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Affiliate growth is still in the first inning, panel agrees.

“It’s a real industry and it's here to stay” stated Blake Saunders, Managing Director at Methuselah Advisors.

Industry investors gathered on a virtual webinar yesterday to discuss the drivers of investment and the future of the industry.

Blake, Marshall Phelps, Managing Director at Lazard and Ben Faw, Co-founder of Best Reviews and AdVon Commerce joined Martech Record for a webinar that shed light on where the industry is heading.

If you missed it, stream a recording of the event here

The panel highlighted several key market drivers that are pushing capital into the affiliate market.

The frothiness of the market was a key macro trend. “Investors need to put capital to work,” Saunders pointed out, but ecmmerce trends emerged as the most important drivers.

"Overall ecommerce adoption is lower than anyone thinks, we are only at 5%-10% adoption if you include all products and services that will eventually be sold online." - Ben Faw

Within ecommerce, affiliate adoption is still small and sure to grow. “If you’re going to build your entire program off of Facebook and Instagram ads, your margins are going to be negative” noted Faw. “Instagram is full.”

Marshall said that we’re just starting to see the adoptions of the ecommerce platforms that will enable growth.

“Only a handful of (affiliate) businesses have reached massive scale as more Americans becomes ecommerce dependent” added Phelps, indicating that there was a lot of room for organizations to grow.

Given all these drivers, the panelists reached consensus that we are still very much in the first inning when it comes to the growth of this industry.

The panelists settled on several themes for future growth.

New, higher price point verticals verticals like cars, B2B, services and other verticals with complexity in the sales process.

Phelps pointed out that luxury goods are already getting in on the action. “People are comfortable now purchasing luxury watches online, that’s a new phenomenon that just shows where things are going.”

New publishers/brands are starting to grow up with “affiliate in their DNA.” All panelist tended to highlight the smart things that were happening in the publisher market.

Faw said “We are seeing an integration of properties into brands. It’s blurred line between media, commerce and brands,” implying the that model is still being built and we’re in the early changes.

But, affiliate industry veterans should be aware that other channels are just getting started, and have the potential to make big moves in the market.

Saunders added that channels that are now silo’d will also adopt an affiliate model, growing the ecommerce long tail.

“People are signaling that Facebook & Tiktok will be big commerce players, this means a small user can get paid out for pushing a consumer in one direction or another. This will include the local liquor store."

Publishing leaders will emerge from the affiliate channel.

An important theme was the leadership opportunities that will emerge for smart people with affiliate experience.

Faw noted that as affiliate grows in importance, people who grew up in those roles, understand the data and employ it wisely, will be in a position to lead.

“It makes all the sense in the world to me that in the next 6 to 24 months one of the CEOs of a publishing group will have affiliate as their primary background.” Pointing out that PE firms North Equity and Lola Digital already have this as a model.

Saunders pointed out that affiliate has traditionally been staffed by more junior people but recent staffing is bulking up in the space and creating room for growth. Blake later noted that the affiliate managers that leverage data have a huge opportunity to catapult their careers since there is nobody above them.

All three panelists agree that in the next 5-10 years affiliate trained people will be running large media companies, pointing out that Buzzfeed, CNN and NYTimes are already creating these leaders.

A final question came from the audience, asking if we’re in the first inning, what does the 9th look like?

So what does the 9th inning look like? All agree that the consolidation of brands, publishers and products would be the main theme.

Want to network with affiliate colleagues. Sign up for our upcoming (5/13) happy hour networking event.

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