Marketing budgets continue to shrink even as more online retailers find affiliate marketing as a cost-effective sales channel.
Currently, 46% of retailers rate affiliate marketing as a very cost-effective method for driving customer acquisition. That number is up 2% from last year, but tightened marketing budgets are affecting traffic and sales, according to the Affiliate Marketing Survey Report 2008 by E-consultancy and R.O.EYE.
Other key survey findings:
- The amount of money set aside for affiliate marketing dropped in the past year from 18% to 14%.
- The percentage of online sales dedicated to supporting affiliate marketing activity also dropped from 16% to 12%.
- 34% of merchants say that five or fewer affiliates drive 80% of their affiliate sales of signups.
- 23% of merchants say between six and ten affiliates drive 80% if sales.
Marketers say the biggest barriers preventing their affiliate programs from being more successful are a lack of internal resources, restricted budgets and difficulty in attracting affiliates.
“While more merchants than in 2007 view affiliate marketing as a very effective channel, almost 70% are spending less than two hours per week communicating with their affiliates and policing them. It is more important than ever before to forge strong relationships between merchants and their affiliates to protect volume and the channel’s efficiency. This report highlights the changes the industry and exposes the end of ‘easy pickings’ for affiliates,” said Mark Kuhillow, Managing Director of R.O.EYE.