SEATTLE, WA / ACCESSWIRE / February 22, 2016 / Affiliate marketing is an important piece of the online advertising ecosystem that Wall Street should be paying more attention to. While pay-per-click advertisers and automated bidding firms have generated most of the publicity, affiliate marketing is widely used by Fortune 500 companies to drive highly measurable revenue by tying ad spending to tangible sales.
In this article, we'll take a closer look at affiliate marketing, companies operating in the space, and where it's headed moving into 2016 and beyond.
What is Affiliate Marketing?
Affiliate marketing represents a natural progression from traditional advertising to the modern era where everything is a lot more trackable and measurable.
In print publications, advertisers purchase space to promote their products or services to a magazine or newspaper's audience. The problem is that advertisers have no way of knowing whether or not a reader actually purchases the product or service. As a result, advertisers may find it difficult to calculate the return on investment for their advertising dollars.
Figure 1 - Online Advertising Spending - Source: Statista
The online advertising industry has rapidly grown precisely because advertisers can calculate return on investment. In fact, Alphabet Inc. (NASDAQ: GOOG) became one of the world's largest companies by enabling advertisers to see exactly how much each click costs them. Facebook Inc. (NASDAQ: FB), Twitter Inc. (NYSE: TWTR), and many other social networks, content networks, and adtech companies make money in the exact same way.
Affiliate marketing goes a step further by tracking actual sales rather than simply leads. Using cookies and tracking links, publishers can refer potential customers to an advertiser's website to buy a product or service. Advertisers only pay when an actual sale is made, which lets them calculate an exact return on investment. Publishers benefit because they have the potential to generate greater and longer term revenue than a one-off payment for a click-through.
Affiliate Marketing Stocks
There are many different companies in the affiliate marketing industry. The two largest affiliate marketing platforms are Alliance Data Systems' (NYSE: ADS) CommissionJunction ("CJ") and Rakuten Inc.'s (TYO: 4755) (OTC: RKUNF) LinkShare.com. In simple terms, these platforms connect advertisers with publishers and provide a basic set of tools that enable affiliate marketing campaigns to take place in the first place.
These affiliate networks are used by thousands of blue-chip companies and household brands. For example, CJ has over 3,000 different clients including H&R Block (NYSE: HRB), Home Depot (NYSE: HD), and Intuit Inc. (NASDAQ: INTU).
E-commerce companies, like Amazon.com Inc. (NASDAQ: AMZN) and eBay Inc. (NASDAQ: EBAY), also provide affiliate marketing programs of their own. Publishers can easily embed Amazon.com's products into their content and receive a commission whenever a visitor makes a purchase, while eBay offers similar abilities for customers that make purchases through its auction website via its Partner Network.
Adding More Measurability
Affiliate marketing is a somewhat fragmented industry given the numerous platforms for both advertisers and publishers. Tracking a single customer's movements across these multiple channels can prove difficult - if not impossible - for both parties.
As traditional ad spending shifts online, advertisers and agencies choose between a wide variety of digital methods to reach their target customers and measure performance across multiple channels, including search, affiliate, social, mobile, video, and e-mail, among others. They must then quantify in real-time the results of their efforts in order to maximize the return on investment for their ad dollars. After all, what's the point of having access to customer acquisition data if - by the time you're able to analyze it - it's no longer relevant?
Accelerize Inc. (OTCQB: ACLZ) designed CAKE to solve this problem and bring measurability to the industry. While Adobe Systems Inc.'s (NASDAQ: ADBE) Marketing Cloud provides some of this kind of functionality, it's widely considered to be a "walled garden", whereas CAKE was designed from the ground-up to be platform agnostic to work with all technologies. A large portion of the market isn't using any tracking technology, since there are few solutions that can traverse affiliate marketing platforms and mediums to track customer movements.
The company has attracted more than 100 advertiser clients on the CAKE enterprise platform in 2015 and is on pace to achieve 30% revenue growth to a record $21 million in 2015. Management is targeting a minimum of 30% growth in 2016, while taking steps to achieve positive cash flow in Q1 2016. In addition, it was named a Vendor to Watch in the 2016 Gartner Magic Quadrant for Digital Marketing Hubs alongside companies like Acxiom (NASDAQ: ACXM) and HubSpot Inc. (NYSE: HUBS).
Looking Ahead
Affiliate marketing is widely used by Fortune 500 companies to drive highly measurable revenue and represents a natural progression toward increased ROI visibility. Within this space, there are many companies that operate affiliate marketing platforms, but Accelerize Inc. (OTCQB: ACLZ) is uniquely positioned as a provider of much-needed analytics and tracking in order to ensure visibility across a growing number of channels and mediums.
For more information, visit the company's website at www.accelerize.com.
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SOURCE: Emerging Growth LLC