In our latest article, we went in-depth on what Affiliate Marketing actually is and how it works. In this one, we are going to be looking at a specific, very important aspect of the large affiliate marketing ecosystem.
That is, the affiliate network.
While not quite as nebulous and difficult to pin down as the term “ad network,” the term affiliate network is, nonetheless, not exactly self-explanatory.
Upon seeing the term “affiliate network” for the first time, the uninitiated layman may think that it is a network of actual affiliates all working together.
This is not the case, though the word is on occasion incorrectly used that way. So let’s quickly take a look at what an Affiliate Network is and what it isn’t.
Contents
Definition
Pros
Cons
Why not go direct?
Breakdown
Conclusion
Definition
Alright, so let’s start by defining “affiliate network” before we go any further.
Any affiliate network is a platform that works as an intermediary between companies (or their ad agencies) and the actual affiliates.
Essentially, they gather affiliate offers in one place and offer a way for businesses to reach many affiliates while only dealing with one entity. For the affiliates, it provides the convenience of just having to deal with one affiliate manager and having a single marketplace from which one can sort, find, launch, and track affiliate offers.
Pros
This arrangement offers a good deal of benefits for both the contracting company and the affiliate himself, which is why this method has become the default for all but the largest businesses.
For the affiliate
For the affiliate, the benefits are very clear.
Easy selection and sorting of offers
This is perhaps the most significant upside of working with an affiliate network for the affiliate himself. With a network, he can immediately look at and sort through a large variety of offers, often sorting by average Earnings-per-Click, available GEO, restrictions, payout, and a host of other criteria.
This information and a diverse array of offers means that an affiliate can often identify what’s working, or at least pick out offers that are in vectors he knows and in GEOs for which he has good traffic.
One affiliate manager, one point of contact
Since affiliates generally work alone, they don’t have the time to deal with a large number of account managers and diverse tracking dashboards for every single offer that they want to run.
Further, there are often a lot of papers to sign when one starts working with a business directly. This is extremely time-consuming and easy to mess up, so a lot of affiliates are pleased to be able to avoid this whole process by working with the network as a middleman.
Having one manager also means having someone that has a broader perspective. Affiliate managers need to make their numbers, and that means that they want their affiliates to succeed. Having a network affiliate manager means having a manager who can see a huge variety of offers, often in different vectors and different GEOs. Provided the affiliate has a good relationship with him, he can point out high performing offers and even give tips insofar as the creative that has been working particularly well.
Built-in tracking (sometimes)
Another big plus for affiliates is that they can manage all of their tracking in one place and monitor all their campaigns from the same dashboard.
This way, an affiliate can always see how much money he’s making, what offers are performing well, what offers aren’t, whether or not he’s making a profit, etc.
Having consolidated tracking is extremely useful, especially for the beginning or intermediate affiliate. At more advanced levels, an affiliate will likely be using a third-party tracking system because he’ll be working with some clients directly and using a multitude of affiliate networks to find suitable offers.
For the company
So, as you can see, affiliate networks bring a ton of benefits for the affiliates themselves, especially for newbies, part-timers, and intermediate level affiliates.
But what benefit does it bring the other side of the equation?
One point of contact
The company enjoys the same benefit here that the affiliate does, just mirrored. There’s no need to hire affiliate managers or spend a lot of time making sure that all the paperwork for all the affiliates is in order.
By just dealing with one network, the amount of work needed to test out an affiliate marketing strategy is greatly reduced.
Large access to affiliates
An affiliate network also gives the business immediate access to a large number of active affiliates. So not only does the company not have to manage these affiliates, it doesn’t even need to find them. With an affiliate network, they’re already there.
Minimal overhead
Oftentimes, companies will not pay affiliate networks directly for their work. Instead, the affiliate network takes a percentage of the transaction itself. In this way, it operates as something of a middle man taking a percentage of the value of the purchase driven by the affiliate for the company.
