www.pepperjam.com

The Pepperjam A�iliate Marketing Sales Index

Updated through May 9, 2020

Vertical Status for Week Ending in 5/9

Surging+499% YoY Gifts & Flowers

+352% YoY Food & Drink+114% YoY Sports & Fitness+100% YoY Health & Beauty

Significantly increasing+69% YoY Home & Garden

+65% YoY Accessories & Jewelry

+59% YoY Clothing & Apparel

+50% YoY Art, Photo & Music

Decreasing-14% YoY Computers & Electronics

Significantly decreasing-85% YoY Travel

02The PAMSI data is not intended as a proxy for overall affiliate marketing activity, e-commerce activity overall, or the performance of any individual business, including Pepperjam.

In developing the Pepperjam A�iliate Marketing Sales Index we measured the gross merchandise sales directly attributable to a�iliate marketing promotions for the period beginning March 1st through May 9th and compared them against the a�iliate gross merchandise sales for the same period in 2019.

We analyzed performance in 10 retail categories comprised of ~700 retail brands as tracked in the Pepperjam Ascend™ A�iliate Cloud Platform. Additionally, commission trends, publisher activity and customer behavior were also examined.

Introduction

Gross Revenue YoY Growth

Weekly Revenue TrendsYTD revenue momentum continued into May.

YoY revenue growth experienced its highest point in week ending 5/9.

Gifts & Flowers observed the largest YoY increase across verticals, indicating a greater number of Mother’s Day purchases were made online this year versus last year. (see page 8)

**In this version of the PAMSI and future versions hereafter, gross revenue data will be used, and will be independent of return data, to reflect true demand

30%

40%

50%

60%

20%

70%

10%

0%

3.142.15 2.22 2.29 3.7 3.21 4.43.28 4.11 4.18

25%

10%12%

8%

4%

16%

24%

36%

53%

76%

4.25

74%

5.2

72%

5.9

79%

03

Clicks YoY AOV YoY Conversion Rate YoY

60%

80%

100%

120%

140%

40%

20%

0%

-20%

YoY

Gro

wth

Rat

e

18%

1%4%

2.15

12%

2%

-4%

2.22

12%

-3%

10%

-8%

7%

-14%

7%

-25%

28%

-21%

19%

-15%-11%

2.29

7%

3.7

14%

3.14

44%

3.21

22%

3.28

33%

4.4

45%

29%

-15%

61%

4.11 4.18

34%

-21%

65%

4.25

98%

-18%

7%

5.2

140%

-17%

-10%

5.9

4%

19%

Drivers of Weekly Revenue GrowthIn week ending 5/9, YoY clicks decreased, but conversion rates experienced highest YoY growth YTD, primarily due to conversion drops

for the same time period in 2019. AOV continued its downward YoY trend for week ending 5/9.

04

Variable Commission YoYTotal Commission YoY

Weekly Commission Trends

30%

YoY

Gro

wth

Rat

e

40%

50%

60%

70%

10%

20%

0%

-10%

72%

18%

27%

15%

2.292.15 2.22 3.7 3.14 3.21

18%

12%

27%

15%14%

-5%

5%

31%

21%23%

3.28 4.4

62%

37%

4.11

48%

59%

4.18

64%

69%

4.25

68%

31%

5.2

55%59%

5.9

65%

3%

•

•

•

•

Commissions paid to publishers are comprised of two types: 1. “Variable Commission” is defined as a percentage of revenue or conversion2. “Bonus Commission” is defined as a flat amount typically associated with paid placements or media buys

“Total Commission” is defined as the total of “Variable commission” plus “Bonus commission”

In week ending 5/9, we observed a 65% increase YoY in “Variable Commission” and 59% increase in “Total Commission”.

These continued upward trends suggest greater brand investment and favor into the affiliate channel's pay for performance model.

We’ve provided views with and without bonuses to illustrate that spend is strong even without bonuses.

05

06Variable commission rate 2020Variable commission rate YoY

Weekly Variable Commission Rates Trends“Variable Commission” rate growth continued to decrease YoY into week ending 5/9.

