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Affiliate Marketing - Choosing the System |
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The way that a merchant runs their programme will depend on the type and quantity of products or services they sell, the size of the market, how competitive the market is, what financial and human resource are available and how much control they wish to have over the programme. This articles describes the options available to the merchant.
There are 3 general administration methods that can be used to run an affiliate programme.
1) Through a network - Networks are the middleman between the merchant (advertiser) and the affiliate (publisher). Some of the networks include AffiliateWindow, Affiliate Future , Paid On Results, TradeDoubler etc.
The advantage of using a network is that they will provide the programme administration for the software, host the banners and creative, handle the billing, attract or recruit affiliates to the programme and also assist in running the programme if needed. They can be a very cost effective method of running a programme for those with staff, time and money restrictions.
Affiliates like working with networks because they can get all their creative and updates from a limited amount of sources and don't need to invoice and chase each individual merchant for outstanding fees.
The disadvantage is that the merchant doesn't always have full control over who signs up to their programme or where it is promoted. There may be technical aspects that restrict the way the programme is administered and the fees could work out to be quite high there is often a set up cost of £500-£5000 and a monthly fee for running the programme. Monthly fees range from zero to several hundred pounds. The merchant will also need to pay the network an override fee, which is about 30% of the amount that is paid to the affiliate.
2) A self run (in-house) programme is one where the merchant hosts their own system and has the advantage of full control in every aspect. They will be able to take on any affiliate they wish and be able to see what each affiliate is doing with the brand. All inbound links to the site will boost search engine ranking (depending on the system setup). No monthly fee or override commission is payable to the network. The cost of the software starts at a couple of hundred pounds
The disadvantages are that the system will take time to set up, configure and manage, each affiliate will need to be paid at the end of the month and it will take some time to recruit affiliates in the system. In addition affiliates may need some convincing to sign up to an external programme and promote your product since they already belong to many networks. Running an in-house programme will probably require at least one person full time or nearly full time.
Affiliates like in house programmes because they can often get a better deal since the merchant does not have to pay the 30% override commission to the network. They allow the affiliate to work closely without the need for liaising through an agency.
An example of an in-house programme is Amazon.co.uk, who are also the company credited for inventing affiliate networks. One of the most popular in-house affiliate tracking solutions is DirectTrack
3) ASPs (Application Service Providers) will host and run the affiliate software technically but the merchant is responsible for recruitment, promotion, payments etc. This means that although the monthly costs are higher than a self run programme, the merchant will not have to spend time setting up and administering the programme technically and will also have full control over who signs up. The merchant will not need to pay an override commission to the network. The disadvantage is that the merchant will not have total control of technical updates as they would in a self run programme.
One of the best known ASPs is KowaBunga!'s MyApp Pricing depends on requirements. Estimated $2495 set up and $500 per month service fees
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