Unlocking value of affiliate marketing – IAB signals big plans for Australia

Pippa Chambers
By Pippa Chambers | 23 October 2016
David Jones uses affiliate marketing as a key part of its digital marketing mix

David Jones, Country Road, Myer, Net-a-Porter, Burberry, Liberty London and ASOS are just a handful of brands using affiliate marketing, but until now there has been no official industry guidelines for the booming sector Down Under.

As a result, Interactive Advertising Bureau (IAB) Australia’s Affiliate Marketing Working Group has published the first Affiliate Industry handbook for the Australian market. Plans are also afoot to assess the local affiliate market to establish its size and revenue within the digital ad space. 

According to the IAB UK and PwC Online Performance Marketing Study 2015, affiliate marketing produced £16.5 billion in sales in 2015, equaling 10% of all UK retail e-commerce (and 1% of UK GDP). The same report noted that affiliate marketing generates a 14:1 ROI. 

While there are no official Australian figures, affiliate marketing is a rapidly growing component of digital marketing, or specifically ‘performance marketing’, in many foreign markets.

The new handbook outlines the basic mechanisms of the practice, the different types of affiliates, the key players in the local markets, the role of content and how to capitalise on mobile and other technologies. 

It brings home the bacon – and new shoppers

David Jones digital marketing specialist Claudia Dwyer says affiliates are not only bringing sales to David Jones, but they are bringing new valuable customers.

“Affiliate marketing is an integral part of our digital channel mix; we can see that it directly drives and influences a customer to purchase on our website with a consistently strong return on investment,” Dwyer says.

“We’ve established a solution around our strict brand guidelines, working with transparency across the breadth of our partners – whilst also streamlining processes. As affiliate partners and strong top of the funnel influencers continue to grow in Australia, we can also see the opportunity for David Jones to grow with them.”

As well as specialist networks like Rakuten Marketing and APD, media agencies have also been ramping up the focus on performance marketing methods. In June this year Dentsu acquired performance marketing firms Scorch and the Search Factory. Last year ZenithOptimedia also said it was investing big in performance marketing solutions, having acquired FirstClick.

Affiliate marketing, the practice whereby a digital publisher or website promotes an online retailer and earns a commission based on the sales or leads that the advertising generates for that online retailer, in the past suffered from stigmas about product quality and spam associations, due to a lack of understanding about the channel. It has now however emerged from such a past and is used by globally renowned brands and publishers.

Further sector analysis needed

The new handbook is the first project completed by the working group, which next plans to examine the local affiliate market to determine its size and revenue within the digital advertising and marketing ecosystem. 

IAB CEO Vijay Solanki says affiliate marketing has outgrown its role as just another marketing channel and become an objective in its own right.

“I know from my time overseas as a marketer just how valuable affiliate marketing is,” Solanki says.

“I think we can expect a similar story will soon be told here in Australia as the industry grows in financial importance and reputation.” 

Established by IAB Australia in July 2016 as a cooperative of the major affiliate marketing companies in Australia, the working group aims to bring awareness and education to the growing local market.

The IAB Affiliate Marketing Handbook 2016 was authored and compiled by Isabell Schneider from GroupM’s MediaCom, Richa Dani at Dentsu’s Columbus, Verity Beard at Allure Media, Roger Lee from APD, Anthony Capano from Rakuten Marketing, Chris Carner at Cash Rewards, Matthew Sheppard, Navigate Digital and Zane McIntyre at Commission Factory

Navigate Digital’s Sheppard adds: “Affiliate marketing is an industry built on relationships and I’m pleased the group has been able to work together to produce this handbook and help drive the channel forward."

Check out the handbook here.

Interested in performance marketing? Check out our November print edition's Ad Tech 101 - sign up to it here.

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