winning Basketball

Self-Educate to Survive Succeed!

Perhaps the most important part of offensive basketball is the part played by each man without the ball.

~ John Woden, Naismith Hall of Fame Coach

One of the most difficult coaching tasks is to teach players to carry out actions that don’t involve the basketball — the magnet of the game.

~ Krause, Meyer & Meyer, Basketball Skills & Drills

Moving without the ball requires you to be adept at starting, stopping, faking, and changing directions. You must have excellent court awareness and vision…

~ Ralph Pim, Winning Basketball

Self-Educate to Survive Succeed!

Thankyou!