AFFILIATE MARKETING NETWORKS

Buyer’s Guide: Affiliate Marketing Networks (2006) Affiliate Marketing Networks A Buyer’s Guide E-consultancy October 2006 Sample only, please download the full report from: http://www.e-consultancy.com/publications/affiliate-marketing-networks-buyers-guide Copyright © E-consultancy.com ltd 2006 – not for distribution to non-subscribers without written permission 1 Buyer’s Guide: Affiliate Marketing Networks (2006) Table of Contents 1. Introduction 4 1.1 About E-consultancy............................................................................................................. 4 1.2 E-consultancy training ......................................................................................................... 5 1.3 Acknowledgements .............................................................................................................. 5 2. Executive Summary 3. The Market 6 7 3.1 Focus of Report and Market Definition ............................................................................. 7 3.1.1 Affiliate Marketing Networks – the benefit for merchantsError! Bookmark not defined. 3.1.2 Affiliate Marketing Networks – the benefit for affiliatesError! Bookmark not defined. 3.2 Market Value and Growth ................................................................................................... 8 3.2.1 Commission paid to affiliates and networks ......... Error! Bookmark not defined. 3.2.2 Who is spending money on affiliate marketing? .. Error! Bookmark not defined. 3.2.3 Size of market compared to other online marketing channels ..................................... 8 3.3 Market Trends ...................................................................................................................... 9 3.3.1 Affiliate marketing goes „mainstream‟ as clients embrace cost-efficient and lowrisk channel................................................................................................................................. 9 3.3.2 Networks seek to “find their own identities” within increasingly competitive marketplace ...................................................................... Error! Bookmark not defined. 3.3.3 Super affiliates lead the way in move towards „affiliate 2.0‟Error! Bookmark not defined. 3.3.4 Rise in number of merchants using affiliate marketing for lead generation and brand building activity ..................................................... Error! Bookmark not defined. 3.4 Return on Investment (ROI)............................................................................................... 9 3.5 Strengths, Weaknesses, Opportunities and Threats (SWOT) .......................................... 9 4. Costs and Pricing Models Error! Bookmark not defined. 4.1 Introduction ................................................................ Error! Bookmark not defined. 4.2 Over-ride charges....................................................... Error! Bookmark not defined. 4.3 Set-up/technical integration costs ........................... Error! Bookmark not defined. 4.4 Monthly management charges ................................. Error! Bookmark not defined. 5. Tips and Pitfalls: how to find the right providerError! Bookmark not defined. 5.1 Introduction ................................................................ Error! Bookmark not defined. 5.2 Can affiliate marketing help you to meet your sales and marketing objectives?Error! Bookmark n 5.3 Do you require an affiliate network (or networks) to help you?Error! Bookmark not defined. 5.4 What network will provide the best fit with your affiliate needs?Error! Bookmark not defined. 5.5 What services does the network provide? ................ Error! Bookmark not defined. 5.6 What technology does the network use?.................. Error! Bookmark not defined. 5.7 How can you integrate affiliate marketing within your overall marketing strategy? ............................................................................ Error! Bookmark not defined. 5.8 Is your organisation making enough commitment to affiliate marketing?Error! Bookmark not de 6. Market Positioning Charts Copyright © E-consultancy.com ltd 2006 – not for distribution to non-subscribers without written permission 11 2 6.1 Explanation for Chart 1 – Business Focus & Geography ................................................. 11 Buyer’s Guide: Affiliate Marketing Networks (2006) 6.2 Explanation for Chart 2 – Pricing .....................................................................................12 7. Affiliate Marketing Networks Matrix 8. Supplier Marketplace and Profiles Error! Bookmark not defined. Error! Bookmark not defined. 8.1 Advertising.com – Company & Service Details ....... Error! Bookmark not defined. 8.2 AffiliateFuture – Company & Service Details ......... Error! Bookmark not defined. 8.3 Affiliate Marketing UK – Company & Service DetailsError! Bookmark not defined. 