predictions that were made in late 2010 regarding 2011. Some of them were right on the money, some didn’t take root (yet)… But it’s time to create a similar post for the Year 2012, which is already here. So, just as it was for 2011 I now bring you predictions for 2012 from affiliate (and digital) marketing experts from
four different countries on both sides of the Atlantic. Here they are (in no particular order):
Affiliate Marketing Predictions for 2012
1) With the rising prominence of Product Listing Ads taking up paid search space on the Google SERPs, affiliates will have to rethink their paid search strategy with Google on the long tail product specific searches.
2) From a real estate perspective on the Google SERPs, Google Shopping results will continue to drop on the page. This should open up more real estate towards the top of the SERPs for organic listings for retailers and affiliates.
3) Abusive affiliates will increasingly shift from direct relationships with merchants to indirect relationships through super affiliates with sub-affiliate programs
4) The FTC will take aggressive action against several brands for inappropriate representations made by their affiliates in social media
5) US merchants will push back on paying multiple, static commissions for the same sale (this being triggered by EU trend in 2011). Continued absorption of ‘affiliate channel’ into mainstream “performance budget” means: (i) path to conversion reporting including PPC, retargeting, display, SEO plays a major role in correctly rewarding/identifying successful affiliates/partners; (ii) split commissions on affiliates will become more common place as merchants see what is delivering incremental sales; (iii) affiliate networks offer contractual wording to accommodate ‘attribution and de-duplication technology’ (source); (iv) merchants remove duplicate/unfair payment in real-time, allowing for re-distribution of spend to smaller affiliate networks; (v) budgets/bounty for successful and fair affiliates will grow, as merchants raise bids for affiliates driving genuine incremental leads/sales based on audited data.
6) Low-converting landing pages will be squeezed out in many categories. Unless you have a relentless focus on conversion rate optimization and always provide your affiliates with the highest possible EPC, you are at a huge disadvantage. Without best-practices redesigns and ongoing testing of your key landing pages you will fall behind and never recover.
7) Mobile specialist affiliates will emerge in force. Now that smartphones and tablets have become well-established, there are new and innovative ways to reach on-the-go people. New ways of driving traffic, mobile landing pages, and apps will become more common as affiliates become more sophisticated.
8 ) Mobile, social and video will take charge… and not necessarily individually. Look for them to be merging even tighter than before. As an example, an affiliate can take a video of a product with a mobile phone and share on a social network today, but look for them to take it even farther and do more with the messaging in 2012.
9) Affiliates will use social media more to advertise. This offers merchants another platform to reach potential customers, but will require close monitoring in order to detect fraud/spamming/TOC violations, etc.
10) Merchants will need to provide more creatives that are optimized for mobile and tablets. No flash banners for these users! They might even want to consider video creatives.
11) According to comScore Video Metrix, 184 million U.S. Internet users watched online video content in October 2011 for an average of 21.1 hours per viewer. A year earlier, comScore reported that 175 million U.S. Internet users watched online video content in October 2010 for an average of 15.1 hours per viewer. An increase of 9 million viewers and 6 more hours per viewer on average over the past 12 months means there is even bigger opportunities for merchants and affiliates to include video in their marketing mix and I don’t expect that to slow down in 2012. I found the info in YouTube Creator Playbook especially helpful when thinking about creating marketing videos. It includes tips, best practices, and strategies to build larger audiences on YouTube and tells you how much effort it will take and what you can expect to get out of each change.
12) I think variations/iterations of the QCP model that eBay has used for the past 2 years will be implemented further across the industry. I think this will be a result of the natural evolution of multi channel attribution in the affiliate world.
13) I think affiliate marketing as a sole business model will no longer be tenable. I think Google will insert itself more and more into the buying cycle of consumers and the traditional affiliate model will finally die. Affiliates who previously put in the effort in lieu of revenue to build a brand will reap the rewards and those who didn’t listen to Rae Hoffman-Dolan will wish they had. I’m glad I did.
14) I think a lot of affiliates and/or beginning affiliates will give up as Panda will make the barrier to entry too difficult and time consuming to understand. Panda will continue to decimate low quality affiliates and keep higher quality publishers on their toes.
