Marketing’s ‘Best-Kept Secret’ is now out of the bag

posted by Dan Cohen - Regional Director, North West22 Jan 2013

It’s a ground-breaking day for the Online Performance Marketing sector.  The Internet Advertising Bureau UK (IAB) and PWC have come together to prove that marketing’s ‘best-kept secret’ –  performance marketing – is generating £11 of revenue for every £1 invested – contributing a massive £9bn in sales.

The research report shows that every year the equivalent of more than two online purchases are made by every UK adult.  As for advertisers, they are spending more than £800m on Online Performance Marketing activities including affiliate marketing and lead generation.

Some of the most popular examples of OPM are price comparison sites, voucher sites, loyalty/reward sites and cashback sites such as Quidco.

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. This means OPM drives around 5-6%* of all UK e-commerce retail sales. In addition to the convenience and cost-savings common to Internet transactions, OPM is one of the reasons consumers can access so much informative content free of charge online.

Finance and Retail are top two OPM advertiser sectors
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 come through price comparison sites. 

Driven by clothing & accessories and electrical and computing advertisers, retailers are the next biggest spenders – accounting for 20% of OPM expenditure. The five top OPM advertising sectors are completed by telecoms and media (10%), travel & leisure (9%) and gaming (6%).

What does the future hold?
With the High Street under pressure and consumer behaviour rapidly evolving with the surge in smartphone and tablet ownership and the roll-out of 4G, it’s essential that retailers and brands engage with performance marketing to find new sources of revenue and ways of getting in front of consumers. 

The fact that the sector is already contributing 0.6 per cent of the UK’s GDP is a fantastic tribute to the expertise and innovation that we’re seeing in the industry.  With new attribution models, combined network and technology offerings and the growth of quality consumer content websites, this is an exciting sector for marketers and brands new to performance marketing to get involved with in 2013.

If you are interested in finding out more about how Tradedoubler can help you generate revenue and leads or share its performance marketing technology solutions with you, please email me on dan.cohen@tradedoubler.com

Members of the IAB member can download the full research here.

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