11 Comments

Where is the Affiliate Marketing Benchmark Guide 2006?

Jan 14, 2007
by

Working on articles at Wikipedia related to Affiliate Marketing showed me some interesting things and look into those things a bit more than I would have otherwise.

While there was already a thought forming in my head, did I receive an Email from a foreign marketing agency that is interested in expanding into the US market and looking for some numbers, without finding them.
That reinforced what I already suspected.

What the heck is this guy talking about you might ask. I am talking about statistics and benchmarks for the affiliate marketing industry, or better the lag of it.

Maybe they are locked up behind Market Research Subscriptions and Commercial Statistics with a triple or quarto digits price tag. Data collected by companies like: Forrester Research; Nielson/netRatings, comScore, eMarketer; JupiterResearch; American Technology Research; Piper Jaffray & Co.; Deutsche Banc Alex. Brown; Veronis Suhler Stevenson; J.P. Morgan; Merrill Lynch; SG Cowen; Smith Barney; Myers Report; The Kelsey Group; GartnerG2; PricewaterhouseCoopers (PwC); TNS Media Intelligence and Universal McCann

I have no access to the data although I tried to get some, but I bet some people who read ReveNews do. If you do, please do me a favor and check what data you can find to Affiliate Marketing.

Just by itself (hard figures) and in relation (percentages) to other Marketing Channels like Email, Display Advertising, PPC Search Engine Marketing etc.

I was accessing the more affordable stats for the internet marketing industry, which are available from MarketingSherpa for the United States, e-Consultancy for the UK and the AffStat Report by Shawn Collins specifically for affiliate marketing in the United States. But even those are only providing very limited information to look at affiliate marketing compared from a higher view down to see what the impact of affiliate marketing is on the overall business of a merchant.

I found following public information.

Quote from Wikipedia

The total sales generated through UK affiliate networks in 2006 was £2.16 billion in the UK alone. The estimates were £1.35 billion in sales in 2005.

Source:
e-Consultancy Affiliate Networks Buyers Guide (2006)

Quote from Wikipedia

The MarketingSherpa’s research team roughly estimates affiliates worldwide will earn $6.5 billion in bounty and commissions in 2006. This includes retail, personal finance, gaming and gambling, travel, telecom, ‘Net marketing’ education offers, subscription sites, and other lead generation, but it does not include contextual ad networks such as Google AdSense.

Source:
Affiliate Summit 2006 Wrap-Up Report — Commissions to Reach $6.5 Billion in 2006 , Anne Holland, President of Marketing Sherpa on 1/11/2006

Nice number, where does it come from? I missed that in the wrap-up report. I spent $5 to find out but was disappointed.

I had to remove a sentence from the affiliate marketing article at Wikipedia that stated that merchants that implemented an affiliate program had in average a 20% increase in revenue as a result of that.

I have no idea who added that to the article nor was I able to find any source for this statement that could back it up. Not just the 20% growth, any growth.

Such a report would make it much easier to sell somebody the idea of affiliate marketing. There are probably a few decision makers out there that think about affiliate marketing as branding and beyond that as a diversion of traffic they would have gotten through their other channels anyway.

If you can show that this is not accurate and that an affiliate program (if implemented properly) increases revenue in average by x% or customer retention by x% or lowers customer acquisition cost by x% , then you are in a much different situation and probably get some ears.

A burning question and ongoing discussion with everybody guessing and speculating is the impact of affiliate marketing on other advertising channels and vice versa. There is a give and take of course, areas where affiliate marketing competes with other channels. Directly like in PPC and SEO or indirectly like email marketing where affiliate cookies are overwritten if the customer response to the email.

Here are the numbers I was asked about by the foreign agency.

  1. Size of Affiliate Marketing revenues, eCommerce & Search Revenues
  2. contribution of Affiliate to ecommerce revenues.
  3. Correlation between Search Marketing revenues & Affiliate Marketing
  4. Correlation between eCommerce & Affiliate Marketing

With digging through some individual reports that state some total e-Commerce figures at sites like Internet Retailer, Clickz.com and others; extracting some individual numbers related to the individual marketing methods in the MarketingSherpa’s E-Commerce Benchmark Guide 2006, Email Marketing Benchmark Guide 2007 and Search Engine Marketing Benchmark Guide 2007 plus mix that with Shawn Collin’s AffStat 2006 and AffStat 2007 Reports is it may be possible to come up with some very rough estimates to some figures and let’s call them educated guesses to some others.

