R.O.EYE Blog | Our eye on the affiliate industry

There have been many new advancements within the affiliate marketing industry, and it feels like an age that we’ve been saying, “This is the year for mobile.” But, stealthy, video has made a small charge that could pay large dividends for affiliates.

We already know that TV advertising is still the king of advertising. A survey shown in NMA suggested that this medium has a 56% impact (i.e. influence), and when comparing to web banners’ supposed 4%, its clear to see which one is most effective – by a long shot!

But online, we are still seeing the rise of video still continue; whether it’s sharing a piece of smart viral marketing on Youtube.com, or viewing a ‘virtual catwalk’ on ASOS, we are finding that videos can not only draw in viewers, but could also have a pivotal role in ensuring conversions, as well as benefitting heavily from social sharing technique such as Facebook, Twitter and Sphin it!

We’ve already seen ‘Coull’ from Buy.at, which allows publishers to place affiliate links into video, but more recently, Dell have made their iVideo Widget available for affiliates through the TradeDoubler network. It provides a new way to actively engage with the consumer, providing a full interactive overview of the products available, the key USPs of each product, as well as an option for support; and of course, an all important ‘buy now’ button. This piece of inventory is of significant importance because not only does it demonstrate a committed approach from Dell to the affiliate industry by making available such a succinct and comprehensive tool, but also the potential reach this could have should affiliates adopt this.

Looking at another sector, like travel sector for example: How much more appealing would it be to see your hotel room through the medium of video, showing how much a great time you can have? It would certainly be a lot more interesting than a banner, and it’ll probably be more interesting than an episode of ‘wish you were here’ should the merchant get the mix right. With big-ticket items such as travel, the video form could also benefit from comments by happy customers leaving feedback to increase confidence levels, thus increasing conversions for affiliates. There is a wealth of opportunities to really make this take off.

I feel that videos, used in moderation and within a specialist site (as no-one likes information overload – imagine 20 videos on one site or similar brands…), could dramatically improve conversions. But I guess that the proof is in the pudding and time will tell as to whether the video becomes the next big thing that provides a commercially viable uplift, or will it simply be a nice addition in order to enhance stickiness as opposed conversions. One thing’s for sure is that marketers need to start taking video seriously, seeking its performance from early adopters, and give great contemplation to integrate this within their own affiliate marketing strategy.

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The recent recession has caused everybody to ‘tighten their belts’ and watch their spending. Families and businesses alike have been monitoring their outgoings with more attention than ever to the bottom line. Various industries have felt the pinch and experienced bankruptcies and redundancies, however online advertising has managed to keep performing well, even experiencing growth in some areas. Research performed by the IAB (Internet Advertising Bureau) found that internet advertising expenditure last year grew 4.2% to £3.5 billion from 2008. So why is this?

The IAB list various reasons such as more people shopping online, greater public access to the internet and social media. The appeal of low start up costs and the ability to work from home has obviously caught the attention of British entrepreneurs and this in turn has helped online advertising prosper.

Affiliate marketing in particular has gone from strength to strength. Spend in our sector has increased by 38.2% since 2008, a huge rise, with the indication that it will continue to increase. Such strong improvement has to be accredited to AM’s unique selling point of letting the client only pay for results. This means that every advertising pound spent can be accounted for and the ROI proven. As well as this, AM can be carefully analyzed and performance can be constantly tracked.

Through affiliate marketing merchants have the ability to establish an online sales force very quickly, and on a revenue share basis. This not only means their cash flow is not affected, but they also have the flexibility to alter or drop that sales force instantly.

No other industry has this flexibility. This is why the online community continues to thrive whilst the bricks and mortar world of business and advertising are scaling back. With the potential for a double dip recession, and the harshness of the banking crisis experienced in 2008, the world has been forced to look at alternative solutions. The whole financial climate has benefited online advertising.

In addition, AM is not standing still, with dialogue over payment methods and the ‘last click wins’ policy at the forefront of the industry. Such persistence to innovate and improve can only help the industry as a whole and ensure we are at the forefront of advertising expenditure figures next year.

