Online performance market rockets

Affiliate marketing and lead generation activities are bringing in the kind of revenue only City bankers can dream of, according to the Internet Advertising Bureau UK, which claims the disciplines led UK consumers to spend £16.5bn in 2014, up 14% on the previous year.
According to the decidedly bullish third annual Online Performance Marketing study conducted for the IAB by PwC, UK businesses spent £1.1bn on these activities – 8% more than in 2013. Bur this equates to an ROI of 15:1 – 6% higher than in 2013.
Across so-called “online performane marketing” (OPM) sites – from large players such as Comparethemarket, Vouchercodes, Nectar and Quidco to the 12,000 smaller publishers in the UK – 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).
In 2014, consumers made 125 million purchases via affiliate websites – totalling £15.4bn, with £1.1bn in sales was generated from the 30 million contact forms submitted. Consequently, the sector drives 10% of all UK e-commerce retail sales and roughly 1% of GDP – the latter, an approximate 34% increase on 2013, the report claims.
PwC senior manager Dan Bunyan reckons there is nothing in the report that lives up to his name, with the sector actually walking tall. Bunyan explains: “The fact that consumer spend is growing at nearly twice the rate of advertiser spend, indicates the market is maturing and brands are becoming more efficient in how they drive consumer spending.
“OPM has grown to a near-£17bn industry due to the fact that all parties continue to benefit. Advertisers get new customers extremely cost-effectively, consumers save money and get access to free online content, whilst the publisher in the middle gets revenue through referral fees.”
In comparison to the overall 8% increase, advertiser OPM spend on mobile and tablets increased by 72%. Consequently, the share of OPM spend allocated to these devices increased from 11% to 17%.
IAB chief strategy officer Tim Elkington pins the rise on the booming mobile market. He said: “Advertisers are heavily increasing OPM spend on mobile because it’s playing a bigger role in shopping. Half of adult smartphone owners buy something with their mobile every month, a quarter do so weekly.”
The finance sector, driven by insurance and credit card advertisers’ use of price comparison sites, is the biggest spender – accounting for 34% of OPM expenditure in 2014 – followed by retail (21%) and travel & leisure (19%). In total, these three sectors account for 74% of OPM spend.
An accompanying YouGov study shows that almost four in five (79%) Britons online³ have used a website employing one of the main OPM techniques in the last six months. Cashback websites are the most frequently used – around two-thirds (67%) of people who have used them do so at least once a month.
Holidays/travel (cited by 21% of respondents) is where people are most likely to be trying to save money or looking for more information, followed by energy tariffs (16%) and car insurance (15%).
“Britons generate 10 million clicks every day in pursuit of getting a better deal or finding the right product – it’s an utterly ingrained part of today’s savvy consumerism. To put it in context, at £17bn it’s already as big as the beauty industry,” concluded Elkington. “The majority of people online say they’re aware how these sites make money, and whilst the privacy debate continues, the reality is that nearly half are willing to share personal information to get these things.”