There’s a hidden pot of online affiliate and lead generation revenues worth £814 million sloshing around 10,000 UK publishing sites, according to a new report from the IAB and PwC.
That’s a big chunk of money that content publishers can tap into using two things they (should) already have – content and user data. Spend on display advertising, particularly interactive ad formats, is growing rapidly, but competition for that spend is fierce, making diversification of revenue streams a key priority.
Both affiliate and lead generation, which PwC lumps together as online performance marketing, offer a way to make extra revenue out of assets publishers have already got.
What is performance marketing? Broadly speaking, it’s marketing based on a cost per action (CPA) rather than CPM (cost per mille, or per thousand pageviews).
The report also says the sector has been rising by a compound average growth rate of 12 percent each year since 2008. However, there are a couple of caveats here, not least the fact that affiliate is something that any online publisher – in the widest sense of the word – can do, not just legacy “news” publishers.
PwC and the IAB say their study is the first to go beyond a simple ad spend measurement, taking into account commission on sales generated, technology spend, set-up fees,consultancy fees, and data cleansing.
Of the £700 million annual spend on affiliate in the UK 10.1 percent goes to “content sites, blogs etc” (represented by the yellow block in the chart below). That’s a total of £70 million, not to be sniffed at, but not exactly a gold mine either.
There’s less money in lead generation according to PwC, just under £114 million, and again the spend directly on content sites is low, just 11 percent or around £12.5 million.
However, email lists and newsletters generate £44.5 million through lead generation. That’s still smaller in cash terms than the amount spent on affiliate marketing on content sites, but in terms of share of a growing market, it’s huge.
If you’ve got someone’s email address you’ve got a lead. But content publishers have the content and publishing expertise to construct newsletters people actually want to receive, giving readers a compelling reason to hand over their data.
Diversification in digital ads
The online ad market is growing faster than any other, but there is huge over-supply of ad inventory online. Importantly, automation and scale are allowing ad buyers to pick out target audiences irrespective of what content they are looking at.
Affiliate marketing attributes more value to content and the intent of users – it’s the link between content and sales, while lead generation is reliant on creating a bond with their users that makes them more prepared to hand over details.
Pursuing both widens ad funded revenue streams making you less dependent on a far more volatile display ad market where it is difficult to eke out an advantage against the many, many websites out there that can attract lots of eyeballs on a regular basis.