The affiliate marketing landscape is undergoing a significant transformation as retail media networks continue to capture an increasing share of digital marketing budgets. For affiliates navigating this evolving ecosystem, understanding where and how marketing budgets are being allocated has become crucial for business survival and growth.
The Current State of Marketing Budgets
The emergence of retail media networks has fundamentally altered how brands distribute their marketing spend.
Major retailers like Tesco, Sainsbury’s, and Boots have developed sophisticated advertising platforms that leverage their first-party customer data, presenting both challenges and opportunities for traditional affiliates.
Budget Distribution Trends
Recent market analysis shows significant shifts in digital marketing budget allocation:
Retail Media Networks:
- 30-40% of digital marketing budgets
- Focused on immediate conversion
- Heavy investment in peak shopping seasons
- Dominated by major retailers
- Emphasis on first-party data utilisation
Traditional Affiliate Marketing:
- 15-25% of digital marketing budgets
- Year-round consistent spending
- Diverse publisher ecosystem
- Focus on customer journey and education
- Relationship-driven partnerships
Why This Matters for Affiliates
The shifting budget landscape has created immediate implications for the affiliate marketing community. Understanding these changes is essential for developing effective strategies and maintaining competitive advantage.
Impact on Commission Rates
The growth of retail media has put pressure on traditional affiliate commission structures. Brands are reassessing their commission rates as they balance investments across multiple channels. Many affiliates report seeing traditional commission rates decrease from 10% to 5-7% as brands redirect funds to retail media initiatives.
Changes in Brand Relationships
The automated, data-driven approach of retail media networks is challenging the traditional direct relationship between affiliates and brands. Affiliates must now demonstrate clear value propositions to maintain and grow their partnerships.
Competition for Attribution
Retail media networks offer closed-loop attribution, making it easier for brands to track ROI. This has raised the bar for affiliates to prove their contribution to the customer journey and justify their commission structures.
How Successful Affiliates Are Adapting
Forward-thinking affiliates are finding innovative ways to thrive in this new ecosystem by focusing on areas where they can provide unique value.
Specialisation and Expertise
While retail media excels at mass market reach, successful affiliates are carving out profitable niches by:
- Developing deep expertise in specific product categories
- Creating comprehensive buying guides
- Building engaged communities around specific interests
- Offering unique insights that automated systems cannot replicate
Content Strategy Evolution
Affiliates are moving beyond basic product listings and price comparisons to create high-value content that retail media cannot match:
- Detailed product comparisons and analysis
- Long-form buying guides
- Expert reviews and recommendations
- User experience documentation
- Interactive content and tools
Revenue Diversification
Smart affiliates are expanding their revenue streams beyond traditional commission structures:
- Developing sponsored content partnerships
- Creating premium content products
- Offering consulting services
- Building membership communities
- Establishing direct brand partnerships
Future-Proofing Affiliate Businesses
To maintain relevance and profitability in this changing landscape, affiliates should focus on several key areas:
Data Collection and Analysis
Successful affiliates are investing in:
- First-party data collection systems
- Advanced analytics tools
- User behaviour tracking
- Performance measurement capabilities
- Conversion path analysis
Relationship Building
Despite the rise of automated systems, personal connections remain valuable:
- Developing direct brand relationships
- Building networks within the industry
- Creating unique partnership opportunities
- Maintaining regular communication with key stakeholders
Value Proposition Development
Affiliates need to clearly articulate their unique benefits:
- Demonstrating specific audience engagement
- Showing detailed conversion metrics
- Highlighting content quality and authority
- Proving long-term customer value
Opportunities in the Current Market
While retail media networks present challenges, they also create opportunities for affiliates who can adapt:
Content Gaps
Retail media networks excel at point-of-purchase advertising but often lack:
- In-depth product education
- Authentic user experiences
- Detailed comparison content
- Community engagement
- Personalised recommendations
Niche Markets
Opportunities exist in:
- Specialised product categories
- Technical product segments
- Luxury markets
- Complex purchase decisions
- High-involvement products
Looking Ahead
The future of affiliate marketing lies not in competing directly with retail media networks but in complementing them. Successful affiliates will be those who can:
- Provide unique value to both brands and consumers
- Adapt to changing market conditions
- Invest in technological capabilities
- Build strong relationships
- Maintain focus on quality content and engagement
The key to survival and growth in this evolving landscape is understanding that retail media and affiliate marketing serve different but complementary roles in the customer journey. While retail media excels at capturing point-of-purchase intent, affiliates continue to play a crucial role in guiding customers through their buying decisions with trusted advice and detailed information.
For affiliates, the focus should be on developing and maintaining unique value propositions that complement rather than compete with retail media networks. This approach ensures continued relevance and profitability in an increasingly complex digital marketing ecosystem.
