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Brands 'more efficient' with online performance marketing

UK brands spent £1.1 billion on online performance marketing (OPM) in 2014, which represented an 8% increase year on year as affiliate marketing and lead generation activities grew in popularity among the business community.

According to the report – conducted by the Internet Advertising Bureau UK (IAB) and professional services firm PricewaterhouseCoopers (PwC) – consumers in the UK spent £16.5 billion during the course of the year due these OPM activities. This was up 14% on 2013's figure.

OPM sites, which range from large players such as Comparethemarket, Vouchercodes, Nectar and Quidco to the 12,000 or so smaller publishers in the UK, are used by finance firms in particular – with insurance, credit card and other similar firms accounting for 34% of OPM expenditure in 2014. The retail (21%) and travel & leisure (19%) industries were also reportedly prolific users of these marketing strategies.

Dan Bunyan, senior manager at PwC, remarked: "The fact that consumer spend is growing at nearly twice the rate of advertiser spend, indicates the OPM market is maturing and brands are becoming more efficient in how they drive consumer spending.

"OPM has grown to a near-£17 billion industry due to the fact that all parties continue to benefit. Advertisers get new customers extremely cost-effectively, consumers save money and get access to free online content, whilst the publisher in the middle gets revenue through referral fees."

Business advertisers using OPM techniques only pay a publisher for an ad if it causes someone to complete an action, such as a purchase (affiliate marketing) or submitting contact details (lead generation). 

The IAB-PwC report, which was based on detailed submissions from 18 companies, supplemented by a modelling methodology for companies not participating and a further nine in-depth interviews with industry participants, said consumers made 125 million purchases via affiliate websites in 2014, totalling £15.4 billion. 

Like much of the business world, there was a growing focus on mobile technology within the OPM sector. Advertiser OPM spend on mobile and tablets grew by 72% year on year to represent a 17% share of the overall market.

Tim Elkington, chief strategy officer at IAB UK, commented: "Advertisers are heavily increasing OPM spend on mobile because it's playing a bigger role in shopping. Half of adult smartphone owners buy something with their mobile every month, a quarter do so weekly."

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