This data suggests that while brands continue to invest in affiliate marketing, they are more cautious with the variable rate paid to publishers.

6%

5%

7%

4%Pu

blis

her V

aria

ble

Com

mis

sion

Rat

e

YoY

Gro

wth

Rat

e

3%

2%

1%

0%

20%

15%

25%

10%

5%

0%

-5%

-10%4.113.72.15 4.18 4.25 5.2 5.92.22 2.29 3.14 3.283.21 4.4

Variable commission rate 2019

07

30%

25%

20%

35%

15%

5%

10%

0%3.72.15 2.22 2.29 3.14 3.283.21 4.4 4.11 4.18 4.25 5.2 5.9

% M

obile

Rev

enue

YoY

20%

15%

25%

30%

35%

10%

5%

0%

% M

obile

Rev

enue

in 2

020

% Mobile Revenue 2020% Mobile Revenue YoY

Weekly Mobile Revenue ShareIn week ending 5/9, 35% of revenue was attributed to a mobile device, as consumers continue to spend greater time on their personal devices.

The % of mobile revenue held steady at 31% YoY growth.

400%

500%

300%

200%

100%

0%

-100%

Accessories & Jewelry

Art, Photo & Music

Clothing & Apparel

Computer & Electronics

Food & Drinks Gifts & Flowers Health & Beauty Home & Garden Sports & Fitness Travel

Mother’s Day spike

Revenue Growth by Advertiser Vertical

4.254.18 5.2 5.94.1108

30%

40%

20%

50%

10%

0%3.72.15 2.22 2.29 3.14 3.283.21 4.4 4.11 4.18 4.25 5.2 5.9

51%

% New Customer 2020% New Customer YoY

Weekly New Customer Revenue ShareNew customer revenue share has exceeded 50% for 5 consecutive weeks indicating a sustained increase over 2020 YTD trend in new to file

transactions attributable to the affiliate channel. Revenue from New Customers for content publishers (see page 10).

09

10LoyaltyCoupon/Value Propositions OtherContent

40%

30%

50%

60%

20%

10%

0%4.42.15 2.22 2.29 3.7 3.14 3.21 3.28 4.11 4.254.18 5.2 5.9

% o

f Rev

enue

from

New

Cus

tom

ers

in 2

020

64%

New Customer Revenue by Publisher CategoryShare of revenue from new customers acquired from content publishers was 64% for week ending 5/9.

This constitutes a 39% increase over the same period prior year.

For customers acquired via coupon publishers, the % of revenue from new customers remained unchanged at 51%; while loyalty publishers increased WoW to 39%.

Content Publisher Share of Variable Commission

Content Publisher YoY Revenue and Commission Trends

Content Publisher Revenue YoY Growth Rate

0%

20%

40%

60%

80%

100%

YoY

Gro

wth

Rat

e by

Fis

cal W

eek

and

Vert

ical

93%

104%101%

53%

2.15

40%

2.22

38%

2.29

30%

3.7

35%

3.14

64%

3.21

31%

3.28 4.4 4.11 4.18

119%

4.25

98%

5.2

107%

5.9 2.15 2.22 2.29 3.7 3.14 3.21 3.28 4.4 4.11 4.18 4.25 5.2 5.90%

5%

10%

15%

20%

25%

30%

35%

40%

45%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Con

tent

Pub

lishe

r Sha

re o

f Var

iabl

e C

omm

issi

on

Con

tent

Pub

lishe

r Sha

re o

f YoY

Var

iabl

e C

omm

issi

on G

row

th

2019YoY 2020

Content publishers continue to offset losses from Amazon Associates commission cuts by working directly with brands whose affiliate programs offer competitive commission rates, as evidenced by increased Ascend™ application volume (see page 12). This is an opportunity for brands to diversify their publisher mix, and reach new customers through discovery-oriented publisher destinations.

The last 6 weeks have shown extremely high revenue growth YoY for content partners.

This growth is primarily at the expense of loyalty partners. Content partner Share of Spend was 36% in week ending 5/9, a 60% YoY increase over the same period in 2019.