I have not seen an Affiliate Marketing Benchmark Guide. Every other larger type of online marketing and advertising has one. Why not affiliate marketing?

Is it because you can’t benchmark affiliate marketing? It is hard, I believe that. Also that some numbers will be less accurate than others, but any number that was perceived in another way than using feelings in the lower abdominal of somebody old in the industry will be better and more useful for decision makers to make a somewhat educated decision.

Does the Business Technology Marketing Benchmark Guide 2006 show anything? That’s the only related benchmark guide I was not able to have a look at. It does not seem like it.

Please proof me wrong.

Filed under: Affiliate Marketing
  • http://www.costpernews.com Sam Harrelson

    You can't benchmark affiliate marketing (which is wh analytics are doomed).

  • http://www.cumbrowski.com carsten cumbrowski

    You can, start with the basics like who much revenue was generated by affiliates and how much percent is that of your total revenue.

    How much money did you spend on affiliate marketing and how much was it compared to other marketing channels.

    Than look the growth rates, before affiliate program and then with it.

    Affiliate Sales growth proportional to Overall Sales growth.

    then go ahead and get more sophisticated and track where things overlap. etc. etc.

    Add to that some case studies.

    There is something, alright. I could be much better, true, but I hardly see the basics. AffStat is touching a view but mostly without looking at the other marketing efforts very much or at all.

    Once Advertising that do basic tracking get some numbers, they will realize what else they should track and analytics and numbers will improve and more realistic.

  • http://www.affiliatetip.com Shawn Collins

    Hey Carsten –

    Why don't you compile and sell the report?

    I collect information from affiliate managers and for affiliate managers, so it's not going to give the answers everybody wants.

    Now that you've outlined the need, don't wait for somebody else to capitalize!

  • http://www.cumbrowski.com carsten cumbrowski

    Hi Shawn,

    Thanks for the comment. I was thinking about it. Seriously, but those numbers would be much more flawed if I would do it myself for various reasons.

    It is also not my core business and that is needed because to get at least the available data together for some rough numbers cost a small fortune.

    Did you check how much it cost to get access to the reports at eMarketers and Nielson/NetRatings (I contacted them end of last year)? Thousands of dollars. Or only $500-$700 for individual reports. I saw already a handful that could be used if cross-referenced with some other data.

    I was actually trying to get somebody else interested. Somebody who has the know-how, the access and the reach to compile something useful and even get some missing data themselves via tests. You know who I am talking about :)

    I would like to be a bit part of it, but don't intend to make a career out of it.

  • http://www.affiliatetip.com Shawn Collins

    > I was actually trying to get somebody else interested. Somebody who has the know-how, the access and the reach to compile something useful and even get some missing data themselves via tests. You know who I am talking about :)

    I couldn't agree with you more. Sam Harrelson will be great for this.

  • http://www.cumbrowski.com carsten cumbrowski

    I don't think that Sam has the pocket change to get all the data purchased, compared and crunched and the resources to fill in some blanks by asking advertisers or doing some own tests.

    I was thinking about MarketingSherpa in cooperation with MarketingExperiments. They are now "one" and could put their combined knowledge and power in the industry to good use and deliver some data for the Affiliate Marketing Industry.

    Like the report about the cookie deletion.

  • http://www.affiliate-software-review.com Peter Koning

    Hi Carsten – I don't mean to hijack your thread but since you mentioned it, where is the latest and greatest info on cookie deletion wrt affiliate marketing?

    Thanks,
    Peter

  • http://www.cumbrowski.com carsten cumbrowski

    the first version would not be that good due to the lag of capabilities of tracking and analytics on the side of the advertisers, but it is getting better and if they see the tendency of some figures and the comments what was not considered or what had to be estimated at large, some might start tracking those things.

    If revenue generated via the Affiliate Marketing channel makes up 10-40% of some merchants of the total revenue, they better be interested.

  • http://www.cumbrowski.com carsten cumbrowski

    Peter,

    here it is
    It's about Cookies that are removed by anti-spyware and anti-virus vendors actually.

    Carsten

  • http://www.cumbrowski.com carsten cumbrowski

    I sent some comments via email to this topic which I’d like to share with you.

    I hope that they will make it a bit more clear what general direction this thing is aimed at.

    I don’t know either how this would work out eventually, but I feel that it is something worth spending time on and get started, at least with something.

