*This blog post was updated in November 2021
Our team of local and global experts showcase what there is to know about key regions across EMEA. In this post, we shine the light on affiliate marketing in the UK.
Table of contents
- UK affiliate market overview
- Affiliate marketing in the UK
- Overview of key players in the UK affiliate market
- What are the 3 key differences between the UK and US affiliate markets?
Worth $22.07 billion in digital ad spend, the UK market in 2021 is larger than Germany, France and Russia combined.
The UK affiliate market represents one of the largest opportunities for domestic and foreign advertisers in affiliate marketing worldwide and particularly in Europe. Since launching in 1996 in the UK with the Amazon Associates global affiliate programme, the industry has continued to evolve. Affiliate marketing in the UK grew by 10% YoY in 2020, to £627 million, driven by the global pandemic and shifts in consumer behaviour.
COVID-19 altered consumer buying habits, with more Brits now preferring to shop online. With this in mind, brands increased spend on the measurable partnerships channel. Research from the IAB reported that almost one in five brands and agencies spent more than £250k per month on affiliate campaigns in 2020. Data released by Awin and the IAB indicated how a growing number of online consumers adjusting to the lockdown, impacted growth across different verticals:
- Online gaming purchases increased 237% YoY
- General fitness product sales increased 53% MoM
- Online revenue for education increased 123% from March-April 2020
- Online revenue for health and wellness increased 63% from March-April 2020
- Online revenue for business solutions increased 52% from March-April 2020
In 2020, smartphone affiliate spend accounted for over two-fifths of all spend indicating an upwards trajectory for the industry. Advertisers not already targeting smartphone users should consider recruiting partners that specialise in reaching this growing consumer group.
The key players for voucher affiliates are Global Savings Group, Vouchercodes.co.uk, MyVoucherCodes, Honey, and Vouchercloud. Traditionally, these sites have promoted voucher codes and offers through standard placements such as on-site exposure and newsletter inclusion. However, over the past few years, many have been driving innovation within the sector, by developing new features and capabilities in their offering. Vouchercloud recently developed in-app geo-targeting campaigns and Global Savings Group now offers influencer collaborations and content exposure. In addition to voucher affiliates, cashback affiliates, such as TopCashback and Quidco, are also key players in the market.
Even though traditional affiliate models continue to dominate the UK landscape, interest from advertisers is now moving towards content and influencers, as well as new sectors including mobile-app partners, programmatic display advertising, and CSS partners. To support the growth of content and influencer models, advertisers are exploring new payment models to support top-of-funnel partners.
In the UK, the largest affiliate network is Awin, and other networks include Webgains, CJ Affiliate, Tradedoubler, and Rakuten Marketing. One of the biggest changes within the sector has been the emergence of SaaS platforms. Key SaaS platforms in the UK are Impact.com, Partnerize, and Cake.
Due to its level of maturity, the UK affiliate market is comparable to the US, the pioneer country of affiliate marketing. With an internet population in the US almost six times bigger than the UK, aside from its size, the affiliate marketing industry is similar in many ways. For any US advertiser with affiliate marketing experience in the US, it is essential to understand these key differences prior to entering the UK.
Affiliate networks and SaaS platforms
In the US, the largest affiliate network is CJ Affiliate. They were the first network to make affiliate marketing accessible to online advertisers when they launched in 1998. ShareASale is also a large local affiliate network, with a self-managed platform dedicated to in-house affiliate programmes, and was acquired by Awin last year to reinforce their position in the US. Similar to the UK, SaaS platforms such as Impact and Partnerize have also seen strong growth in the US.
The US and UK markets have a similar share amongst affiliate partner types, including loyalty, voucher, and cashback. In general, flat fees for placements are incomparably higher in the US than in the UK, which requires advertisers to spend higher budgets for affiliate marketing. In addition, mobile is well developed in both markets.
Affiliate marketing regulation
The channel is primarily regulated in the US by the Performance Marketing Association (PMA), founded in 2005, and is similar to the IAB (Internet Advertising Bureau) in the UK, but focuses solely on affiliate marketing. It is the trade body in charge of setting the industry standards and best practices for advertisers and networks and is considered to be the most established trade body for affiliate marketing globally. One of the main issues for the PMA that is specific to the US, is the 'Nexus' law, a tax that is paid by affiliates on advertiser sales.
The industry in the US and UK have commonly been facing the question of affiliate disclosure that was tackled by the Federal Trade Commission (FTC) in the US and the Advertising Standards Authority (ASA) in the UK. This requires influencers and publishers to clearly disclose relationships with brands they are promoting online if they are being incentivised in return.
In response to growing privacy concerns, laws have gradually been implemented to control how personal information can be used by businesses. The 2018 GDPR law in Europe ensures that strict data protection principles are adhered to when using personal data. More recently, the CCPA law in America, introduced in 2020, forces companies to make new changes to their privacy programmes.
UK affiliate marketing outlook
As a mature affiliate market, the UK has been at the forefront of major developments within the industry, expanding its traditional model into new technologies, payment models, and affiliate partnerships which have changed the way that we do affiliate marketing today. Affiliate marketing remains a key driver for e-commerce growth in the UK and is a channel not to be ignored by brands.