This performance-based payment system is one that lends itself well to affiliate marketing.
The company gives the affiliate network an offer of, say, 15 EUR per purchase driven by the affiliate, and the network, in turn, offers its affiliates 10 EUR per purchase that they manage to drive.
Cons
There are naturally quite a few cons – or at least tradeoffs – that come with the utilization of an affiliate network. There are tradeoffs for both the affiliates that work with the network and the businesses that give their offers to the network.
So let’s take a quick look at these drawbacks.
For Affiliates
First, let’s check out the downsides for the affiliates themselves.
Limited selection
A big one here is the limited selection of ads and the fact that, in many cases, they will need to apply for approval to be able to run the best offers. Further, if their network is only strong in a certain vertical, then then they’re selection could be quite limited and they might find their growth stifled by the offers the network’s offers.
Paying the middleman
The other downside here – and the reason that many affiliates might try to get an offer directly from a business after running it for some time with a network – is that the network takes a slice of the profit. Sometimes this slice can be quite large.
It is for these reasons that most affiliates are going to work with a variety of networks rather than with one. They might start out with just one and try to do their initial growth, learning, and relationship building there, but then they move onto other, higher-quality networks or start chasing direct offers.
For the business
For companies, the downsides are very similar to those experienced by the affiliates themselves. For one thing, the actual payout that the affiliates receive, as noted above, is reduced by the affiliate network. This, in turn, means that their offers are less attractive to affiliates since the payout is lower – despite the fact that the company itself is paying out a larger amount.
Another drawback here is that using one affiliate network limits the pool of potential affiliates with whom a company can work (provided they don’t move out to other affiliate networks at the same time). Sometimes, however, this can actually be an upside if the network is selective and a business is worried about brand security or is particularly fraud-sensitive with a certain offer.
Why not go direct?
Affiliates, in general, try to keep the number of jumps that their offers go through to a bare minimum. This means that affiliates are generally trying to work their way up the chain until they can get as close to the offer as possible.
This generally means working directly with the company itself that is making the offer or, if they don’t do that, working with the agency that is placing the offer on their behalf.
This kind of offer is called a “direct offer.” Direct offers are generally considered to be the best possible offers. This is because, without a middleman (or middlemen), they are able to keep a larger percentage of the actual profit made upon conversion.
The more jumps there are, the more middlemen there are, and the more middlemen there are, the more money is being shaved off of every transaction and not ending up in the affiliate’s pocket.
So, knowing this, why would a successful affiliate ever go to an affiliate network, knowing that it reduced ‘maybe significantly) the amount of money he could make from that offer?
For several reasons, getting a particular offer direct is impossible, or at least one needs to start with it indirectly. Then, having to prove
Breakdown
Lastly, an important thing to know about affiliate networks is that they are often GEO or vertical-specific. There are affiliate networks for lead generation, for China, for gambling, etc.
With specific niches or with countries that are a little bit outside of the general scope of an affiliate advertiser (think the large Asian economies, India, etc.), there are going to be lots of affiliate networks that focus exclusively on these regions.
So if you want to focus on India or start running a lot of lead generation ads, then you’re probably going to need to look for specific affiliate networks that specialize in said GEO or vertical.
Conclusion
Affiliate Networks play a crucial role in the modern digital advertising ecosystem in general and the affiliate advertising system in particular.
They provide an important point of contact between the business that is looking for affiliates and the actual affiliate himself.
As the affiliate industry has grown and as the number of people that want to or are attempting to be affiliates has grown, a means of actually organizing the interaction between the company and the affiliates needed to be developed. Centralization was need.
This means of organization and centralization is the affiliate network.
Tl;dr
An affiliate network is a platform that brings a large variety of affiliate offers from a variety of different businesses together into one place. From here, affiliates can apply for approval and run the offers without actually dealing with the company itself.
Affiliate networks tend to provide a dedicated affiliate manager, as well as advanced and unified tracking tools and easy affiliate link builders.
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