|Thoughts on merchants having secondary affiliate network|
I've heard some stories lately of merchants having not one, but two affiliate networks in place, and wanted to know if anyone has thoughts on
a)why merchants might do this;
b)how often you see this happening; and
c)whether you see this at all and if so, is it a trend on the up or down-swing?
Usually, when I see this, the merchant has
1) An affiliate program with one or more of the third party networks. This allows them to have a wide base from which to gain affiliates. (lots of middle to low producing affiliates)
2) An in-house program where they bring there best affiliates. This allows them to custom tailor their in-house program to their highest producing affiliates and also to pay them more since they don't have to give the 3rd party their cut. (a few high-producing "super" affiliates)
Thanks Philo. Do you think that the trend in the affiliate space is to do as you've described?
It certainly makes sense. The merchants get the best of both worlds.
They get the exposure you get from being a part of a large network along with their management of the vast majority of it which is a big headache.
They also get the customization allowed from an in-house system coupled with the ability to pay more for good affiliates.
I think once a aff. program reaches a certain level, this is a good step.
For what it's worth...the networks get really peeved when advertisers open 2nd or even 3rd programs. In some cases (when it makes $$ for them) they will expend significant effort building out the affiliate channel for advertisers. Then when the new network gets on the program, some of affiliates will defect. The reason its a problem is that the networks only regain the investment made in an advertiser over time, the suddlenly the revenue stream has been drastically curtailed.
When an advertiser signs on additional networks, he can expect much lower service levels from the networks, because they arent seeing the revenue upon which they balance their service allocation. This may give cause for an advertiser to think twice before adding networks. It may be better to negotiate for lower rates from the 1st network, than to bring on the added complexity of working with multiple networks.
There is truly a finite pool of worthwhile affiliates for any advertiser. An advertiser must hear in advance that the 2nd network, that it will bring incremental (new) sales, rather than just offer alternative tracking and reporting for the same affiliates. I have no doubt that 2nd networks expand the reach to new affiliates, but It typically wouldn't be by a very high percentage.
Lastly, even as network services have become increasingly commoditized, its wrong to thing they are all the same in what they offer an advertiser. They arent.
Sorry for the novel on this :-) - actually there is much much more that could be said (including mention of the behind the scenes payoffs some networks make to lure affiliates away from other networks on the same program.) Yikes!
It makes sense to me to use a network to help build brand exposure and get your name out there in front of a larger number of affiliates, even if 99% of those affiliates who sign up with a network never produce.
You might get some decent affiliates out of it, but I certainly have never heard of a big network going out and actively recruiting good affiliates. It's up to the merchant to do that and usually the merchant would rather pay a good affiliate more with their own in-house affiliate program than to have someone else take 30% for something the merchant did themselves.
Maybe some of the newer hungrier affiliate networks will go out and recruit, but of course they are doing this as the network is paying them ( the recruiters) a percentage of increased sales to do this.
Few networks invest substantial effort or money in helping merchants build their networks, unless they are separately compensated for this "recruiting" activity.
There are some affiliates who simply won't work with certain affiliate networks (I won't work with CJ, LS, Kowabunga, or Performics).
There are some affiliates who will only work with one affiliate network, such as CJ or ShareASale.
There are others who may work with several networks but focus their effort on a "preferred network" (for me, that's ShareASale).
Many affiliates are reluctant to join an in-house affiliate program for a wide variety of reasons; some affiliates refuse to join any in-house programs, or limit their in-house affiliate relationships to major merchants like Amazon.
In a world where no solution will attract all desirable affiliates, it makes sense to offer two or more options. I've always argued strongly in favor of having an in-house affiliate program, but more recently I've recommended launching new-merchant programs with one affiliate network instead, and adding an in-house program or another network later.
It's extremely important to recognize that any merchant who has "multiple affiliate programs" or "multiple tracking solutions" faces the risk of paying commissions to multiple referrers for the same transaction. This is especially true if the merchant isn't aggressive in excluding "parasites" from their programs (a parasite can trigger an affiliate cookie at the time a transaction is initiated, even though there was no actual referral).
Typically I think being on more than one network divides your efforts, makes things harder and doesnt accomplish a whole lot for smaller brands. For a huge brand it could make sense but you need to have resources and systems in place so you don't end up paying out double on some sales like Mark said.
I know some smaller, very aggressive marketers or over anxious newbie merchants that set up on 3,4,5,8 different networks (many of them CPA instead of affiliate networks), thinking it will get them more exposure and more affiliates. I think this is a very shot gun approach and waters down their effectiveness.
For the most part the good affiliates are on most of the good networks. Their are certain networks that some affiliates wont work with however. So with bigger brands it can be wise to pick your best network, plus set up an Indie for affiliates that prefer that option - or pick a big network plus one of the 2nd tier networks that have pro-affiliate anti-scumware policies.
Hope this helps and best of luck!