The Affiliate channel is ever-evolving, with trends and patterns shedding light on industry dynamics. In their annual report released by the IAB recently, several noteworthy findings emerged, offering valuable insights for advertisers, publishers and agencies operating within the channel.
The IAB Report thoroughly analyses their annual survey which is completed by advertisers, affiliates, and agencies operating in the affiliate space. The survey assists in understanding overall engagement and usage of the affiliate channel, and how we can determine future strategies, trends, and challenges within the affiliate industry. Moreover, the survey results play a pivotal role in fostering growth and advancement within the current Australian affiliate landscape.
Highlighted below are key insights from the 2024 report.
Experience Levels in Affiliate Marketing
Firstly, the report highlighted that a significant proportion of respondents in the Affiliate Marketing industry have less than three years of work experience in the channel (39% for advertiser/agency and 35% for affiliate), and a further 48% have under a year's experience. Despite this, 64% of affiliate programs are managed in-house, reflecting a preference for maintaining control over marketing strategies and facilitating collaboration between teams internally.
The increased presence of employees who are considered 'new' to the industry demonstrates the strong need for fundamental knowledge training and support as well as the sharing of more advanced strategies along with testimonials and case studies. In other words, companies would be able to benefit from investing in training and educational programs to enhance their staff's skills and experience with the Affiliate channel. Recognising this need, we at Commission Factory offer an Agency Accreditation program to equip our partners with the essential skills for navigating the affiliate landscape effectively. We also provide a range of flexible service packages and lite touch services that include comprehensive training and education to give those advertisers managing their activity in-house the tools and knowledge for successful partnerships. Our frequently updated series of best practice videos covering all relevant topics in affiliate marketing management are also widely available and can be accessed here.
Additionally, resources such as the Essentials Training by the IAB Affiliate Marketing Council serve as invaluable tools for building expertise in this field and a resource we at Commission Factory also highly recommend.
Investment and Revenue Increases
Another noteworthy takeaway from the report is the positive correlation between investment in the affiliate channel and overall revenue growth among advertisers and agencies within the past year. It has been reported that 36% of advertisers allocate more than $50,000 per month to the channel, with 63% of advertisers indicating that they are planning to spend even more in the year to come. Additionally, for more than a third of advertisers, the Affiliate channel makes up 10%+ of their total online revenue (a figure that has increased by 11% YoY), demonstrating that affiliate marketing remains an instrumental online channel for revenue growth and stability. Similarly, on the publisher front, the report concluded that 54% of the publishers surveyed confirmed that the affiliate channel has contributed to 25%+ of their total online revenue over the past year.
With over 800 advertisers falling part of Commission Factory's brand ecosystem, and an average of 15 advertisers successfully launching their affiliate program with us per month, we continue to see the importance of the channel within advertisers' overall digital marketing strategy.
Value of Affiliate Channel
The report emphasises the significance of ROI and sales volume when advertisers assess the success of their affiliate program. 89% of advertiser respondents expressed satisfaction with the ROI obtained through the channel. This highlights the incremental value of affiliate marketing, particularly in light of current economic conditions, where performance-based channel models are increasingly favoured due to their cost-effective nature.
Furthermore, although an always-on performance marketing channel, there are various steps advertisers can take to monitor spend and budget in the affiliate channel - such as forecasting based on historic program results, reviewing current commission structures, and planning set tenancy budgets per month/quarter ahead of time. Click here for a further deep dive into our budgeting suggestions and tips.
Importance of Features in Affiliate Programs
The report draws attention to the key features that drive successful affiliate partnerships. Transparency in tracking and commission structures emerged as paramount; emphasising the importance of fair compensation and commissioning and advanced tracking capabilities to elevate an affiliate program's potential. Click here to find out more information on how you can enhance your current tracking setup.
By aligning with these core principles, agencies and advertisers can foster stronger partnerships and drive stronger performance with their publisher base.
IAB Conference - 30th April
The annual IAB in-person conference was held on the 30th of April at the NSW Teachers Federation in Sydney, and deep-dived into the most significant findings from their annual survey. Commission Factory's Matthew Titcomb (Marketing and Demand Manager), Amanda Calkins (Head of Publisher Development) and Alberto Morencos (Publisher Development Team Leader) attended the event, along with Kate Eringa (Client Strategy Manager) who took part in the IAB's annual panel discussion alongside industry professionals Dom Ferguson (Client Services Manager - Cashrewards), Mark Baartse (Consultant) and Rainer Schmid (Global Head of Marketing - BikesOnline.)
Our team's key takeaways from the conference included:
- Education on Channel Incrementality: Further education around the channel (particularly around its incrementality) is still very necessary; particularly with employees with less than three years' experience, to remove the ongoing stigma that the channel continues to be perceived as solely discount-based.
- Full-Funnel Strategy: Further education is also needed around implementing and running a full-funnel strategy and how a company can measure incrementality via this approach.
- Flat Fees and Tenancies: The importance of upskilling and increasing awareness around why flat fees/tenancies are needed in the channel; and how to evaluate their effectiveness/measure their overall success and need. Up until now, a firm belief that the Affiliate channel operates purely on CPA has been held, with this looking to change from now.
- Diverse Metrics for Success: Success in the affiliate channel shouldn't be solely determined by ROAS. Other metrics such as increased engagement, customer acquisition, and borrowed media performance should also be considered.
- Tailoring ROI and ROAS by Publisher Type: It's important to tailor ROI and ROAS expectations based on the type of publisher. Comparing ROAS from content creators to incentive or cashback publishers requires understanding the differences between these publisher types before coming to any key conclusions about what is deemed a strong ROI.
- Content Commerce vs AI: Whilst AI is automating numerous processes and ways of working, the personalised, tailored, and highly segmented approach to writing content is something that AI will not be able to master completely.
It was also flagged that two-thirds (or 67% of respondents) believe that the affiliate channel is pivotal in helping them achieve their business goals. This is due to the channel's stronger ROI compared to other digital channels being used, and in doing so are re-allocating (more) budget to the affiliate channel. The report itself reinforced this point by saying that approximately 9 out of 10 brands actively engaging in the affiliate channel are very satisfied with the return on investment it continuously delivers to their business.
Commission Factory Team (left to right): Amanda Calkins, Kate Eringa, Alberto Morencos, and Matthew Titcomb.
Final Thoughts
In essence, the latest IAB affiliate marketing report serves as a compass, guiding industry stakeholders toward informed decisions and building successful strategies. By leveraging these insights and aligning with best practices, advertisers and agencies can navigate the affiliate landscape with confidence, driving growth and fostering mutually beneficial partnerships.
Click here to download your copy of the report today.
Reference: Affiliate & Partnership Marketing – Industry Review 2024 by the IAB Australia Affiliate & Partnership Working Group.
Commission Factory is not only the Asia-Pacific region's largest affiliate platform, working with more than 900 of the world's biggest brands, it is also a performance marketing platform that allows affiliates, partners, and content creators to earn money and online businesses to increase sales.
Connect with the Commission Factory team to learn more about how we help brands and partners build and grow their affiliate marketing strategies.