15) I think that most large affiliates/publishers will, with the data and skill set they have built up over the past few years, become merchants themselves.
16) I think that the lack of anonymity for affiliates as a result of the necessity to participate in social to compete will clean the “darker” side of the industry up. Somewhat.
17) Continued growth in the industry: We’ll continue to see growth in the affiliate channel as technology and expertisebecomes even more sophisticated. Of note, industry analysts at Forrester predicted that the affiliate channel will reach $4B by 2014. Also, in their December 2011 report on the channel, they found that consumers perceive deals offered on affiliate sites as superior to those on the merchant’s website. It’s clear that the steady growth of the industry and consumers’ increasing reliance on affiliate sites will enable the channel to continue to thrive.
18) The evolution of mobile: We’ve been talking about mobile for a while now and the potential it represents for the affiliate channel. In 2012, we’ll see more opportunities in mobile. This will be driven by three factors. The increased number of smart phone users, which is expected to rise by nearly 50 percent from 2011-2015 according to eMarketer. The second factor is that mobile shoppers are expected to reach 72.8 million in 2012, according to eMarketer. Third, the mobile browser shopping experience will become a better user experience. As these two worlds come together they will create more opportunities for advertisers to reach their audience on the users’ preferred device.
19) It’s all about data! Whether it’s on a desktop, smart phone or tablet, the opportunities for advertisers and publishers will be contingent upon their ability to quickly and accurately mine customer data and present the right offer at the right time on the right device. This will require networks to provide sophisticated technology including easy to use, customizable data feeds while ensuring offers are current and relevant.
20) The US economy will continue to grow slowly but with an occasional knockback from growing economic problems in China, rapid oil price fluctuations and European wobbles. That means affiliates, merchants and advertisers will continue to see slow growth too unless they can create new revenue streams through innovation.
21) Several CPA networks will go to the wall as the FTC drives easy profits out of the sector and cash flow pressures mount. This kind of consolidation is a good thing as the CPA network space needs fewer, bigger players to drive increased trust and growth with major brands and agencies. CPA can boom, but it has to do more to educate big-brand CMOs.
22) If Obama loses in November the FTC will lose interest in enforcement.
24) Performance-based call campaigns will continue to capture more affiliate dollars. Industry leader RingRevenue will expand its current footprint in 9 of the 10 largest affiliate networks, while simultaneously driving calls in the offline world for advertisers whose offerings do not lend themselves to affiliate marketing.
25) Google Panda and the dominance of coupon and cashback sites struck a blow to many small and mid-size affiliates in 2011, and they will continue to struggle for survival as a result of assaults on three fronts: coupon/cashback sites, Google, and the recession. Online will continue to become more reflective of the offline world, with the bigger affiliates getting bigger and the small withering away. In every mature e-commerce market a handful of affiliates will be responsible for a huge share of sales.
26) The god that is Google will continue to enact algorithmic refinements which will impact negatively on most affiliate models, with a few exceptions. The Google Remote Rater document that was leaked a while ago stated that coupon and price comparison sites are acceptable. Therefore, the leading affiliates I mention in my first point will be such sites in the CPS space.
27) For CPA-paying advertisers, email and lead generation affiliates will be responsible for an even larger share of leads in 2012 than they were last year. Some of these affiliates operate ethically, others less so, but they will generate enormous volumes of leads. Their databases will grow and, with the continuing demise of CPM advertising, more and more list owners will enter the affiliate marketing fold to broadcast campaigns on a CPA model.
28) For the first time ever Affiliate Summit will cross the cumulative annual mark of 10,000 attendees.
29) A new affiliate management e-Book will be published (insider info: likely to be available in electronic format(s) only).
30) Affiliates will continue to evolve their multi-channel offering helping to drive the performance channel ever more mainstream. In 2011 we saw the UK’s biggest cashback site, Quidco launch a mobile app and offer in-store cashback and voucher code redemption, all supported by a significant marketing push that included TV and other above the line media. Alongside a handful of other well known publishers have established themselves as retail portals in their own right, attracting far more traffic than the vast majority of advertisers they feature. The implications are far reaching with a shift in the traditional publisher/advertiser relationship as well as a multitude of promotional activity, not all performance focused. This development will continue and will help drive the industry further towards professionalism.