•

•

•

11

20%

40%

60%

80%

-20%

-40%

0%

3.142.8 2.15 2.22 2.29 3.7 3.21 4.43.28 4.11 4.18

17%

1.11 1.18 1.25 2.1

14%

23%27%

8%

-31%-27%

9%

50%

88%

4.25

89%

5.2

92%

5.9

82%

7%6%8%

3% 5%

Part

ner A

pplic

atio

n G

row

th Y

oYPublisher Application Growth YoY

12

In Q1, average growth rates YoY in Ascend™ publisher partner applications were ~13%. Beginning in week ending 3/21 applications volume declined. However, once the Amazon Associate program commission rate cuts were announced on 4/14, Ascend™ YoY application growth accelerated,

suggesting publisher partners were in search of alternate revenue streams. Pepperjam’s Ascend platform enables brands to quickly identify publishers that have utilized Amazon Associates as a monetization source, and easily recruit them into their program at a competitive rate.

13Content Coupon Loyalty Other Social Media

% of Approved Publisher Sign Ups by TypeYTD publisher applications have largely been from content partners.

However, in recent weeks, we have observed an increase in publishers classified as ‘Social media’, suggesting that more influencers are turning to affiliate marketing to monetize their content.

60%

50%

100%

90%

80%

70%

40%

30%

20%

10%

0%

1.11 1.11 1.29 2.1 2.8 2.15 2.22 2.29 3.7 3.14 3.21 3.28 4.4 4.11 4.18 4.25 5.2 5.9

14

Average Publisher Connections per AdvertiserConnection” is defined as an active relationship between an advertiser and a publisher partner.

In the month of April, we’ve observed a 51% increase YoY in the average number of connections per advertiser, suggesting advertisers are seeking to create new relationships in the affiliate channel.

50%

40%

30%

20%

10%

0%January AprilFebruary March

500

400

300

200

100

0%

Aver

age

Part

ner C

onne

ctio

ns p

er A

dver

tiser

YoY

Gro

wth

Average Connections 2020Average Connections YoY Average Connections 2019

15

Average Revenue Generating Connections per AdvertiserNot only did we see an increase in the number of relationships established between advertisers and publishers; but we also observed a 36% increase in the number of advertiser-publisher connections that are generating revenue.

This suggests that a mutual interest from both advertisers and publishers to speed activation and time to revenue within the affiliate channel.

January AprilFebruary March

25%

30%

35%

40%

20%

15%

10%

5%

0%

YoY

Gro

wth

Revenue Generating Connections 2020Revenue Generating Connections YoY Revenue Generating Connections 2019

Insights by vertical.

+52%

+44%

+36%

+36%

+59%

4/4:

4/11:

4/18:

4/25:

5/2:

Clothing & Apparel

+16%

+27%

+11%

+7%

-14%

Computer & Electronics

+11%

+80%

+97%

+85%

+65%

4/4:

4/11:

4/18:

4/25:

5/2:

Accessories & Jewelry

+3%

+12%

+23%

+46%

+50%

Art, Photo & Music

Weekly Revenue YoY Trends by Vertical

4/11:

4/18:

4/25:

5/2:

5/9:

4/11:

4/18:

4/25:

5/2:

5/9:

17

+67%

+197%

+141%

+204%

+100%

Health & Beauty

+78%

+95%

+66%

+62%

+69%

Home & Garden

+406%

+451%

+343%

+346%

+352%

Food & Drinks

+200%

+110%

+285%

+258%

+499%

Gifts & Flowers

Weekly Revenue YoY Trends by Vertical

4/11:

4/18:

4/25:

5/2:

5/9:

4/11:

4/18:

4/25:

5/2:

5/9:

4/11:

4/18:

4/25:

5/2:

5/9:

4/11:

4/18:

4/25:

5/2:

5/9:

18

+95%

+157%

+307%

+186%

+114%

Sports & Fitness

-91%

-91%

-88%

-85%

-85%

Travel

Weekly Revenue YoY Trends by Vertical

4/11:

4/18:

4/25:

5/2:

5/9:

4/11:

4/18:

4/25:

5/2:

5/9:

19

Interested in learning more with a Pepperjam expert? Contact us at research@pepperjam.com

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