In 2020 it is estimated that the global value of the affiliate marketing industry is around $12 billion.
This is a significant piece of change for a field that was only kickstarted just over 20 years ago when the Amazon backed Befree and Linkshare (now Rakuten) launched the first significant affiliate marketing program.
The rise of affiliate marketing has been impressive, and it is not expected to slow anytime soon. Some pre-Coronavirus estimates predicted that the affiliate marketing spend in the US would grow a further 10% year-on-year for at least the next two years.
With the recent events that have seen practically every industry in the world thrown into turmoil, it is impossible to know with any certainty whether that will hold in this new landscape.
With affiliate marketing being an online model that has grown up with and because of the internet, it’s likely that in these stay at home times that any impact will be much less severe than in other forms of more traditional advertising.
What may also be true, however, is that for some publishers, a move away from affiliate marketing towards an e-commerce model might be one that better serves their interests in the long-term.
Affiliate marketing in the era of mobile-first
In the noughties, online consumption took place almost exclusively on home computers or laptops.
In the last decade, the trend has shifted dramatically to mobile devices, and with that transition, consumer behaviour and desires have changed too.
Traditional affiliate marketing works best on a desktop, where people are less put out when being redirected to a new site. On a mobile device, this is a different story. For example – comparing products and prices is much trickier on the mobile device, and if the option for immediate conversion existed it would result in a major improvement in the purchase flow. The desire is for much more immediate action, and the enforced opening of another tab and the need for more time-consuming clicks can often result in the buying process being abandoned.
In a modern on-demand world attention spans are low, and the affiliate marketing model finds itself perhaps out of sync with the zeitgeist. But this doesn’t mean that affiliate links don’t work on mobile devices. Consumers are used to this approach, and for that reason we’ll continue to see affiliate links also going forward even if the long-term trend is towards the higher convenience and a shorter conversion path offered by embedded e-commerce.
How can we solve the last-click attribution issue with affiliate links?
The reliable tracking of data has always been a point of contention between merchants and publishers, and creating reliable product data feeds has also proven to be a challenge. New browsers prevent more often third-party cookies, which also leads to tracking challenges.
Even in cases where cookies fire correctly, it can happen that the affiliate who generate traffic to a merchant will not receive commissions because another site has placed new cookies in between the two clicks. This is often called the last-click attribution issue.
Such cases are obviously frustrating for publishers who work hard to generate high quality traffic for merchants.
We see that the natural evolution of affiliate marketing will be towards a model where transactions happen directly at the point of inspiration. This approach eliminates the need for third party cookies and there is no way for other affiliates to inject themselves in the middle.
Embedded commerce in the toolkit for traffic monetization
For publishers, the best way to monetize traffic is to keep hold of it rather than send it away to an affiliate. This is possible by selling directly from the content. By implementing embedded e-commerce, publishers can also be certain that purchases and commissions are attributed correctly.
This model is ideal for merchants too as conversion rates are higher than with traditional affiliate marketing. Consumers benefit from a much more streamlined user experience, which means the new approach of converting at the point of inspiration is a win-win-win situation.
Will embedded commerce work everywhere?
Affiliate links are ubiquitous on the web, but will embedded e-commerce replace them everywhere going forward?
Embedded commerce has in the past years proven itself to work in every imaginable medium, vertical, sector and type of content. It can be applied profitably in any type of context where there are large volumes of traffic on a digital surface.
The biggest factor limiting the adoption of embedded e-commerce over affiliate marketing is that running e-commerce means slightly more work than adding outbound links to your site. Maintaining a store, creating buyable product articles and collections all takes time from your team. The effort is compensated through higher commissions and conversion rates, which makes it more profitable. Therefore it’s most likely that publishers will adopt both strategies and use them side by side.
Technically the implementation of embedded e-commerce is just as easy today as affiliate links. At Tipser we signed one of the biggest websites in Northern Europe this summer and we were selling products within two weeks from signing the contract.
Right now the future looks good for both affiliate links and embedded e-commerce. But we see the future will naturally evolve towards the embedded e-commerce model that creates a win-win-win for everyone in the ecosystem.
If you want to hear in more detail how we think about the evolution of affiliate marketing, take 15 minutes to watch our on-demand webinar!