31) Evolving this first point we have also seen some initial steps towards embracing the opportunities that mobile offers. At Affiliate Window and buy.at we have spent the past year analyzing our mobile traffic and have seen rapid adoption with our mobile sales and traffic increasing fivefold in the past twelve months. There is a chicken and egg dilemma with mobile however, in that many major advertisers have launched m-commerce sites without affiliate tracking in place. Therefore, where is the incentive for publishers to develop their own mobile proposition? Having said that we have seen incentivized traffic take the lead in 2011 primarily through in-store redemption. I would expect 2012 to see a handful of more engaged advertisers look to focus their energies in using affiliates to drive online traffic in store as well as actively pursue mobile strategies alongside their existing affiliate activity.
32) Regulation will continue to feature largely in the wider digital landscape with the revised ePrivacy Directive being actively enforced from May 2012. The IAB’s Affiliate Marketing Council (AMC) has already made a good start at engaging with affiliate marketers in the UK and has devised a five point plan that we will push out in the next few months. As a network we will be focusing our energies on encouraging affiliates to offer greater transparency to consumers on how on-site content is monetised. The AMC will also evolve as it looks to continue its agenda of self-regulation.
33) Niche affiliate networks will become more appealing to affiliates than general ones. This will be caused both by the affiliates’ focus on specific niches and the big/popular merchants joining these networks. Most of the smaller affiliate networks will become more and more focused on certain types of products / services, or they will only target affiliates from specific territories.
34) The ability to segment and target customers from specific territories through affiliates will be an important factor in the big merchants’ choice for the affiliate network(s) to run their programs on.
35) In the software vertical, games and security niches will continue to grow with the strongest rise of the mobile apps vertical. As “new entries” — SaaS and cloud-based end-user services will gain even more ground.
36) Small and medium affiliates will continue to focus on niches. They will prefer to rather have multiple websites for multiple niches rather than one website for all the niches.
37) Local authoritative affiliate websites with original content in form of reviews for products and services will have a bigger slice of the affiliate sales pie. So, to wrap it all up, the two main words in 2012 for affiliate marketing will be “niche” and “local”.
38) Over the last 12-18 months there has been a noticeable shift for brands to engage an agency to provide the account management for their affiliate campaign. Previously the norm would be that the chosen affiliate network(s) would act as both the technology provider and the service agency. More and more, brands are beginning to take the opinion that the technology provision needs to be separated from the account management and this has lead to a growth in both specialist affiliate agencies, digital media agencies as well as traditional full service media agencies bulking up their digital provision.
39) Further to the above, the market has seen several of the larger full service agency groups launching their own tracking solutions or utilising white-labels with the networks, thereby removing the need for a network at all. Personally, I think this is a trickier route to go down successfully and I think there will continue to be developments within this as with pure play technology providers entering the market to service this need.
40) The other main trend, which ties into the above, is the viewing of affiliate marketing within a wider marketing context. The affiliate sector has always sat slightly separately from “mainstream” online marketing (something that the affiliate community has encouraged in my view) but now brands are beginning to scrutinize the channel more. This is driven partly by the economic situation, partly by a natural maturation of the market and partly by the increasing involvement of media agencies in the arena. This has lead to an increase in the attempted understanding of the part that affiliates play within the overall customer journey and how this knowledge should influence trading discussions and buying behaviour in the affiliate space. Brands themselves are also becoming more sophisticated by incorporating metrics such as lifetime value of a customer in order to truly understand the real value of the affiliate channel.
If you have something to add to the above, the “Comments” are all yours; and I would highly appreciate your input.
Make sure to also take a look at Matthew Wood‘s post where he reviews 2011 and gives his predictions for 2012, Peter Hamilton‘s expectations of 2012, as well as Chris Johnson‘s summary of IAB’s Affiliate Marketing Council’s recent findings pertaining to 2012. Also, my today’s Affiliate Marketing Strategy in 2012 interview to Smart Insights may be something worth checking out.]]>