April 21st marked the release of the annual IAB / PWC Digital Adspend Study which looks to measure the value of the digital marketing industry in the UK. IAB UK Digital Adspend has been the official measure of the size of the UK digital advertising market since 1997. It is formed of a census of major UK media owners and intermediaries, and includes smartphone and non-smartphone advertising.
Partnerize was once again delighted to be asked to contribute and give a true reflection of the partnership channel as part of the overall study.
The full report found that as an industry as a whole, digital marketing has proved resilient in the face of adversity seeing 5% growth in 2020. This has slowed from the 15.4% increase 2019 vs 2018 but is promising given the economic uncertainty experienced over the past year. Social display is the fastest-growing ad format, up 19%. IAB indicated that this reflects wider shifts in consumer behaviour during the pandemic, with UKOM data showing that time spent with social media grew by 12% in 2020*. This is unsurprising given the increase of consumer time spent online and supports Partnerize’s own benchmark data indicating a rise in success of content partners also signaling this shift.
Given the implications of the pandemic and rising costs of other primary marketing channels such as paid search and social, the need for marketers to gain operating leverage through performance-based channels to maintain this cross-channel omnipresence is pressing. To this end, contributions from partnership specific survey submissions indicate that spend for affiliate marketing has increased 10% year-on-year. 2019 vs 2018 saw a lesser 8.4% increase, given we know budget scrutiny has risen, this stands in great affirmation of the acknowledgement from brands to elevate partnership and embrace the advantages it affords as a pay-for-outcome channel. Further supporting this are the results of the recent IAB UK Affiliates & Partnerships Group Buyside Survey which saw over 50 % of UK survey participants detailing an increase in affiliate spend across 2020, with a third spending over £50,000 per month through the channel and almost one in five brands and agencies spending more than £250k per month on their affiliate campaigns.
2020’s report also captures smartphone affiliate spend for the first time – showing a 23% YoY increase. It accounts for 41% of all affiliate spend, while non-smartphone affiliate spend grew by 3%. Associated to this is the need for brands to ensure that they are adhering to recent iOS14.5 and IDFA regulations which threaten to skew tracking and thus attribution. The industry has been aware of these changes for a long time and as such Partnerize responded with the appropriate solutions. Given that the Buyside Survey alarmingly found that 1 in 5 brands or agencies don’t know how their activity is tracked and over 50% are still using third-party cookies, this area is one that the channel will need to tackle head on over the coming months to ensure accurate attribution related to partner activity.
Despite this increase to the partnership channel, the Adpsend study found that search continues to attract the largest share of spend across formats, up 7% year-on-year to account for 51% of all digital ad spend. It is therefore the responsibility of platforms, agencies and networks in the partner channel to act as thought-leaders and educate marketers around why this primary sales and marketing channel approach will not yield the potential returns that can be delivered through harnessing the true power of partnership. The Buyside Survey indicated that affiliate marketing performs very highly for customer acquisition and ROI compared to other marketing activities and contributed to customer retention also. It is these benefits which need to be conveyed effectively to gain partnership the seat at the c-suite table it deserves.
Growth and investment in the affiliate channel is expected to continue in 2021 and beyond. Matt Gilbert, Partnerize CMO commented in a recent PerformanceIN article, “The step-function growth in e-commerce transaction volume in 2020, material improvements in technology innovation, including app-based tracking, and the outcome-based commercial models underpinning the affiliate channel have all combined to deliver results at a time when marketers needed to create real operating leverage for their businesses.
“We expect the increase in allocated budget to the channel to continue to scale well into the future.”
The full study and the affiliate marketing report are available to download here.
*UKOM social time spent: UKOM Approved Comscore data, Total Minutes 2020 v Total Minutes 2019 for the social media category based on adults 18+