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New Studies Show Affiliate Marketing Shrinking Among Some Marketers

by Jeff Molander

Are revenues associated with affiliate marketing programs moving beyond flat-lining and actually declining among multi-channel online retailers?  The answer would appear to be yes given my recent conversations with executive decision-makers at large and mid-sized marketers alike who, broadly speaking, report the below factors driving this phenomenon:

1) Decreased competition in organic/natural search engine listings (with affiliates; due to search engine algorithm changes that penalize search-based affiliates)
2) Increased competition in paid search advertising (with affiliates and competitors) resulting in new rules that decrease affiliate sales volume

1) Decreasing expectations of affiliate marketing programs
2) Decreasing funding of affiliate programs (shrinking budgets)

To be clear, my comments focus exclusively on multi-channel retailers and direct marketers… and conversations I’ve been having via executive level consultations and/or networking at conferences. 

Decreasing Expectations
In summary, multi-channel marketers are reporting a decrease in expectation when it comes to affiliate programs as evidenced by Internet Retailer’s report released last week wherein they asked…

“How effective is affiliate marketing in generating online sales compared to other forms of marketing that you use to promote your retail web site?”

How did retailers rate affiliate marketing?

17% highly effective
20% somewhat more effective

47% about the same or slightly less effective (versus other online marketing strategies)

That’s only 37% of retail organizations suggesting that their affiliate program is more effective than other strategies.... leaving a clear majority suggesting otherwise.  In fact, an equal number (37%) told Internet Retailer that affiliate marketing was “somewhat or much less” effective.  What happened?!  Needless to say this is being under-reported in trade media yet is dramatically “off” of countless surveys past where retailers touted the pay-for-performance model as the hands-down-most-effective. 

Source: Internet Retailer Mag.

October 03, 2005

Multi Channel Retailing

Page 36 of 36 pages

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