UK businesses spent £814m million on affiliate marketing and lead generation activities in 2012 which generated £9 billion in sales.
This was revealed in the UK’s first ever study on the Online Performance Marketing industry conducted by PwC on behalf of the Internet Advertising Bureau (IAB).
In 2012, UK consumers conducted around 100 million direct transactions to the value of £8 billion as a result of affiliate marketing, and submitted around 70 million enquiries (indirect transactions) which resulted in £1 billion in lead-generated sales.
This means OPM drives around 5-6% (Verdict Research 2012) of all UK e-commerce retail sales.
The most popular examples of OPM are price comparison sites (e.g. USwitch, CompareTheMarket), voucher sites (e.g. VoucherCodes.co.uk), loyalty/reward sites (e.g. Nectar) and cashback sites (e.g. Quidco).
The rise of
Since 2008, the OPM spend has grown by 57%, this was due to lead generation spend growing by 136% and affiliate marketing spend growing by 50%.
The weak economy has played a part in this. Advertisers are put under increasingly more pressure to deliver more value from their marketing activities.
Whilst the public also felt that same squeeze, looking for alternative sources of income by turning to produce blog’s and other content online, choosing to monetise these through OPM.
Publishers have also had to diversify their revenue streams, incorporating Online Performance Marketing into their revenue models.
Despite the growth, Tim Elkington, Director of Research & Strategy at the Internet Advertising Bureau doesn’t believe it is getting the recognition it deserves, “Despite around 3,500 advertisers and 10,000 publishers engaging in Online Performance Marketing it still has the air of a ‘best-kept secret’. This is particularly surprising, considering each year it drives more than two online purchases for every UK adult and causes the equivalent of every UK person to fill out a form showing interest in a product – generating £11 of revenue for every £1 spent.”
Top advertising sectors
Finance is the biggest spender, driven mainly by insurance and credit card advertisers. Finance accountant for 45% of the total OPM expenditure.
Retailers were the second biggest spenders, accounting for 20% of the total OPM expenditure.
There were followed by telecoms and media (10%), travel and leisure (9%) and gaming (6%).
Suppliers of OPM services and technology estimate their revenue to grow by 25% in 2013 – a combination of market share gain as well as market growth – whilst advertisers estimate they will spend 5-10% more on OPM in 2013.
Anna Bartz, Senior Manager at PwC, says: “Economically challenging times have seen marketing budgets squeezed and greater evidence required of return on investment. As a result, we expect that the attractiveness of paying for advertising based on an extremely measurable and specific consumer action will see more advertisers using Online Performance Marketing as a key channel for driving sales.”