8.4 Affiliate Window – Company & Service Details ...... Error! Bookmark not defined. 8.5 affilinet UK – Company & Service Details ............... Error! Bookmark not defined. 8.6 Brand Conversions – Company & Service Details .. Error! Bookmark not defined. 8.7 Buy.at – Company & Service Details ........................ Error! Bookmark not defined. 8.8 Clash-Media – Company & Service Details ............. Error! Bookmark not defined. 8.9 Commission Junction – Company & Service DetailsError! Bookmark not defined. 8.10 DGM Affiliates – Company & Service Details........ Error! Bookmark not defined. 8.11 Online Media Group – Company & Service DetailsError! Bookmark not defined. 8.12 Paid On Results – Company & Service Details ...... Error! Bookmark not defined. 8.13 PrimeQ – Company & Service Details .................... Error! Bookmark not defined. 8.14 Silvertap – Company & Service Details .................. Error! Bookmark not defined. 8.15 Smart Quotes – Company & Service Details .......... Error! Bookmark not defined. 8.16 TradeDoubler – Company & Service Details ......... Error! Bookmark not defined. 8.17 Webgains – Company & Service Details ................. Error! Bookmark not defined. 8.18 Zanox – Company & Service Details ...................... Error! Bookmark not defined. Sample only, please download the full report from: http://www.e-consultancy.com/publications/affiliate-marketing-networks-buyers-guide Copyright © E-consultancy.com ltd 2006 – not for distribution to non-subscribers without written permission 3 Buyer’s Guide: Affiliate Marketing Networks (2006) 1. Introduction E-consultancy’s buyer’s guides are the ideal starting place for anybody researching new service providers in interactive market sectors. They contain in-depth vendor profiles, to help you quickly evaluate suppliers, as well as market analysis to help you put things into perspective. Vendors/service providers are selected for the report based on a combination of factors, not limited to but including:           Analysis of capabilities (services / products) Clients and Partners Experience (qualifications / trade bodies / case studies / client lists) Expertise (by sector / topic), UK status (a UK office is preferred, occasional exceptions are made) Ability to take on and fulfil new projects Recommendations from trusted sources (or anecdotal evidence to the contrary) Google visibility Business model (a high % of turnover should be related to these services) Company website E-consultancy does not explicitly recommend any of the suppliers featured in these guides, principally because it is impossible for us to work with all of them to form a first-hand opinion. But we do believe - based on an intensive and careful selection process - that the chosen service providers represent quality. Buyer‟s Guides are typically updated on an annual basis, so the information contained within is recent, valid, and reflects changing market conditions. Send any questions or comments to E-consultancy editor Chris Lake via chris@econsultancy.com. 1.1 About E-consultancy E-consultancy is an online publisher of best practice internet marketing reports, research and how-to guides. It also publishes buyer‟s guides and has a directory of 100,000+ third party internet marketing white papers. Since moving to a paid-content model in 2003 E-consultancy has amassed thousands of paying subscribers, more than 40,000 registered users and 100,000+ unique users sessions per month. E-consultancy is popular among internet professionals around the world, for delivering practical, time-saving advice and insight. Subscribers pay from £149 per year to access the exclusive and highly practical content. E-consultancy has more than 100 events lined up for 2006, including roundtables and Copyright © E-consultancy.com ltd 2006 – not for distribution to non-subscribers without written permission 4 Buyer’s Guide: Affiliate Marketing Networks (2006) monthly Supplier Showcases, where six suppliers pitch to an audience of pre-qualified buyers in a Central London venue. http://www.e-consultancy.com/about/ 1.2 E-consultancy training E-consultancy also provides a range of public and in-house training programmes, such as seminars and workshops. Our next Affiliate Marketing training seminars will be held in London and Manchester in November 2006. 