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9 affiliate marketing trends in 2018: Are you prepared for them?

By: Rob Davinson

Things are changing very quickly in online retail, and affiliate marketing is no exception.

It’s always hard to know what’s coming, but some things on the horizon are very large and very clear.

Here are nine predictions for affiliate marketing in 2018.

Affiliate marketing

Wary of the future's inherently whimsical nature, the American economist Edgar Fiedler once said, "If you have to forecast, forecast often." That seems a pretty reasonable sentiment for an industry as prone to change as digital marketing too. And so, despite Awin publishing its original predictions for what 2018 holds in store for affiliate marketers only in January, things have already changed enough to warrant a quick recap and update.

Normally, our predictions have focused on trends and themes that are specific to the affiliate world. But this year’s selection was far more expansive, inextricably connected to the changes occurring in the wider digital advertising industry. That’s in part because of the increased profile that affiliate marketing is gaining within the digital ad sphere, as more publishers turn to it as an alternative revenue stream in an era where conventional incomes are increasingly being squeezed.   

As with all forecasts, the immediate past will often dictate the nature of the immediate future. Bearing that in mind, it’s worth recognising the fact that 2017 was a rough year for the online ad industry, pockmarked as it was with numerous controversies that threatened to undermine the basic principles of faith that enable it to function as a commercial entity.

While affiliate marketing was largely blameless for these mistakes, the reactionary consequences of last year’s wider failings will naturally have a big impact upon affiliate marketing in 2018, bringing to bear opportunities and obstacles in equal measure.  

So let’s take a look at our original predictions and where they stand now…

1. GDPR will hand more power to large media affiliates

With the EU’s General Data Protection Regulation still looming on the horizon we’re yet to understand the true fallout from the new legislation. However speculation is rife throughout the ad industry as to how it will impact businesses.

Affiliate marketing’s array of varied players means that there is no one industry-wide interpretation of the regulation that will fit everybody. But for those affiliates with a large and loyal base of users, such as the traditional publishing houses and bigger news media sites, the regulation could potentially put them in a position of power.

User consent sits at the heart of the new law and, given that publishers are the ones that have built up trust with those users, it could afford them significant influence over their advertiser or third party partners, driving up competition for access to these prospective customers.

As a consequence we may well see such affiliates dictating terms to their commercial partners in a manner that hasn’t been seen before.

2. Data dilemmas will require clear communication

Tin can phone

One of the other consequences from the GDPR fallout will be understanding the changing status of what is considered private data. Affiliate marketers, like all others, will have to justify their use of personal data to continue gaining access to it.

Education and communication will be key elements in this regard and, unfortunately, these have so far largely been found wanting. The tone of most GDPR information found online is characterised by individual speculation rather than unified instruction and that does not bode well for when the eventual live date is reached in May.

This is not entirely the industry’s fault. The nature of the law is such that only through legal precedent will we fully understand its remit. Someone will have to be prosecuted before we know for sure what constitutes a transgression.

But there’s no doubt that both the wider ad industry and its affiliate strata have so far lacked a clear and simple message to their constituents and consumers about what GDPR means for them and why it’s important that they consider how data is necessary for online advertising and, by extension, the web to function. 

3. Affiliate channel could benefit from 2018’s year of regulation and restitution

Numerous initiatives have been launched recently by Google, Apple and the IAB to improve web standards and win back some of the goodwill that was lost last year. 

As such, there will be inevitable collateral damage for ad formats that fall short of these standards. Most recently we’ve witnessed the launch of Google’s default ad blocker in Chrome which will block a selection of ads deemed by the Coalition for Better Ads to be disruptive to the user’s online experience. Google notified publishers who would see a negative impact from the Chrome update and 42% made pre-emptive changes to ensure they were compliant in time for its launch.

Such initiatives hold little fear for the affiliate industry though. Network and advertiser programme terms robustly police the advertising formats used by affiliates and therefore, the channel may well benefit from offering a ready-made alternative solution for publishers that is well set for this new ethical climate.  
 

4. Smartphone success will continue to surge with launch of Google’s mobile-first index

Smartphone

We’re still waiting for official confirmation that mobile sites have usurped desktop versions for ranking value in Google’s SERPs, but we know that it’s coming this year. Since being announced in November 2016, the company has been gradually rolling it out on a small scale for testing purposes. At some point in 2018 this will be the default setting and, in doing so, it will reflect the transformed nature of how we generally browse the internet via mobile devices now.

