by Neha Kulwal
The advent and subsequent spread of internet has changed the entire course of humanity. Today, one of the core factors driving our lives is digital inventions. These inventions are changing the way in which we communicate, conduct businesses, and live our day to day life. Digital has become an agent of growth and is bringing changes in the (now) archaic systems that we used.
Digitalisation is transforming the field of global trade and commerce at a blistering speed, giving birth to the digital economy in its wake. The digital economy is the umbrella term used for the collection of economic activities between businesses, devices, data, processes, and customers which are being powered digitally. According to recent reports published by Huawei, the volume of the digital economy in 2017 was estimated to be more than $12.9 trillion. This number is expected to grow up to $23 trillion by 2025!
Retail e-commerce sales worldwide were 2290 billion US dollars and are expected to rise to $2774 billion in 2018, according to Statista. Thus, global e-commerce sales are predicted to show 20% growth, which is a huge number for business and certainly a steady trend with no signs of decline. Even developing nations like India are contributing substantial revenue of $25 billion (and looking up) every year. Moreover, this number is expected to witness an increase of 95%, contributing 4.479 billion to the digital economy by 2021.
The drivers of this mammoth like growth in the e-retailing and purchasing sector (and in turn the digital economy) lies in the growing digital literacy amongst the masses, use of advanced marketing technologies by marketers and the high fertility value of the digital sector itself. Today, there are many methods available which are being employed by online players to increase sales, reputation, customer acquisition and client base. Within the same, Affiliate Marketing has been consistently performing well, trumping other methods.
In simple terms, affiliate marketing is the practice of increasing sales by allowing a ‘publisher’ to promote and earn a commission for driving the same audience that the advertiser is targeting. The cost of the product doesn’t vary at all but, if the purchase from the advertisers’ website is made using a publisher link, the publisher earns money. This kind of marketing strategy works because it is heavily performance based as well it also uses revenue sharing as its base.
According to a recent article published in Forbes, as of 2017 affiliate marketing took over social commerce and display advertising and came at par with email marketing by being responsible for 16% of the e-commerce sales. Additionally, given the top- class results affiliate marketing has been producing, there has been a dramatic rise in it’s spends. A study done by Forrester Consulting estimated that affiliate marketing will go through a compound annual growth rate of 10% by 2020.
This huge investment in affiliates is particularly because of how advantageous and effective this marketing strategy is. Advertisers prefer using affiliate networks as they offer them a more diverse base to tap into through their global affiliate networks and ease of cross border trade.
Global affiliate networks are beneficial for advertisers as they chuck out the need to onboard (geographically) different traffic sources for promoting/launching a global campaign. This is because global networks have publishers from across the globe, working under a single roof. This makes it easier for advertisers to launch their campaign and attract either consumers or publishers world-wide.
On the other hand, cross-border trade (CBT) concerns the client. CBT allows the merchants to trade between multiple countries and to open various business routes to sell their products in the neighbouring countries. These tools bridge boundaries and bring together vendors and customers under a single roof.
Moreover, as people are shifting from desktops to their handheld devices for making purchases, the m-commerce industry is on the rise. As of today, m-commerce is all set to become the biggest trend in digital marketing in 2018. For affiliate marketers, this trend will bode well as the segment is already making use of technology like cross device targeting to keep up with the changing attitudes of their target audience. Through cross – device targeting, marketers can easily keep a track of their target audience and push better ads across smartphone platforms to motivate sales.
This arm of digital marketing is expected to become a major contributor to the global digital economy because of its various attributes like performance-based nature, globalised reach and ability to target clients more extensively. The affiliate stratagem has earned the title of being the ‘golden child of digital marketing’ for consistently driving e-commerce transactions and collecting substantial revenue in each year.
Neha Kulwal is the CEO of Admitad, the biggest CPA affiliate network in India.