Looking back and forward planning!
By Mark Kuhillow, Managing Director, R.O.EYE
When we founded R.O.EYE in October 2004, we were pioneers in the affiliate space, who believed that the fledgling industry represented a big opportunity. It seems that we were right, as three years on the affiliate market is booming and we are now the largest affiliate marketing management agency in the UK! We’re now well beyond our third birthday, and the time seems right to look back at how far the industry has come already in its brief history.
The huge difference in the affiliate market of today and that of three years ago is perfectly illustrated by the A4U Christmas Party in 2004. The event was populated by young affiliates and their families, all of whom were excited about what the future would bring. Some light networking was followed by various games - designed to appeal to the attendees’ competitiveness. I would estimate that there were maybe a hundred people there, the vast majority affiliates who had come along to enjoy themselves and not take anything too seriously.
There was some business talk, but no mention at all of RFIs (Requests For Information) or RFPs (Requests for Proposal). Affiliates, clients and agencies were content to just sit down, discuss their existing projects and try to see where value could be added. There was no strategy behind it at all. This was where R.O.EYE differed - we were the first in the UK to introduce an account management service that provided a strategic approach focused on the needs of both the affiliate and the client.
2005 marked the rise of the Pay Per Click (PPC) affiliates. Due to a commercially aggressive business model, they rapidly began to account for a significant slice of online advertising share. However, Google did respond to this trend by raising the bar for affiliates. To that point, if you had entered any random search term, you would have been presented with a link informing you that one was live on their auction site - which, after much exhaustive searching, you swiftly realised it wasn’t.
At this point, the market dynamics began to change, as corporate money was making its presence felt. PPC affiliates were making significant sums, which allowed them to invest in PPC, Development and SEO teams to broaden their product portfolio. Google for one made no secret of the fact that is was more than happy for affiliates to make money through its system - they were making a solid contribution to its Profit and Loss sheet.
More recently, some affiliates have guaranteed their success by building rich content sites, which add true value to the consumer journey. Affiliates such as Flightmapping spring to mind - great sites which offer a unique service on the web.
There is a caveat to all of this, however, and that is the increasing number of affiliates who are being forced to abandon the industry, for various reasons. I have seen many who have announced their decision to move on - either because of overly aggressive competition, higher click prices or simply the long term impact of working alone. Many of these have been people who were there right at the beginning of the industry, and it is sad to see them go.
So where does this leave us? My own view is that the inevitable consolidation of ’super-affiliates’ (however this is fundamentally defined) will continue as traditional market forces take affect. Those with a strong proposition will further enhance their position in the market, while I would expect to see those affiliates who have built up funds to look for new ways to invest, potentially diversifying or looking at other territories.
Yes, the affiliate space has become more corporate - but we are probably only about 65% of the way to being truly professional. I believe that it could take another 12 to 24 months for all the current activity - mergers, acquisitions and closures - to die down. After this period, expect to see the affiliate market emerge as a robust, mature, self regulated channel which can stand head and shoulders above its siblings - PPC, SEO, Email, Design & Build, and Media.
Here’s to the next three years and more…
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