Marketers are now spending just under one-fifth of their marketing budget on affinity marketing (cooperative marketing efforts between brands), and this proportion is expected to rise to more than 25% by 2007, according to new research from Lloyd James Group.
For the purpose of its study, Lloyd James Group defined affinity marketing as being "the growing activity between two brands, where both organisations swap brand assets, usually access to each others' customers, or the high visibility appeal of their brand or product offering".
According to the research, the rapid uptake of this form of marketing by UK corporates is expected to continue so that, by 2007, more than one-quarter of all marketing spend in the UK will be allocated to this type of marketing partnership.
Affinity marketing drivers
The survey of large UK companies found that factors such as "restrictions in the availability of commercially available third party data" and "the fragmentation of traditional advertising channels" are key reasons behind the growing popularity of affinity activity.
According to Glyn Davies, managing director of computer services, "There is constant pressure from management and shareholders for companies to spend their marketing budgets 'smartly' and improve their return on marketing investment."
This pressure, Davies believes, has led marketing professionals to explore hidden assets such as under-exploited marketing communications channels - especially when traditional advertising channels are increasingly fragmented and less able to offer coverage of the desired target audience. Davies suggests that affinity marketing has become a key method of achieving those goals.
The financial services, travel, and mobile telecoms sectors are all above average users of affinity marketing techniques, either because of industry intermediation, fierce competition, or both. In the survey, the retail sector had an average affinity performance, suggesting that retailers may not be fully exploring opportunities to enrich their loyalty programme-based relationships.
Surprisingly, charities also registered an average score for affinity marketing, despite an obvious wealth of co-branded credit card offerings. This suggests that these organisations - once pioneers of the technique - are finding it more difficult to set up affinity relationships because of competition from an increasing number of non-profit causes, and perhaps because companies are looking for longer-term pro bono relationships.
The leisure, automotive, and independent financial advice sectors all scored poorly (at 14%, 15% and 16% respectively). Utilities also scored badly, which suggests that many of these companies could do more to exploit their wide customer reach and trusted brands through the cultivation of third party affinity relationships.