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Data suggests UK marketers will increase affiliate ad spend in 2023 - here's why
January 9, 2023
By Nicola Wellington, UK marketing manager
Brand marketers continue to navigate a complex landscape, balancing ambitious 2023 marketing targets with unprecedented, challenging economic conditions. With consumer confidence at an all-time low, and inflation at an all-time high, the affiliate channel has retained its status as a robust pillar of transparency in the face of marketing adversity.
A UK industry-wide survey conducted by major networks and platforms: Awin, CJ, impact, adtraction, Tradedoubler, Acceleration Partners, Optimise and Rakuten evaluated responses from over 100 of the biggest advertisers and agencies to reveal how the affiliate channel is used and valued as we enter 2023.
1. ROI, ROI, ROI
It may come as little or no surprise that return on investment was the aspect that brands and agencies most valued in affiliate marketing activity, closely followed by sales volume and profitability. Whilst challenging macro-factors continue to impact businesses of all sizes, the affiliate channel has historically been credited with being robust in the midst of economic pressures. Founded on a cost-per-acquisition model, it empowers brands to test new digital tactics creatively thanks to the wide choice of partners and unparalleled control the model offers. For almost two-thirds of respondents, affiliate revenue accounts for more than 10% of total advertiser revenue. With a growing choice of publishers and technology partners available for advertisers to work with, affiliate remains a safe haven for ad spend due to its anchoring to a clear ROI.
2. Affiliate ad spend will grow in 2023
When asked whether advertisers and agencies plan to invest more of their ad spend into affiliate in 2023, almost half (46%) claimed they would be. In fact, this is fifteen times more than those planning to decrease spend. A further 39% said they will invest around the same level. No agency respondent planned to reduce spend. When asked how much they currently invest in the channel almost a third said they spend at least £600k per year, with 7% investing more than £10m. Delving deeper into the data, it was revealed that larger affiliate programs had a higher propensity to increase budget, possibly due to the maturity of the program, strategic focus and a great confidence in the channel as a secure investment versus other marketing avenues.
3. CPA transparency provides marketing confidence
Survey findings revealed that the majority of advertisers still overwhelmingly operate on a pay-for-performance basis. 95% of clients utilize the traditional CPA payment model, followed by tenancies and bonuses at 56%. As downward economic conditions commonly increase scrutiny over spend, the transparency and insights generated by the affiliate channel will allow brands to implement and refine strategy without impacting margins or profitability, due to flexible commission models and clear attribution data.
4. Marketers are embracing partner diversity
Almost half of respondents (47%) felt there were more partnership opportunities in the channel today, compared to a year ago. There is a growing appetite for affiliate partners that can achieve more than just drive profitable sales volume, brands have identified more upper-funnel awareness generators like editorial and influencers as key targets in 2023. In addition, the emergence of affiliate brand partnerships and technology solution providers is paving the way for advertisers to implement a wider digital strategy and reduce reliance on one or two core partner types or the traditional lower-funnel customer catchment.
5. Support during times of crises
The overriding sentiment throughout the survey data was one of positivity around the channel and its ability to support business needs in the current crisis. More than two thirds of respondents stated that affiliate and partner marketing will be more important to them in 2023 to achieve their marketing goals. The affiliate industry witnessed enormous growth and development in the wake of the 2008 recession as online buying behaviors evolved. With consumer confidence in decline and a continuing cost of living crisis causing economic chaos in 2023 we’re likely to see similar growth in the industry over the coming months.
Whilst uncertainty is undoubtedly set to continue throughout 2023, advertisers and agencies can leverage the choice, creativity and control of the partner marketing channel to insulate themselves from this chaos. By taking advantage of new, emerging partner types and low-risk payment models to drive incremental revenue and ROI, advertisers can continue to succeed and grow.