1.3 Acknowledgements E-consultancy would like to thank Jessica Luthi, an independent affiliate marketing consultant, for her help with this buyer‟s guide. www.AffiliateProgramAdvice.com Sample only, please download the full report from: http://www.e-consultancy.com/publications/affiliate-marketing-networks-buyers-guide Copyright © E-consultancy.com ltd 2006 – not for distribution to non-subscribers without written permission 5 Buyer’s Guide: Affiliate Marketing Networks (2006) 2. Executive Summary The focus of this report is Affiliate Marketing, with an analysis of market trends and challenges, as well as detailed profiles of the leading UK Affiliate Marketing Networks. The UK market for affiliate marketing will grow 60% in 2006, breaking through the £2 billion mark to an estimated value of £2.16 billion. Our estimate is for the total value of online sales generated by affiliate marketing in the UK this year. This 2006 figure is based on 60% year-on-year growth. Trends covered in this guide include:      Affiliate marketing goes „mainstream‟ as clients embrace cost-efficient and lowrisk channel. Networks seek to differentiate themselves through service and specialisation within increasingly competitive marketplace. „Super affiliates‟ lead the way in move towards „affiliate 2.0‟. Rise in number of merchants using affiliate marketing for lead generation and brand building activity. Wider adoption of hybrid payment models, with some publishers charging advertisers on a cost-per-click (CPC) basis and cost-per-mille (CPM) basis as well as cost per acquisition (CPA). Sample only, please download the full report from: http://www.e-consultancy.com/publications/affiliate-marketing-networks-buyers-guide Copyright © E-consultancy.com ltd 2006 – not for distribution to non-subscribers without written permission 6 Buyer’s Guide: Affiliate Marketing Networks (2006) 3. The Market 3.1 Focus of Report and Market Definition The focus of this report is Affiliate Marketing, with an analysis of market trends and challenges, as well as detailed profiles of the leading UK Affiliate Marketing Networks. This is an updated version of our 2005 Buyer‟s Guide with a fresh analysis of a rapidly evolving marketplace. The increased competition in this sector is reflected by the fact that we have profiles of 18 networks this year compared to 11 last year. The guide is intended to be of interest to online retailers and other types of merchants who are considering affiliate marketing for the first time or reviewing their current approach. It will also hopefully be of interest to media agencies, the affiliate networks themselves and also the individual affiliates. The affiliate marketing networks, sometimes referred to as affiliate solution providers (ASPs), provide their advertiser clients (known as “merchants”) with technology and services while acting as a gateway to large numbers of individual affiliates (the publishers). The networks help to facilitate the mutually beneficial relationship between merchants and publishers whereby affiliates typically receive a fee for each sale or customer acquisition (or lead) which is made as a direct result of traffic referred from advertisements (and most importantly, the links) on their websites. Sample only, please download the full report from: http://www.e-consultancy.com/publications/affiliate-marketing-networks-buyers-guide Copyright © E-consultancy.com ltd 2006 – not for distribution to non-subscribers without written permission 7 Buyer’s Guide: Affiliate Marketing Networks (2006) 3.2 Market Value and Growth E-consultancy: the UK market for affiliate marketing will grow 60% in 2006, breaking through the £2 billion mark to an estimated value of £2.16 billion. Our estimate is for the total value of online sales generated by affiliate marketing in the UK this year. This 2006 figure is based on 60% year-on-year growth, using £1.35 billion as the baseline figure for 2005. More notes on market valuation methodology:  We have made our calculations after analysis of revenue figures (where made available) as well as interviews with affiliates, agencies and executives from most the leading affiliate networks. In reviewing financial information, it has sometimes been necessary to estimate UK revenue figures for individual companies, for example where a breakdown of income by country is not made public. For companies who have a mixture of services, it has been necessary to estimate the proportion of gross earnings derived exclusively from network spend.   3.2.3 Size of market compared to other online marketing channels It is instructive to compare the size of this market to other online channels and sectors. For comparison, E-consultancy has previously estimated that:      The UK market for online advertising networks was worth about £60m in 2005. The UK market for Search Engine Marketing will be worth an estimated £1.41 billion by the end of 2006. Paid Search alone will be worth £1.26 billion and Organic Search will be worth £147 million. The UK Site Search market was worth around £20 million in 2005, and will grow by 30% in 2006 to a value of around £26 million by the end of 2006. The UK market for Email Marketing Platforms and Services will grow 20% to an estimated value of £178 million by the end of this year (2006). The UK market for Web Analytics will grow 22% in 2006 to an estimated value of £56 million. Sample only, please download the full