Affiliate Marketing in E-Commerce

GROWTH OF AFFILIATE MARKETING IN E-COMMERCE E-COMMERCE HISTORY Michael Aldrich invents online Year 1979 shopping Thomson Holidays, UK completed the first B2B online shopping transaction Year 1981 Peapod becomes the first online grocery store Year 1989 First World Wide Web server Year 1990 and browser,created by Tim Internet was commercialized; The Berners-Lee National Science Foundation Year 1991 releases its hold from the internet and opened it for commercial use (Real Birth of eCommerce) Year 1994 Netscape unveils SSL encryption, enhancing web security The King of eCommerce, Year 1995 Amazon.com starts selling online Year 1997 Dell becomes first company to hit $1 million in annual online sales Paypal launches its alternate online pay service and was later acquired by eBay. Year 1998 Between 1998 and 2000, a substantial number of businesses in Western Europe and the Between 1999-2000 United States built out their first rudimentary e-commerce websites. E-Commerce Growth E- Commerce sales are growing by more than 19% a year and will be of almost ($1.4 trillion by 2015) $1600 $ 1400.00 $1400 $1200 $ 963.5 $1000 $ 820.5 $800 - $ 680.6 $ 572.5 .... e $600 $400 - $200 $0 2010 2011 2012 2013 2015 U.S. E-Commerce Sales,2012-2017 Online retail sales will grow from $225.5 billion in 2012 to $434.2 billion in 2017 Year Sales Growth 2012 $225.50 15.80% 2013 $258.90 14.80% 2014 $296.70 14.60% 2015 $338.90 14.20% 2016 $384.90 13.60% 2017 $434.20 12.80% What's driving ecommerce growth? Internet Penetration Growth 2007-2012 Share of Internet Population Growth 2007-2012 0.5% 3,6 9.6% 5.2% Europe 11.3% North America Asia Middle Africa Fa 53.8% 16.1% Latin America Oceania/Australia O Asia Africa Europe O Middle East Asia's Internet population is now almost as large as the entire Internet population was 5 years ago Latin Amercia. O North America Oceania/ Australia 1.1 billion new internet users added in 5 years The proliferation of smartphones, tablets, and other portable devices Global Mobile Phone Subscribers 8000 7000 6000 B000 Global Population 4000 Mobile Phone 2000 Subscribers 1000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 There were 6.4 billion mobile phone sub- scriptions at the end of 2012, translating to 91% penetration globally. That's up from a mere 662 million subscriptions a decade ago Increasing Online Marketing Spends 2011-2013 2011-2013 Increase Decrease Same 2011-2013 100% 100% 100% 100% 2011 22% 100% 2012 24% 100% 2013 25% 100% 100% 100% Companies spend over 10% of revenue on marketing...and those budgets will increase over 5% in 2014 Online retail sales will grow at a compounded annual rate of 10% from 2012 to 2017. By 2017, the Internet will account for 10% of U.S. retail sales Introduction of Affiliate marketing in E-Commerce Nov The first affilaite program was launched by CDNOW 1994 Jul Amazon.com (Amazon) launched its associate program 1996 Mar Dell Computer announced its affilaite program 1999 Jul Amazon.com (Amazon) launched its associate program 1996 Jun Ebay launched it's affiliate program 2005 Affiliates worldwide earned US$6.5 billion in bounty and commissions from a variety of sources in retail, personal finance, gaming and gambling... 2006 Affiliate marketing's 16% growth rate outpaces display advertising and the digital marketing spend category growth rates of 12.5% and 10%, respectively. Ads & Digital Marketing 77% of advertisers Increased their affiliate 77% marketing spend this year, while 71% expected spend to grow in the future. Case Studies O Amazon.com was one of the first and Biggest player to introduce Affiliate Marketing. amazon.com O Amazon derives about 40% of its sales from affiliate marketing called "Amazon Associates" and third-party sellers who sell products on Amazon OeFlorist is an online store for buying flowers. It's a big network of over 1800 florists in the UK. florist O 20% of their online sales come from their affiliate program O They're an online retail outlet for selling fragrances and make up stuff based in Fountain Valley, CA. beauty encounter O7% of their online sales happen because of their affiliate program. 56% of those customers are new who they can where beouty ise sell to in the future as well. O Started as a small electronic retail outlet in 1936 and has expanded to a 37 acre compound with over 1000 employees. Abt O They're #151 on America's largest e-retailing businesses. O Abt's Affiliate channel represents 15%of their online business OShopWiki crawls the web to find available products and creates detailed buying guides to help customers make the best purchase. OShopWiki currently features products from over 200,000 storesin the US and has also grown its global presence. shopwiki O They grew their network revenue by 65% YOY in the Google Affiliate Network. O GAN also helped them expand to global markets, and acquire 15% customers all around the world Future Affiliate Marketing Spend forecast $5000 2011- 2016 CAGR 16.6% $4,474 $3,944 $4000 - $3,436 $2,958 $3000 - $2,489 $2,077 $2000 - $1,905 $1,675 $1,615 $1000 - 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total Affiliate Marketing Spend (in millions) Conclusion The growth of affiliate marketing looks great ahead, as more and more E-Commerce companies are introducing "Affiliate Marketing" as their additional sales channel FLYING Sources http://econsultancy.com http://www.gartner com http://wikipedia.com http://www.responsys.com http://www.forrester.com/home/ http://emarketer.com http://www.iabaffiliatemarketing.com START ONLINE www.flyingstartonline.com 71% 74% 67% 1102