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Affiliate marketing ROI increases

News, 28 April 2015

LONDON: Advertisers increased the amount of money they spent on affiliate marketing and lead generation activities during 2014 and were rewarded with improved return on investment, new research has shown.

The third annual Online Performance Marketing study, conducted for the Internet Advertising Bureau UK (IAB) by consulting firm PwC, revealed that UK businesses spent £1.1bn on these activities last year.

These are where advertisers only pay a publisher for an ad if it causes someone to complete an action, such as a purchase (affiliate marketing) or submitting contact details (lead generation).

That sum was 8% more than in 2013, while consumers were found to have spent £16.5bn as a result, or 14% more than in 2013.

That equated to a 6% rise in ROI, which in 2014 stood at £15 for every £1 invested by advertisers.

The IAB reported that, overall, online performance marketing (OPM) had driven 10% of all UK ecommerce retail sales and roughly 1% of GDP.

Dan Bunyan, senior manager at PwC, noted that all parties involved – advertisers, consumers and publishers – benefited.

"The fact that consumer spend is growing at nearly twice the rate of advertiser spend indicates the OPM market is maturing and brands are becoming more efficient in how they drive consumer spending," he added.

In particular, brands are turning to mobile: this grew nine times as fast as the overall market and the 72% increase seen here boosted mobile's share of OPM spend from 11% to 17%.

Just three sectors – finance, retail and travel & leisure – accounted for three-quarters of all OPM expenditure as consumers explored money-saving options.

"Britons generate 10m clicks every day in pursuit of getting a better deal or finding the right product," said Tim Elkington, chief strategy officer at the IAB. "It's an utterly ingrained part of today's savvy consumerism."

So ingrained that four in five (79%) of online Britons have used a website employing one of the main OPM techniques in the last six months. Cashback websites are the most frequently used (67%), followed by holidays/travel (21%) energy tariffs (16%) and car insurance (15%).

Data sourced from IAB; additional content by Warc staff