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Affiliate Marketing, In-House vs. Network

Affiliate marketing is a great way for a business to expand its reach into the online arena.  Simply stated, an affiliate program is another way of saying reseller or introducer.  You allow those signed up to your program to offer your products and service to their site traffic and in return you pay them on certain types of activities.  This can be done on a low-cost and low-risk model.  

There are two main ways to create and run an affiliate program.

1. In-house: You build an affiliate tracking platform for your business or you buy an off-the-shelf package to manage your affiliate program.  All you need then is to go out and get affiliates.

2. Network: You sign up to an affiliate network that has all the tracking software already running and also has affiliates all ready and waiting to join your program.

As you can see both options pretty much do the same things and both have pros and cons.

In-House Option

Pros: Cheaper to set up; gives you full control; builds a private network; and with no network fees, this allows to you pay affiliates more. 

Cons: No affiliate network and can take longer to start to see results. 

Network Option

Pros: Built-in affiliate network; access to wide variety of affiliates; and can see sales quicker. 

Cons: Higher setup costs and higher pre-sale fees due to overrides. 

In summary, you can see there are benefits for doing both; it does really come down to expectations, budget and how quickly you want to see a Return on Investment (ROI).

Once you have decided which route to go down, you then need to think about a few more things. The first big one is remuneration.

Remuneration

There are a number of ways to pay affiliates:

Cost Per Click (CPC): You could pay affiliates on a pay-per-click basis to drive traffic.

Cost Per Lead (CPL): You would pay for a completed validated lead. Tends to work in B2B or insurance.

Cost Per Action (CPA): Again, similar to a lead but could be a survey, quote form, newsletter signup or guide download.

Cost Per Sale (CPS): Pay affiliates a flat fee per product sale or a percentage of their basket value. This works well in retail and travel.

Whatever payment type you choose, you need to make sure the numbers work for you as a business before you publish rates. Nothing kills a program faster than having to reduce commissions in week two because you missed something or tried to pay away too much.

Recruitment, Incentives and Communication

Once the program is up and running, it will need maintenance and work - even on a network you can't rely on them to be proactive for you. You need to make this work.

Actively go out and look for a potential affiliates, use Google and forums to find these guys and reach out directly. With current affiliates, incentivise them, run contests to drive more sales. Above all, make sure you communicate regularly. After all, these guys are your sales force. You wouldn’t go into a sales meeting without the proper product details, so make sure your affiliates don't. Affiliate marketing is a great way to drive sales and diversify your online income or traffic streams but it does take planning and effort to get it working for you.


About the Author:

Jason Hulott is Director of SpeedieConsulting and helps merchants globally grow their affiliate activities via SpeedieAffiliates.com.

Contact: Jason Hulott, Director of SpeedieConsulting. Tel: 01843 831088 / 07940 521056, email: jason@speediepr.co.uk

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