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UK online shoppers spent £14bn in 2013 through online performance marketing: study

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Britons spent £14bn via deal, incentive and review websites in 2013, 15% more than the previous year, a new study suggests.

The second Online Performance Marketing study, carried out by PwC for the Internet Advertising Bureau UK (IAB), found that during 2013 UK shoppers made 150m purchases via affiliate websites, totaling £13bn, while another £1bn resulted from lead generation. Online performance marketing (OPM) now drives about 10% of all UK ecommerce retail sales, suggests the report. Unlike online display advertising, OPM is paid by its outcomes such as when a visitor to a website buys a product or submits contact details.

Advertisers spent £1bn on OPM in 2013, 15% more than in 2012, and the IAB calculates a return of £14 for every £1 spent.

“The proliferation of online services offering deals incentives and product reviews has ushered in a new era of savvy and careful consumerism,” said Tim Elkington, director of research and strategy at the IAB.

“However, the industry is growing quickly because it’s an everyone-wins situation. Consumers can save money in a variety of convenient ways and get access to content online free of charge. Advertisers get new customers – nearly six in 10 people become repeat customers of a company they only discovered through a deal or incentive site – and, at a return of 14:1, it’s extremely cost-effective. It also generates extra revenue for the publishers in the middle, large or small, via referral fees.”

The report cites comScore data that suggests in November 2013, 39% of UK internet users (18.7m people) visited a price comparison site, and 35%, or 16.6m, visited a voucher site and 21% (9.9m) visited a loyalty or cashback site.

It found that more than half (52%) of British adults questioned said they had visited a price comparison site in the previous six months, while 90% said they used vouchers or point schemes to buy. Meanwhile, one in eight has redeemed a voucher or deal using a mobile phone app.

Olivier Claude, marketing controller affiliate and email at BSkyB, said: “Between 2010 and 2012, affiliate channel sales volumes grew by 33% and customer quality has improved. At the same time affiliate share of online volumes have grown steadily. Should performance marketing maintain positive volume growth and positive ROI, we should expect an increased investment in the channel.”

Dan Bunyan, manager at PwC, said: “OPM generated about 4bn clicks in 2013, the equivalent of 10m per day or 120 per second, about 5% of which resulted in a transaction. This high conversion rate and the high return on investment explains the significant increase in advertisers (to 4,000) and publishers (to 12,000) now using OPM.

“It isn’t just the big publishers or super-affiliates who generate revenue through OPM. It’s opened up a new and growing industry among the long tail, where individuals and small publishers with specialist knowledge of a particular area can produce websites and then automatically generate advertising revenue.”

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