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PwC: Hidden online economy complete with affiliate marketing

By Rob Starr, Content Manager,

According to the UK’s first ever study on the Online Performance Marketing industry – conducted by PwC on behalf of the Internet Advertising Bureau UK (IAB), UK businesses spent £814 million on affiliate marketing and lead generation activities in 2012 which generated £9 billion in sales.

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. Driven mainly by insurance and credit card advertisers, the finance sector is the biggest spender, accounting for 45% of OPM expenditure in 2012. A significant proportion of the finance sector’s revenues generated by OPM comes through price comparison sites.

The study estimates that between 2008 and 2012, advertising expenditure on OPM, as a whole, grew by 57% due to lead generation spend increasing by 136% and affiliate marketing spend increasing 50% over those four years.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.

In comparison, the biannual IAB/PwC Digital Adspend report for the first half of 2012 – which mainly measures the best known form of advertising where the advertiser pays simply for an advert to appear – showed that the consumer goods (FMCG) and finance sectors were the biggest spenders on digital display advertising. Both sectors accounted for almost 16% of display spend followed by entertainment & media (13%), retail (11%) and travel & transport (10%).

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.”

This includes affiliate marketing.


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