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Geo-location social networking has been with us for just over a year now when the likes of foursquare burst onto the scene with its “check in” service. Admittedly, I and a few of my colleagues at R.O.EYE are highly addicted to foursquare and stealing Mayorships off them is extremely satisfying. “Checking in” however has been a pastime reserved for members of the online community (geeks), If you talk to anyone outside of the “online” industry about Foursquare or “check-ins” the immediate response is “what’s the point”.

I feel this is all about to change though, Geo-social media has now reached a pivotal point in its development into the mainstream, the question of “what’s the point” is now answered with the introduction of retail offers or even free stuff for the Mayor.  As of August 2010, foursquare had over 15,000 venues, promoting special offers to a base of 3 million users worldwide. The figures look favourable for a service which is still in its infancy and show a bright future for the channel.  Foursquare is already valued at over $100m dollars and it is the market potential that has caught the attention of the eye of the eye of the other big players.

Most significant is the recent launch of Facebook Places which looks to building upon the functionality offered by services like foursquare and Gowalla and make it available to its 500 million active users. As long as privacy concerns are dealt with appropriately this is going to be a real step forward for geo-social into the mainstream. The potential to utilise Facebook data such as “likes” to deliver real time deals and offers is mind boggling. Imagine that you go into town shopping and you call into a music store (and check in) to browse the recent releases. One of your “like” artists on Facebook has just launched a new album, the music store can ping you a message via Facebook to alert you to the release and even issue you a discount code. Amazing!

I think Facebook’s entry into the space is a good move but I do fear for the guys that started the whole thing off. After all if you are a Facebook user, which most people are these days, why would you log into a different app/service when it can be managed from within a single interface? It will be interesting to see what impact Facebook has. Will it grow the market and take other geo-social services along with it, or will it simply cannibalise the pre-existing user bases people migrate to a potentially superior service?

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Several months ago, we created a Geo-Targeting tool for eBay affiliates to use. It was promoted through the eBay Partner Network blog, and picked up by a wide cross section of publishers.

It essentially allowed them to geo-target the existing content units they were using, so that their widgets would automatically display products from the correct local eBay site of the visitor.

As a bit of a research project, in a Mark Zuckerberg kind of way, we’ve analysed the data, and can see some positives results.

Obviously, to protect publisher privacy, to present this info on the blog, we’ve taken a random sample and then averaged out the data below:

So what are the points of interest?

Well, as you’d expect, clicks for the publisher’s “home” country remain fairly consistent, as do publisher commissions. The slight drop in home country clicks can be attributed to visitors from other countries, who before the implementation, would have still clicked through the widget despite it showing results for a different country.

The quite staggering number however, is the increase in clicks from other countries once the geo-targeting tool was installed by the publishers, actually out performing the publisher’s home countries!

So should we all run out and buy geo-ip databases to start coining in the benefits?

Well yes and no…

I feel that part of the increase is from publisher effort. Publishers may have already be making a conscious effort to increase their global traffic, and would have implemented this geo-tool as part of that. This would perhaps account for the fact that there was already low level activity reporting for other territories, in the before stats. Also, publishers may pick up the tool, and be spurred into improving and creating international content and traffic sources.

In addition, eBay’s global reach shouldn’t be ignored. You can promote eBay in 13 countries, all from one interface. Geo-targeting in this case is a no brainer. It’s obviously slightly more difficult if you’re promoting UK only merchants.

However…

I still don’t think you can totally ignore these figures. Sure it may not be applicable to every affiliate, but you never know where your site will crop up around the globe. An affiliate friend of mine, who runs a niche UK based camping site, whose primary traffic source was PPC, told me that it was not uncommon for him to get emails from the USA, inquiring if he delivered there.

I’m sure some of you have your own opinions on this, and may have even dabbled in other markets, but for those that haven’t, it may be an option worth exploring.

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