(PRLEAP.COM) Affiliate marketing has become a crucial area of business for many digital agencies, with 85 per cent of agencies saying that they now manage more affiliate marketing for clients than they did two years ago, according to research by E-consultancy and the UK’s largest independent affiliate network, buy.at. On average, this channel now represents 20 per cent of turnover for those agencies surveyed. The overwhelming majority of respondents (92 per cent) say their agencies will be managing more affiliate marketing in two years’ time, further highlighting the growth of this sector.

Some 90 per cent of respondents believe that affiliate marketing is a way of growing their agency or differentiating it (either ‘definitely’, 39 per cent, or ‘somewhat’, 51 per cent) with only 9 per cent disagreeing.

Almost 100 UK agency respondents took part in the E-consultancy / buy.at Affiliate Marketing Survey carried out in August and September 2007.

Kevin Cornils, CEO of buy.at, comments, ‘Buy.at has developed a proactive partnership approach with digital agencies. From the very beginning we realised that by combining the strategic insight and media planning approach of agencies with the specific expertise, technology and account management of our network we could provide the best affiliate marketing to agency clients.’

Linus Gregoriadis, Head of Research at E-consultancy, adds, ‘Affiliate marketing is becoming an important battleground for media agencies because of the appeal of its performance-based model. The channel is proven to deliver customers or sign-ups in a cost effective manner. This research shows the extent to which agencies are integrating this type of marketing into their service offering.’

Affiliate Marketing is rated by agencies as the most cost-effective channel for customer acquisition, with 61 per cent saying that it is ‘very cost effective’ and 36 per cent saying that it is ‘quite cost effective’.

The next most cost-effective channel is deemed to be paid search, which is described as very cost effective by 59 per cent of agencies and quite cost effective by 36 per cent. The affiliate marketing channel is the second best channel for ‘driving volume’ for their clients after paid search, according to agencies surveyed.

Despite the success that many agencies are achieving for brands across a range of sectors, there are still significant issues affecting this type of digital marketing which stand in the way of further industry growth.

More than half of agency respondents (57 per cent) say that they ‘wish they could get more out of this channel’ compared to just a third (35 per cent) who declare themselves satisfied.

Agencies rate the biggest barrier to success in this channel to be ‘a poorly converting website’, which is regarded as either a ‘major’ or ‘minor’ barrier by 66 per cent of respondents.

‘Restricted budget’ is also rated as a significant barrier, with 52 per cent saying it is a major or minor barrier. Additionally, half of respondents say that investment is held back because clients ‘don’t know the level of incremental volume they will get’.

Lack of internal resource is cited as a major or minor barrier by half of agency respondents (49 per cent). However, the good news for the industry is that three-quarters of respondents (76 per cent) expect to have more people managing affiliate marketing in two years’ time.

Excerpted From: http://www.prleap.com/pr/104097/