1. IAB Affiliate Advertiser Survey In association with A4U October 2012

2. Objective:To size the growth of advertising spend on affiliate marketing channel, map trends, and identify sector hotspots and opportunities Sample: Based on 115 advertiser & merchant companies. Methodology: Online survey, hosted on Survey Gismo Survey: 5-10 minute survey live during September – October 2012 Methodology

3. Quick summary 100% of advertisers survey expect their online revenues to grow in 2013, with 44% estimating revenue increases of between 11-25% Affiliate marketing spend share is increasing and the survey show a 45% uplift in the number of advertisers spending more than 31% of their online marketing budgets in the affiliate channel More than a quarter of the advertisers surveyed (28%) are running seasoned affiliate programmes that are 6 or more years old The channel continues to grow rapidly: advertisers with new affiliate programmes set up during the last year, accounted for 23% of respondents. Over half of the respondents have annual online revenues of over £10 million Over half of the advertisers said that their monthly affiliate commission payments rose in the last year 72% expect affiliate commission payments to rise in the next 12 months 61% are planning to increase their affiliate marketing spend during the next 12 months 49% of principle revenues are from cashback and vouchercode affiliates Source: IAB A4U Affiliate Marketing Survey, October 2012

4. Market sectors surveyed Source: IAB A4U Affiliate Marketing Survey, October 2012 Other includes: Business and Industrial, Utilities, Health, Pets, Qn: What market sector do you operate in? Fashion / clothing Home & garden Cosmetics/toiletries Food Retail: Other* * Retail: Other includes: health, jewellery, software, multi- category, music cds

5. Affiliate channel is engaging more brands with high online revenues: 52% report £10m+ annual t/o Source: IAB A4U Affiliate Marketing Survey, October 2012 Qn: What is your company’s online turnover per annum? Over half of the advertisers surveyed reported £10million + annual online sales revenues, a strong indicator that the affiliate channel is attracting high spending brands

6. Affiliate channel’s growth in 2013 fuelled by increased marketing investment in affiliate programmes: 72% say commission payments will continue to increase Source: IAB A4U Affiliate Marketing Survey, October 2012 Qn: Do you forecast a rise or fall in affiliate commission payments during the next 12 months? Significantly almost three quarters of respondents expect monthly commission payments to rise during 2013 81% of those expecting increased payments (see note), say they’re increasing investment in their affiliate programmes pointing to greater reliability of and confidence in the channel. Only 12% expect commission payments to decrease and 54% of those cite economic conditions for their prediction. Expect increased payments (72%) Expect decreased payments (12%) Expect payments to stay the same (17%) NOTE: base size of reasons for rise, fall and no change inconsistent and so regard charts as narrative indicators only.

7. (Commission payments over £31K show a 21% uplift from 2011 to 2012) Advertisers paying out more than £100K per month in payments increased by 16% Advertisers making monthly commission payments of over £31K significantly increased Source: IAB A4U Affiliate Marketing Survey, October 2012 34%41% Qn: What is your average monthly affiliate commission payment?

8. Affiliate’s increased share of marketing investment is clear indication of the channel’s strengthening role within the marketing mix Source: IAB A4U Affiliate Marketing Survey, October 2012 Qn: What % of your overall online marketing spend is attributed to affiliate marketing? NOTE: Online marketing spend defined as media spend within paid search, online display, email marketing, lead generation, social media channels and content marketing. Programmes investing more than 31% of their marketing budget in the affiliate channel rose by: Programmes investing less than 10% of their marketing budget in the affiliate channel decreased by: 18%45% Advertisers investing more than 31% of their marketing budget in the affiliate channel rose from 11% (2011) to 16% (2012) Advertisers investing less than 10% of their marketing budget in the affiliate channel fell from 51% (2011) to 42% (2012)

9. Greater need for marketing ROI continues: increased marketing investment in affiliate channel predicted Source: IAB A4U Affiliate Marketing Survey, October 2012 Qn: Are you planning to increase your affiliate spend during the next 12 months? Almost 2/3 of all advertisers surveyed said they would be increasing their investment in the affiliate channel in 2013.

10. As the affiliate sector matures, it’s attracting a significant volume of new advertisers, indicating recognition of the channel’s effectiveness Source: IAB A4U Affiliate Marketing Survey, October 2012 Qn: How long have you been running your affiliate programme? (to the nearest full year) 58% respondents are running seasoned affiliate programmes, more than 3 years old. 28% report their programmes are 6 years and older 23% of respondents report their affiliate programmes were established within the last 12 months indicating that the channel has significant attractions to marketers

11. Growing consumer ‘deal searching’ trend through cashback and voucher code sites produce principle revenue streams for 49% of advertisers surveyed Source: IAB A4U Affiliate Marketing Survey, October 2012 Qn: Which affiliate type provides your principle revenue? Advertisers benefiting from growing consumer trend to ‘deal-search’ online.

12. Branded affiliate sites producing reliable advertiser revenues Source: IAB A4U Affiliate Marketing Survey, October 2012 Qn: Which affiliate type provides your principle revenue? Qn: What type of affiliate / publishers do you work with? Publishers worked with Principle revenue sources

13. Collaborative style emerging as advertisers blend affiliate programme planning between in-house teams, agencies and networks Source: IAB A4U Affiliate Marketing Survey, October 2012 Qn: Thinking about how you plan and manage your affiliate programme, is the main strategy generated: Note: In 2011 there was no “A combination of two or more” option

14. Majority still using 1 affiliate network but declining, while users of 2-3 networks growing significantly Source: IAB A4U Affiliate Marketing Survey, October 2012 Qn: How many affiliate networks do you work with?

15. For more information For more information contact: Clare O’Brien, Industry Programmes Consultant clare@iabuk.net 020 7050 6963