It’s virtually impossible to ignore the word “inflation” as the world closes the chapter on the first quarter of 2023, and for good reason
Rising inflation started its upward trajectory in early 2021 and at the time of writing the UK CPIH is up
. While external factors such as the conflict between Ukraine and Russia have undoubtedly contributed to this monumental increase, affiliate marketing is uniquely positioned to gain first-hand insight into consumer habits and trends over the past two years. So what have we learned?
Awin’s data shows that over the course of 2022, consumers spent more time shopping and less time converting. Direct comparisons of the UK CPIH and conversion rates illustrate a clear and definitive trend. As the CPIH rose, retail conversion rates fell, especially in October 2022. CIPH peaked at 9.6%resulting in a sharp drop in conversions. Traffic indicates that consumers were still searching for products, but felt much less likely to convert. This trend was somewhat expected, as consumers softened declines in disposable income and weighed product value versus price.
2. Content is king
With consumer confidence at an all-time low, influencers and content creators have been given a huge responsibility to remain authentic and relatable to their audiences. While the year-on-year performance growth in 2022/23 can be attributed to the limited performance in 2021 (due to the pandemic), nano and micro influencers now play a greater role than ever before. The unique nature of the influencer publisher category not only has a diverse portfolio of creators, but also consists of smaller, niche influencers with an audience base of highly engaged, highly trusting, and highly influenced followers. As a result, the share of influencer content on Awin’s platform increased from 15.5% to 17% between 2021 and 2022 and has not slowed down in 2023.
3. Sustainability has taken a back seat
One sector that has perhaps suffered more than others from reduced consumer spending is sustainability. Since the outbreak of the conflict between Ukraine and Russia, the performance of green eco brands has declined in the face of increased inflation. While there is evidence to support that consumers plan to return to their sustainable lifestyles once the cost of living crisis subsides, 48% of UK consumers now argue that they simply cannot afford the higher costs associated with a sustainable lifestyle, resulting in a temporary slowdown for the nascent industry.
4. Brands offer discounts less often
Content creators and editorial partners are gobbling up publishers’ vertical share, calling into question the value and importance of discounts in 2023. As supplier and production costs have risen, overall trends suggest that brands in general are much less likely to offer discounts. In fact, Awin data showed that retail sales during Cyber Week in 2022 saw a 20% drop in the number of discount codes or vouchers redeemed compared to 2021. While discounts are seemingly less productive for retailers – especially around key periods – as margins return, discounts and promotions will undoubtedly remain an important part of any marketer’s repertoire.
5. Affiliate remains robust in an unstable market
The cost of living crisis has undoubtedly created new challenges for marketers, but affiliate marketing remains a growth engine. A recent UK survey of all major affiliate networks revealed how the channel is used and valued. It’s no surprise that brands expect affiliate advertising spend to grow well into 2023, given the incredibly strong ROI the channel achieves compared to other forms of digital marketing. The channel’s transparency and low-risk pay-on-performance model allow marketers to make clear and decisive spending decisions, especially at a time when everyone’s marketing budgets are under increasing scrutiny.
6. Technology transforming the affiliate space
The channel has witnessed the increase in the number of technology partners; an innovative, game-changing vertical sector driving growth during the cost of living crisis. In 2022 alone, Intent.ly, Envolve, Uniqodo, Upsellit and Revlifter generated nearly 1.5 million in sales on the Awin platform and saw a +60% year-over-year revenue increase. To some extent, the current economic crisis is the perfect storm to leverage these partners; improving the online consumer experience by delivering personalized experiences, driving on-site interaction, increasing conversions and keeping ROI high on a low-risk performance model. With these factors considered, it is not surprising to see technology transforming the affiliate space.
Navigating 2023 as marketers
2023 will continue to present unprecedented challenges, and the cost of living crisis is unlikely to abate anytime soon. Trends from last year are likely to continue into 2024. Marketing, however, is in a new state of flux, while comparisons to the 2008 economic recession are common and fair, but the world has changed dramatically. Affiliate marketing continues to diversify and strengthen its affiliate portfolio, ready to weather the wave of inflation.
By Alfie Staples, Global Insights Manager
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