Technology-Driven Online Marketing Performance Measurement: Lessons from Affiliate Marketing

Introduction

The measurement of online marketing performance is one of the most discussed and yet least understood subjects in both academic and practitioner communities (Germann, Lilien, & Rangaswamy, 2012; Malthouse & Hofacker, 2010; Ryan & Jones, 2009). In theory, the advancements in performance assessments of Internet marketing activities remain limited and fragmented. The extant contributions only address the measurement of selected online marketing activities such as banner advertising and social media marketing (Ewing, 2009; Michopoulou & Buhalis, 2008) and largely rely on the theory-testing quantitative research tradition (Michaelidou, Siamagka, & Christodoulides, 2011). From the point of view of theory advancement, this constitutes a challenge given that Internet marketing performance measurement theories are only starting to emerge. On the other hand, the developments in online tracking, performance measurement and analytics in every day practice are rapid and accelerating. Marketing practitioners, excited by the ‘big data’ capabilities and emerging opportunities to turn what used to be called a ‘slippery’ marketing practice into an accountable business function (Homburg, Artz, & Wieseke, 2012; Ryan & Jones, 2009), willingly adopt new online measurement approaches and readily switch their attention towards monitoring new numerical performance indicators. While these indicators and technology-enabled measurements indeed capture the marketing impact in a more ‘tangible’ manner, they continue to be defined by IT-departments and technology developers, whose understanding of marketing function is generally partial and whose collaboration with the marketing department is frequently occasional, if not absent (Calero, Ruiz, & Piattini, 2005; Seggie, Cavusgil, & Phelan, 2007).

Due to the increased capabilities, practitioner-driven Internet marketing measurement and analytics have been met with much enthusiasm and support by the scholarly marketing community (Ryan & Jones, 2009; Wilson, 2004). A few researchers, however, have also expressed caution towards new technology-enabled measurements, calling for further evaluations of new measurement techniques and approaches (Winer, 2009). In this study, we set out to explore the effectiveness of this measurement and, in order to motivate further development in this field, aim to propose actionable recommendations for practice improvement.

Given that performance measurement is a non-generalisable and context-specific construct (Miller & Cioffi, 2004), we focus on a specific Internet marketing channel – affiliate marketing in the context of tourism and hospitality, where its use is particularly widely spread (Daniele, Frew, Varini, & Magakian, 2009). Affiliate marketing is defined in literature as a commission-based online partnership between merchants and affiliates, in which merchants reward affiliates for the referral of customers to their websites and for the promotion and distribution of the merchant’s goods through additional sales outlets (Bandyopadhyah, Wolfe, & Kini, 2009; Duffy, 2005; Goldschimdt, Junghagen, & Harris, 2003).

We begin the article by discussing the present state of research on offline and online marketing performance measurement and by highlighting existing research gaps. We then explain the research methodology adopted and present the results, where we depict the current approaches to performance measurement in affiliate marketing, identify the difficulties of the present measurement practices and elucidate the nature of change required. Finally, in light of the literature analysis and the empirical evidence, we highlight the theoretical and practical implications of the findings, discuss the study’s limitations and set forth the future research agenda.