Affiliate marketing industry insights - January 2020

The latest IAB Australia research findings

Last week the IAB in Australia released their second comprehensive review of the affiliate marketing landscape across the ditch. The report is packed with insights and perspectives about the channel and is up-to-date as of January 2020.  

We don’t know that such research has been done in New Zealand so for anyone keen to understand a little bit more about this channel you’ll find the full report here. It’s likely the nearest representation of what the New Zealand market might look like a few years from now.

While the report seems to focus largely on affiliate marketing from an advertiser perspective and suggests that most are happy with the returns they are getting, and plan to spend more in the coming year, there are also some valuable insights for publishers. 

Here is a quick rundown of the key insights in the report:

Return on investment 

84% of respondents rated the return on investment from the affiliate channel as 7 out of 10 or higher when compared with other marketing channels.

New customer acquisition

For over half of marketers that use the affiliate channel, it drove 20% or more of new customer sales

Still new to many

Approximately 6 out of 10 marketers in Australia that use the channel have been doing so for less than three years with 41% using it for 1 to 3 years and 16% less than one year. This would indicate that the market is still relatively immature and growing. 

Spend intentions

69% of advertisers have increased their affiliate spend in the last 12 months with 74% intending to increase it over the next 12 months

Budget allocation

75% of respondents said that their affiliate marketing spend came from the marketing budget while 22% said that it came from the e-commerce budget.

Reallocation of spend

It was insightful to see where the spend was coming from. The majority was being reallocated from PPC, social and remarketing. Perhaps encouraging news for publishers as it shows the opportunity to get exposure to performance budgets (e.g. Google search, Facebook which account for almost 70% of the $1 billion New Zealand market) rather than cannibalise their existing display advertising (which in New Zealand accounts for less than 15% of spend).

Payment models

While 99% of Payment models included CPA or cost per action 47% of brands also pay tenancy face which is another piece of encouraging news for publishers. In New Zealand we have seen affiliate relationships can lead to media spend, but did not know it was that common

Affiliate types

In terms of the type of affiliate that brands place the most value on unsurprisingly it was content sites however that was actually equal to reward sites which includes loyalty, points, cashback and incentive sites that have motivated shoppers (e.g. Rewardhub) followed closely by comparison sites (e.g. NZ Compare).   

Of least value were browser extensions and paid search, the latter no doubt because they compete with advertisers on their own brand. Somewhat surprisingly, social influences were around the middle and not that much further above coupon and deal sites in terms of perceived value.

Attribution models

In regards to measurement 4 out of 5 were still using last click attribution which most will agree is far from ideal however with 19% now using multi touch attribution including first click and custom, things are moving in the right direction in that regard.