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HOW TO ENTER THE ITALIAN MARKET SUCCESSFULLY

Filippo Fabiano – Account Manager at Webgains

 

 

The Mediterranean has long been since as a growth area for affiliate marketing and e-commerce as the traditional European markets see huge competition and price pressures. Italy especially has seen a steady growth of e-commerce over the past few years (on average 18% yearly from 2014) and the Affiliate Marketing industry is also trending upwards at a significant pace. As the economy starts to improve, there are substantial opportunities for advertisers to enter the Italian market and see strong results.

To put that in context, we see investments by brands into the sector increased its share across digital channels, with the total spend predicted to increase by 10% yearly until 2020. This trend is also expected to beat countries where performance marketing is well developed, such as the UK and the US. Despite the recent growth of the affiliate space within the Italian digital landscape, there still are peculiarities and gaps that advertisers are aiming to internationalise their affiliate programs need to consider.  

PUBLISHER TYPES AND PAYMENT MODELS 

Due to the commercial nature of the performance channel, we see that in Italy, as it is in most countries, the main publisher sector that drives the market is an incentive (voucher, loyalty, cashback) but what differs when dealing with these partners can be seen in three main areas:  

  • How advertisers can work with them 
  • Related costs  
  • Return on investment  

Just recently we`ve been noticing price rises of paid placements on these publisher sites although they are still far less expensive than rate cards presented by similar affiliates in markets like the UK. Therefore, you can expect to buy the same levels of exposure for your brand with relatively minor investment but what also differs is the anticipated ROI. This comes down to one simple equation in offer-demand where prices go up when the demand increases, and because the spend by brands has been growing so do tenancies. It’s therefore beneficial to enter the market quickly to benefit from this low tenancy spend. Of course, at the same time, you cannot expect to see overly high ROI since online traffic and conversions have not quite reached the level of the more mature markets yet.  

Another aspect to consider is that outside the incentive sector the publisher mix differs substantially. There are channels such as display and email marketing that domestic advertisers run via affiliate (respectively 12% and 4% of the total of publishers/channels), and this also reflects in the payment models. In the UK for example, the affiliate is typically seen as a CPA channel, so even publishers that historically worked on different models such as CPC and CPM have been seeking and finding ways that make viable working on CPA so they can work with big brands which would be challenging to connect with otherwise. A good example is the number of UK comparison sites that today work on cost-per-sale whereas the same sort of publishers in the Italian market mainly work on cost-per-click, with little room for commissions on sales and if any, returning poor results. 

RELATIONSHIPS AND NETWORKING 

Relationships and how you manage them are another big part of affiliate marketing. We are very much part of a relationshipdriven industry, but building and managing them varies from region to region, driven by cultural aspects. What`s in common is that to make affiliate marketing work, relationships must be strong and communication between partners constant. In Italy, the relational aspect is even more important because being an inherently warm population, we prefer human contact when it comes to business, and that is something I see less of in the affiliate industry in the UK. 

The frequency of sector events, trade fairs, networking days, conferences, seminars and talks are far fewer with much less buzz created around the number of monthly gathering occasions happening when compared to events happening in the UK. 

Also, day to day work of network Account Managers, agencies and advertisers themselves lack in terms of regular contact with publishers, meetings, affiliate days etc. 

The relationship management aspect highlights how crucial it is having a physical presence in territories like Italy, where connections need to be constantly cultivated and maintained and where it`s very important to meet business partners in person. These are also the reasons why Webgains is very active in the Italian market with an office located in the centre of Milan, the hub of the country`s digital industry and this is crucial for any partner you choose. Last, but not least, in the Italian peninsula the knowledge of the English language is not widespread to a great extent, therefore, to especially tap into the myriad of small affiliates that make up the publisher landscape is vital to speak the native language. 

WHY INVEST AND GROW IN ITALY 

As mentioned previously, e-commerce in Italy is not yet much developed as it is in the other large global economies, but it`s moving in that direction. 2018 finished off with over 27 billion Euro online sales, and this suggests there is huge room for expansion and opportunities to be grabbed. Major obstacles such as the population`s loyalty to cash payments, perceived as a safer way to make purchases, are being gradually overcome and the inclination of Italians to the internet and adoption of digital technologies is shown by Italy being one of the top European countries to use social media (over 70% is the share of daily users within the total users). Italy also has one of the biggest retail mobile commerce sales growth in Europe in 2017 (32.5% YOY) among the most developed countries.  

Italy is also opening up towards international e-commerce and the retail sector, in particular, is also evidence of this, with traditional foreign heavyweights such as eBay and Amazon serving a huge proportion of demand. In my opinion, we can also use data we see from Black Friday, with exponential growth maintained in year on year trends. In particular, last year versus 2017 saw a triple-digit increase in sales over cyber week drove via the affiliate channel, which compared to 43% uplift seen in the UK provides us with further evidence of the massive opportunities available 

Building up a brand presence now in this favourable position should be advantageous since advertisers can benefit from aspects that characterise a young industry. In the future, when the market will mature, it will be more difficult to work with super affiliates, ad placements will be more expensive, and for SMEs, in particular, many opportunities will be harder to be tapped into. There are also some big international affiliates very active in Italy, where the likes of Groupon, Savoo, Skyscanner and many others will be keen to advocate your brand, spread the world, build relationships and launch profitable collaborations.  

Italy, therefore, represents a big opportunity to expand your business abroad and affiliate marketing is the obvious way to help brands in doing that. My advice though is to not launch internationalisation campaigns just following attractive market conditions or because certain markets show intrinsic potential to be remunerative. Before adventuring into new opportunities make sure you have sufficient resources, a local presence, people working in the field with territorial knowledge and network, or if you don`t, find support from organizations and agencies that tick all those boxes.

~

This article also appeared on PerformanceIn on 11th March 2019.

If you are interested in joining Webgains or expanding your reach to the Italian market, you can get in touch with Filippo via e-mail.

2 weeks ago
We're still reminiscing about the amazing #ASAPAC19 networking party at The Lantern, and the @affiliatesummit crew took some lovely photos to make the memories last. Check the gallery out here: https://t.co/FbsYEKRKWB ☺️ 🥂 🎉 https://t.co/KV0FhCigK0
3 weeks ago
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