report from: http://www.e-consultancy.com/publications/affiliate-marketing-networks-buyers-guide Copyright © E-consultancy.com ltd 2006 – not for distribution to non-subscribers without written permission 8 Buyer’s Guide: Affiliate Marketing Networks (2006) 3.3 Market Trends 3.3.1 Affiliate marketing goes ‘mainstream’ as clients embrace cost-efficient and low-risk channel Affiliate marketing continues to make important strides and its value as a channel has become more apparent to organisations because of its sustained success in delivering incremental revenues or generating new leads for businesses. “Merchants are taking the channel more seriously and they are becoming more educated as they recruit from specialist agencies and networks, and even affiliates,” said Louise Green, MD, OMG Network. 3.4 Return on Investment (ROI) case for affiliate marketing networks Effective use of affiliate networks can offer businesses a range of advantages ranging from highly tangible revenue increases to softer benefits such as improved brand perceptions. Affiliate marketing networks can help advertisers …  Drive revenue o Access to affiliates  Generate sales/actions  Drive acquisitions  Generate leads  Boost offline sales through couponing campaigns Sample only, please download the full report from: http://www.e-consultancy.com/publications/affiliate-marketing-networks-buyers-guide Copyright © E-consultancy.com ltd 2006 – not for distribution to non-subscribers without written permission 9 Buyer’s Guide: Affiliate Marketing Networks (2006) 3.5 Strengths, Weaknesses, Opportunities and Threats (SWOT) This section contains a „SWOT‟ analysis for affiliate marketing - and for the affiliate marketing networks sector. 3.5.1 Strengths  Increased use of the internet and higher levels of broadband access have led to increased spending on internet marketing including affiliate marketing. The measurability and accountability of internet advertising, and particularly affiliate marketing, continues to make it an attractive proposition for marketers. The success of campaigns in ROI terms can be judged with increasing transparency and speed (assuming that the right technology and reporting is in place).  Sample only, please download the full report from: http://www.e-consultancy.com/publications/affiliate-marketing-networks-buyers-guide Copyright © E-consultancy.com ltd 2006 – not for distribution to non-subscribers without written permission 10 Buyer’s Guide: Affiliate Marketing Networks (2006) 6. Market Positioning Charts 6.1 Explanation for Chart 1 – Business Focus & Geography Where we are going Where we are now UK and beyond (e.g. Europe/US) UK only Exclusively an affiliate network Affiliate network is part of a wider range of marketing services The vertical axis charts to what degree the network has a focus on the UK versus having a more international outlook (for example in the United States and/or wider Europe) which includes the UK. The horizontal axis charts whether the profiled company is exclusively an affiliate marketing network or whether the affiliate network is part of a broader suite of marketing services available to the client. The red circle denotes the company‟s current position while the blue circle reflects their medium and long-term aspirations. If there is no blue circle, or if the circles are in the same position, the company is happy with its current market positioning and has no plans to change. A company positioned on the bottom right quadrant has an affiliate network as part of a wider offering and is focused exclusively in the UK market. Sample only, please download the full report from: http://www.e-consultancy.com/publications/affiliate-marketing-networks-buyers-guide Copyright © E-consultancy.com ltd 2006 – not for distribution to non-subscribers without written permission 11 Buyer’s Guide: Affiliate Marketing Networks (2006) 6.2 Explanation for Chart 2 – Pricing Affiliates pay charges Where we are going Where we are now Free for affiliates Performance-based pricing only Set-up & management charges This chart shows the pricing model of the profiled network. The vertical axis indicates whether or not affiliates have to pay to belong to a network. The horizontal access charts the balance between performance-based charges and setup/management costs. A company positioned as shown above will not charge affiliates for belonging to its network. The merchant will only be charged based on performance (in the form of override fees). Sample only, please download the full report from: http://www.e-consultancy.com/publications/affiliate-marketing-networks-buyers-guide Copyright © E-consultancy.com ltd 2006 – not for distribution to non-subscribers without written permission 12 Buyer’s Guide: Affiliate Marketing Networks (2006) Copyright © E-consultancy.com ltd 2006 – not for distribution to non-subscribers without written permission 13