Affiliate Revenue: still a publisher’s best ecommerce bet? | Innovations in Publishing

This is an excerpt from our free-to-download report, eCommerce in Publishing: Trends and Strategies

In this section, we examine the growing importance of e-commerce in publishers’ revenue strategies and the role COVID-19 has played in accelerating this trend.

A built-in income formula

For many publishers, affiliate relationships will be the first and often primary entry into e-commerce.

As eMarketer explains, these revenues come from “commissions earned from conversions or clicks they lead to a brand or retailer through affiliate links placed in content on their site or in other channels such as social media accounts and email newsletters.”

“This is a monetization model,” Shopify observes, “where an affiliate… receives a payment to the retailer or advertiser for providing a particular result.” “Often the result is a sale. However, some programs may reward you for getting leads, free trial users, clicks on a website, or downloads for an app.”

picture through Shopify

Globally, the affiliate market, which includes cashback and rewards sites, as well as publishers and other content creators, social networks and other distribution mechanisms, is valued at over $12 billion per year. In the US alone, affiliate marketing spend is expected to grow from $5.4 billion in 2017 to $8.2 billion in 2022. Simply put, with values ​​like these, this is a market too big for publishers to ignore.

COVID growth of affiliate revenue

Prior to the COVID-19 pandemic, a number of publishers such as BuzzFeed, Condé Nast, Meredith, Hearst, and Vox Media were already embracing the potential of e-commerce, and especially opportunities to generate affiliate revenue.

However, with the COVID crisis acting as a catalyst for increased online shopping, more publishers and marketers have embraced the space. The move paid dividends for some of these companies.

According to Dunia Silan, Vice President of Revenue for Europe, Middle East and Africa at Skimlinks, an affiliate marketing platform, by August 2020, the Top 50 UK publishers increased by more than 100% in average revenue per article to £86. ($113.42). in the last five months.

Image: Examples of content types that can generate affiliate revenue, through skimlinks

They were not alone in this success. On the other side of the pond, New York Magazine’s shopping site The Strategist saw 85% year-over-year revenue growth in the second quarter of 2020. Hearst UK saw even greater numbers, witnessing 322% growth in e-commerce revenue. for the same quarter compared to the same period of the previous year. Former Shopify CTO Jean-Michel Lemieux tweeted out In April 2020 “our platform now handles Black Friday level traffic every day!”

While these record numbers were a byproduct of a very special era, the e-commerce momentum many publishers enjoyed continued (albeit at a slower rate). For example, Future plc’s semi-annual results to the end of March 2021 indicated that e-commerce affiliate revenues increased by 116% (worth £85.2m) compared to 2020.

As a result of longitudinal changes in consumer habits and the continued growth of spending in this space by marketers and brands, new entrants to e-commerce and affiliate revenue strategies continue to be seen from a wide variety of different publishers.

Partnership approaches at work

Perhaps the clearest example of the ways publishers make money through affiliate revenue can be seen in the rise of recommendation sites and industries.

In the UK, The Sun, a British tabloid, now employs five people dedicated to producing Sun Selects, a collection of buying guides and product recommendations, as well as 10-15 freelancers.

The Indy Best division of another British store, The Independent, continued to expand, in part due to its COVID-era shopping habits. Press Gazette reports that the site, which offers product reviews and buying guides, has “doubled the size of the team during the pandemic to 16 people, including ten full-time editorial roles.”

“This [affiliate marketing] It’s a long-term commitment and it was before the pandemic,” said Christian Broughton, Managing Director of the Independent. “We’re accelerating as much as we can to scale this up and I don’t anticipate that it will go away.”

Alongside traditional affiliate approaches like custom review sections and placing shopping links on specific articles (see these articles on BuzzFeed, which highlights the best women’s white t-shirts, toilet paper, and shower curtains, for example) – multiple publishers are also installing online. shops. These digital stores can take a number of different forms, including those focused on generating affiliate sales.

Home design magazine Dwell is just one of the publications to take this approach. In addition to offering articles, guides to various home projects, and links to contractors, their website also features an online store that offers “a selection of finely crafted home, office, travel and lifestyle products.” Clicking on an item in Dwell’s store takes you to the third-party retailer where you can complete your sale.

Screenshot: Dwell’s online store6 November 2021

What’s next? How are affiliate relationships changing?

The future of affiliate revenue presents a mixed bag for publishers.

On the one hand, an increasing number of players – like Vice – are moving into this space. As others like Gannett expand their operations, the New York Times’ decision to put review website Wirecutter behind a paywall (and offer a standalone subscription for it) reflects their confidence in the product.

picture through excitement

Meanwhile, the emergence of affiliate technology and networks such as those offered by companies like Tipser, Skimlinks, Sovrn, and Rakuten can do much of the hard technical work for publishers – acting as well as providing CMS and other digital solutions to support their e-commerce activities. as the conduit between publishers and traders.

At the same time, publishers need to be careful about putting all their eggs in one (online shopping) basket. The decision of major retail partners like Amazon and Walmart to cut the commission they pay to their affiliates can affect a publisher’s bottom line and the effectiveness of their affiliate strategy.

Publishers also need to be aware of the fact that online habits are changing and there are many ways to generate eCommerce revenue. As we’ll see, affiliate revenues aren’t the only game in town.

For example, outlets like BuzzFeed are experimenting with direct-to-consumer options, allowing viewers to buy directly from their sites or social feeds without having to click through to a third party.

Image: Promotional image of the BuzzFeed Shopping website

Also, as online shopping on social networks becomes more common (these platforms are already influential in shaping many purchasing decisions), publishers will need to refine their affiliate strategy to take into account affiliate and e-commerce opportunities. they So are social channels.

All this, as Web Publisher PRO puts it, “while affiliate marketing isn’t the silver bullet, it can be an important part of a publisher’s broader approach to monetizing their website.”

Specifically, they note, “digital publishers see the biggest gains when they combine real-world events (like the pandemic or upcoming seasonal weather events) with online retail.”

This is especially true during major shopping periods such as Black Friday, Cyber ​​Monday, and Singles’ Day, which are major revenue peaks for some publishers.

“For the past three years, Meredith has seen more than 100% year-over-year growth in affiliate revenue. [thanks to commerce content]”, recently explained Chloe Reznikov, Managing Director of Commerce Content and Strategy at Meredith Corporation. “For the 2020 holiday season, Meredith generated $35 million in Prime Day sales and $36 million in Black Friday/Cyber ​​Monday sales through our commercial content program.”

Image: Screenshot through, part of Meredith’s suite of titles

That’s why we’re seeing an increasingly dense affiliate space as more and more publishers are powering this space.

Increasing competition from other media companies, the emergence of social commerce and the ability to shop on social networks and the need to avoid over-reliance on a single partner or platform are strategic considerations for publishers to know.

However, this is also a growing consumer market. And viewers are increasingly used to seeing affiliate links alongside the content they consume. All in all, it’s clear that affiliate revenue will continue to be a part of publishers’ e-commerce strategies for a while, due to the commercial and content opportunities that affiliate revenue can create.

Originally published Innovations in Publishing earlier this year. While some data points have evolved, the analysis and conclusion remain highly relevant.

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