The update represents a virtual ‘double-down’ on the recent success of smartphones within online advertising. The success seen in the rest of the digital ad world has been mirrored in affiliates with huge growth rates for traffic and sales driven by publishers. Google’s expected change to its algorithm in favour of mobile will expedite this trend and 2018 will see smartphones take even more share of traffic and sales in the affiliate industry.  

5. ‘Open Banking’ could open up a whole new opportunity in financial affiliate marketing

Overshadowed by GDPR somewhat, the Second Payment Services Directive (PSD2) is another piece of EU legislation launched this year that could have a seismic impact upon an industry; this time, financial services. PSD2 paves the way for ‘Open Banking’, where consumers are able to take control of how their financial data is accessed and used by third parties, thereby introducing a new and much-needed element of competition to the banking sector.

One upshot of this is that affiliate businesses could take advantage and enter the financial market to offer just such a third party service, providing consumers with insights on buying behaviour or comparison facilities for the best current accounts for example.  

However, since its official launch in January, the initiative has stalled with just three of the UK’s nine biggest banks meeting the deadline by which they were asked to be ready to implement it. Given some analysts have suggested that Open Banking could spell disaster for the incumbent banking institutions, it may well take longer than expected for affiliates to take advantage of this new opportunity.

6. Social publishers to fall foul of Facebook’s return to its personal roots

Facebook mobile app

Mark Zuckerberg’s announcement that Facebook would be changing how content ranked within its News Feed and prioritising personal interactions between friends and family over those with businesses or public personalities, understandably ruffled some advertiser and publisher feathers.

Brands that have used the social platform to engage and drive traffic were left wondering where it would leave them, and for some affiliates, it could well signal a necessary change in their social marketing tactics, compelling a diversification of the social platforms they use to reach people.

Although the impact of the change will take some time to be felt, some social-focused publishers like Buzzfeed are already pre-empting their over-reliance on the platform by diversifying their revenue streams.     

7. Net neutrality repeal could threaten livelihood of affiliates in the US

The decision by the FCC in the US to repeal the net neutrality regulation, which has historically ensured that ISPs provide equal internet access to all websites regardless of their size, could put another obstacle in the way of small start-ups like affiliates as they attempt to grow their online business.

If ISPs start to charge websites for higher speed access it will inevitably favour larger organisations with deep pockets who can afford to pay those additional fees. In so doing, this would create a hostile environment for any new start-ups who will struggle to earn traffic that they can then monetise to sustain and evolve their businesses.

More recently, the opportunity to appeal the repeal was opened and a torrent of petitions quickly ensued from lawmakers across the US determined to fight this legislative change. However, while there is an obligation for such petitions to be reviewed any appeal would have to have the President’s assent and that looks highly unlikely at this point.

8. Back-to-basics solutions will represent the future of affiliate marketing

Nuts and bolts

Affiliate marketing, like the rest of digital advertising last year, was caught up in feverish talk of how artificial intelligence could revolutionise its effectiveness. However, the real impact of such developments will only become apparent by focusing on the more basic, ‘nuts and bolts’ aspects of the industry.

Automation will be key to this and if affiliate networks, for example, can focus their efforts on the automation of such manual tasks as the validation of sales or processing of new publisher applications, then affiliate marketing’s future will be more secure, freeing up hours of manpower that can be directed toward more valuable and strategic purposes. 

9. Industry collaboration to play increasingly important role in continued success

2017 was a stark reminder of what can happen to an industry when it doesn't regulate itself properly and external bodies are forced to intervene and improve standards. Luckily, affiliate marketing has a history of effective self-regulation thanks to continued collaboration from its constituents.

Networks, advertisers, agencies and affiliates must continue to communicate and work together throughout this year if the industry's success is set to continue.

Collaborative assessments of the health of the affiliate industry are an important example of this, and 2018's Online Performance Marketing study in the UK, the largest of its kind, is a great opportunity to demonstrate such collaboration.

Awin has previously called for more participation to ensure that such studies carry the necessary weight and authority. Ultimately, this is the kind of high profile project that actively contributes to the industry’s continued growth and appeal.

 

By: Rob Davinson, Content Analyst, Awin

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