Why the US is Leading the Media Comeback in Affiliate

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Article source: performancein.com

It’s no secret that major media publishers now believe display advertising on its own cannot cover the cost of producing quality content, let alone deliver a profitable business model. Increased privacy controls, ad-blocking and user apathy is the perfect storm that is now eroding confidence in display.

survey by Reuters in conjunction with the Study of Journalism at the University of Oxford earlier this year said that just 38% of media publishers worldwide now view display ads as an important revenue stream, with Subscriptions and Branded Content both considered more important.

In light of this, one emerging trend in the US that hasn’t found its way across the Atlantic is the way large media publishers are embracing performance marketing as a viable monetisation option. Buzzfeed, New York Times, Business Insider and CNN are among the US media giants now successfully incorporating embedded affiliate links inside unique, premium content articles. In the first half of 2018 media automation and optimisation platform, Trackonomics estimated that big media sites added over $30 million to affiliate ad spend in the US, and over a quarter billion dollars in retailer sales – and that’s the slow half!

Amazon was the first major e-commerce brand to link big media publishers with affiliate marketing. A huge product catalogue and simple contextual link building made Amazon a favourite with content editors, particularly in the US given Amazon’s market dominance.  But with demand in Amazon’s favour, publishers hit with low payouts and a short attribution window had to look for new places to send their users, allowing other brands to win a slice of this high-volume, high-intent traffic.

So why in two very similar affiliate markets like the US and the UK have large media owners on this side of the pond been slower to recognise the value of performance marketing as an antidote to declining display revenues?

Certainly, large media sites in the US have enjoyed more editorial freedom, which has enabled them to create dedicated pages for affiliate monetisation, like this example from Buzzfeed.

However, I think the growth of CPA advertising amongst high-traffic media sites has laid bare some of affiliate marketing’s most important and long-standing challenges. Returning to the Reuters survey we can see that while affiliate marketing is finding favour with large content publishers, it remains well adrift of being seen as a key monetisation need, with just 12% of respondents highlighting it as an important revenue stream.

Automation is a key challenge. The manual effort needed to create, add and crucially update affiliate links is a good example.  In the past, this challenge has been solved with dynamic link building solutions that use a centralised integration to automatically monetise outbound links in content articles.  However, we’re now seeing companies who have identified how media publishers increasingly want control to decide where each affiliate link on their site is sent, and so are making customised technology to support this need. An affiliate industry traditionally very focused on incentivised shopping models until now, hadn’t reacted quickly enough to make affiliate marketing a genuine reality for the world’s largest content publishers.

It’s interesting that while large US publishers have used affiliate links in a contextual, content-driven way, media sites in the UK have been lured to the channel by white-labelling their domains to build discount code portals. Awin recently reported that they have seen a 54% increase in YoY sales from media sites. While these sites aren’t identified, it feels inconceivable given the cautious take-up of affiliate-monetised content from large UK media publishers that this increase isn’t due to a low starting point and/or the inclusion of numbers from discount code sites partnering to offer white-label code portals to big media sites.

This ‘race for domain authority’ arguably drives short-term growth in the affiliate channel, but it is also making an already cluttered discount code market with questionably accurate content confusing for the consumer and more difficult to navigate for brands.

Most discount code affiliates generate the majority of their traffic from searches on brand + discount code search terms. White-label code portals partnering with some of the UK’s highest trafficked domains are causing an interesting stir in the space, but are they generating new traffic to the channel?

The move to subscription models by the UK’s big news sites could also be a reason that affiliate marketing has so far been eschewed. Earlier this year New York Times reported a 46% increase in paid digital subscribers. Yet most media publishers using subscription models are also monetising their traffic using affiliate links because it is a less intrusive and disruptive form of advertising. And many media outlets now believe that abandoning the ‘free media’ concept is not the answer. In 2015, after two years, The Sun famously pulled down its pay-wall and two years later is now the biggest online newspaper brand according to Comscore.

In an industry in desperate need of new traffic sources, large media publishers are the significant opportunity the UK affiliate marketing industry has been waiting for. Those publishers may need some convincing. But the bigger challenge will be to solve the automation and technical hurdles that have often turned the very biggest publishers off affiliate marketing. The US market is proving it’s possible.

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