Affiliate marketing has been one of the fastest growing forms of digital marketing. To date, almost all of this growth has been in consumer markets, and there are many who doubt whether affiliate marketing has a place in B2B marketing. However, as affiliate marketing matures, it is clear this is not the case.
There are already opportunities for some B2B brands and, with a shift in mindset, many more could benefit from affiliate marketing. Consumer brands are rapidly recognising that affiliates are one of the most cost-effective and accountable marketing techniques and are pouring ever greater budgets into this channel. It is now time for B2B marketers to start taking it more seriously.
The affiliate revolution
According to the Merchants Survey Report 2007 of 239 UK companies in August and September, companies are now spending an average of ten per cent of their overall marketing budget on affiliate marketing. It delivers an average of 16 per cent of their online sales. The majority say they generate at least £1 million of revenue from online sales per year and 42 per cent generate at least £10 million online.
The rapid expansion of affiliate marketing in the consumer world is not equally split across sectors. The telecoms industry is the heaviest investor, spending 24 per cent of its online budget on it. Financial services companies spend 20 per cent of their online marketing budget in this channel, retailers 19 per cent and travel companies 16 per cent.
Affiliate marketing is closely linked to price comparison websites and these have been soaring in popularity. E-Consultancy valued the market at between £120 million and £140 million in 2005, and Comscore estimates that it is growing at 30 per cent every year. PriceRunner, a leading price comparison website, recorded 35 million page views in July 2007.
Little B2B take-up
Nic Costa
However, take-up by B2B brands has been slow. According to some, this is because affiliate marketing is fundamentally unsuited to the B2B market. Tim Gibson, director at QuidCo, a cashback site, says, “We’re not doing any B2B work and I don’t see how it can work. Businesses buy on personal relationships and the premise of affiliate marketing is buying at arm’s length.”
Monica Taylor, MD of web design agency Kilo 75, agrees there are obstacles for B2B marketers, but adds some brands are using affiliate marketing successfully. “It tends to be commodities that are bought on price,” she says. “In June, a business flights comparison engine launched and office supplies company Viking Direct uses price comparison engines such as Kelkoo.”
She believes that affiliate marketing in the B2B world is likely to remain restricted to these areas, and Nic Costa, MD at affiliate network Affiliate Future, agrees. “We’re working with Pitney Bowes, which is offering free trials of franking machines through affiliates and this is working well. If you’ve got a product that is bought on price or is so specialist people go online to find it, then affiliates can work.”
Ambivalent affiliates
However, some believe the situation is somewhat more complex. Colin Telford, affiliate director at online marketing agency R O Eye, says, “There are plenty of B2B marketers who are seeing the results their consumer counterparts are achieving and are interested. The real problem is that affiliates aren’t that interested in them.”
He continues, “We’ve just started working with Alliance & Leicester Commercial Bank, which is keen to use this channel. It wants to advertise on sites that provide information to start-ups. Our challenge is educating the owners of those websites about how they could benefit from affiliating.”
Supriya Dev-Purkaystha, UK sales and marketing manager at NetBooster agrees that getting affiliates on board is the real challenge. “There are often many contact channels with B2B marketing so tracking leads and sales can be difficult. B2B sales also take longer, so affiliates often don’t see a return for a long time. All this means your affiliate, who is in essence your virtual sales person, is not highly motivated to promote your services.”
Making it work
These problems are not insurmountable. James Little, associate director of online marketing agency Altogether Digital, says, “If B2B marketers want to make affiliate marketing work they need to recognise the need to motivate their partners. They must provide them with regular information about progress with leads and give them reassurance that their efforts will be rewarded.”
Todd Crawford, vice president of sales and business development at affiliate network OneNetworkDirect, adds, “B2B affiliate marketing does have potential for companies that create and manage relevant partnerships. With resources devoted to the programme and other promotions running alongside it, B2B companies can create an advantage that drives results and positively affects the bottom line.”
Making affiliate marketing work requires a shift in the mindsets of B2B marketers. It is not like a traditional advertising medium where brands can more or less dictate the terms. With affiliate marketing it is up to the brands to persuade the publishers to work with them, and they need to invest in making the relationship work.
At first glance many B2B marketers might wonder why they should bother. A second look at the results that consumer marketers are achieving should remind them why. The E-Consultancy research revealed that 95 per cent of UK advertisers describe affiliate marketing as either a ‘very cost-effective’ or a ‘quite cost-effective’ method for acquiring customers.
As Nicky Lapino, MD of Affilinet UK, concludes, “It is only a matter of time before the B2B sector follows suit. As more and more B2B businesses develop their online presence and see the massive contribution the web can make to their sales model, the migration towards affiliate marketing will naturally happen.”
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