    Let’s apply basic affiliate marketing wisdom here. If you only talk about it, nothing will ever happen. Just start and then adapt while you are moving forward.

    Cheers

    Carsten

    ———————————————————

    The Sherpa Benchmarks and the AffStat Report would not be sufficient. I found already other reports, in parts or without access to the actual number.

    I have a e-Consultancy subscriptions and they added some data to their Affiliate Networks Buyers Guide and also their Internet Statistics Compendium has some interesting numbers. Some for the US and Worldwide, but most for the UK specifically. I also say various reports at eMarketer, but I have no access to them.

    All those numbers are nice and good, but you can’t crunch them always to get as a result a figure that comes even close to reality. You can see a tendency maybe, if you are lucky.

    If you cross reference different numbers from different sources then you have already a natural problem, because the numbers were collected under different conditions. That can result it comparing apples with oranges at best. I think MarketingSherpa in combination with MarketingExperiments would be able to pull this off.

    The Benchmarks would not just a good to know for affiliate marketers, but also for people looking into it. It can also show some tendencies and problems in the industry backed at least by some numbers. The numbers used in arguments today are completely useless, because they are usually taken out of context or simply made up, aehm ‘excuse me, very rough estimated.

    I found the statement about the average 20% in revenue growth because of an affiliate program, which I mentioned in my Blog. That was for UK merchants and stated by e-Consulatancy without a explanation how they got to that number in their Internet Statistics Compendium. I hope this makes sense.

    ———————————————————-

    This one was directed to MarketingSherpa.

    I want to kick around this topic at the summit with anybody who is interested

    I see Shawn and SAM already taking notes. ;)

    The Benchmark should show how effective affiliate marketing can be, like with the ecommerce benchmark should the merchant not simply treated the same.

    An affiliate program can have more than one purpose. This has impact on the cold numbers like revenue generated by affiliates compared to the overall revenue.

    Bigger Brands have different goals that small start-up,. brick and mortar vs. 100% online, advertiser where CPA makes sense (services, subscriptions) and advertisers where revenue share is preferable (retail), although CPA is also starting to pick up there.

    The often mentioned “lifetime value” of a customer plays an important role here.

    Putting affiliate marketing into the right perspective compared to other marketing channels and methods. It should also show if and how much you could benefit from an affiliate program (revenue, brand Exposure or simply

    to get “them” that your competition can not). That number would, as I already said, depend on industry and company size.

    For marketers in affiliate marketing are numbers of interest that show the effect of affiliate marketing on other types of advertising and marketing on the web.

    Affiliates do everything, so you will run into them and sometimes also “collide”" (like PPC search marketing) and compete with them. Exact figures are hard to get. I guess those numbers are only possible to get via a study or if more advertisers can be convinced to look at this kind of stuff.

    Revenue development when a new marketing method is introduced and measurement of not just the results of that new method itself, but also the impact on existing method.

    The technology is already out there to track the different touch points of the customer with the advertisers brand at the various stages of the buying process to see what influences consumers in what way and where is one thing really “stealing” another one the customer and blurs the overall results.

    Analytics is getting more and more integrated and connected which is good.

    You can’t just look at things with a narrow view ignoring what is going on around it. Behavioral targeting plays along this trend by actually leveraging the multiple touch-points in a way to reinforce the marketing message. Since affiliate marketing deals with almost every other form of marketing in one way or another and overlaps to some degree with the merchants direct marketing efforts , but expands the reach of the same beyond what he would be capable of by himself, will it become imperative to understand how the things can work with each other and where they conflict.

    This will give advertisers the opportunity to get an understanding of their customers behavior and decision making process and by working together with their affiliates and the ability to reach their customers at the farthest and most exotic places.

    They can be there when they should be there and not there if it is the wrong time for it. Customer will appreciate it and probably also consider Ads to be something good that enriches their life rather than a annoying and intrusive form of one way communication with a selfish-purpose and not the particular customer in mind. This on the other hand will strengthen the brand, customer loyalty, conversions and the overall bottom line.

    You can see, I am thinking a bit farther already, but that is what affiliate marketing is all about. The frontier of marketing.I hope this makes sense too hehe.

  • jamix

    Carsten, I'm working on launching an affiliate network in my country and I can definitely relate to the frustrations voiced in your article. Having representative data on the industry in the US would make it so much easier to sell the idea to investors and merchants. It's just that I can't find it so far.

    Any improvement on the situation a year after the article was published?