Build or OutSource Affiliate Program?

[iamchmod]

Dear all-
I recently have been reading all the various posts on affiliate programs and I thank you all for the information and discussion.

One topic I haven't seen yet is a discussion as whether to build an affiliate program or to outsource with a program like LinkShare, BeFree or CJ.

In my job, I am tasked with developing my company's affiliate strategy. We get approx 3m uniques/month.

In my analysis, I have found the main reason (thus far) to use an outsourced service would be access to a huge pool of webmasters. There is also somewhat of a credibility factor for the joining affiliates (aka they know they will be paid).

But I am curious to know what others think about this question. We would be willing to pay for Linkshare,CJ, etc. should we feel comfortable that the economics were justified. Does anyone know if the economics work out? We are not a merchant, we are more like a price compare engine where we earn money on clicks sent to our merchants.

I am interesting in your feedback, as we are leaning towards building a program but the pool of publishers that CJ, Link, etc has are pretty tempting (aka easier to get affiliates to sign up).

Thanks!
iamchmod

[FillDeCube]

iamchmod,
you have another option -- do both.
Affiliate program like CJ allows their clients to have both system running (at least I saw some of their client is doing that..)

Another way of attracting webmaster to sign up is to offer two-tier earnings to webmaster who introduce webmaster.

just my $0.02

cube

[vibgyor79]

A discussion [webmasterworld.com] on the issue from affiliate's point of view

[thaedge]

You have a third option as well: Buy someone's affiliate code. I have seen asp, php, and cgi versions available for various prices online. How well they work or if they even work, that I dont know. Your question does make me wonder if I should indeed kick a friend and rekindle the idea of selling our own code. :)

- Dave

[smackman]

iamchmod, I guess for me it would (does) boil down to two things really.

1. The quality of affiliates you would attract by using the CJ/Linkshare pool or doing your own program. If you have the ability to market the program yourself _and_ have a targetted niche for the product, you might be better off with your own program. If it's very very broad, then the outsourcing might make more sense.

2. How much control do you want over the affiliates? And I don't mean control in the sense of micro-managing affiliates, but more overall direction and ability to implement what you want to do. It seems with an outsourced program, you might give us some things in order to access a large pool of affiliates. And with an outsourced program you might be more inclined to just let it run itself, whereas an in-house program forces you to stay on top of the program, which is probably a good thing.

The other thing you might need to address is the attractiveness of the offer to the affiliates. You mentioned that you are a price comparison engine and earn your money on clicks to the merchant sites. I'm not sure what kind of range the CPC is to the merchant, but if it's in the .25 to .50 range and you pay affiliates 10%, then thats .025 to .05 if the visitor clicks to you, does a search and then clicks off to a merchant. I'm just thinking out loud there...

just my 2%

[smackman]

thaedge, if you decide to go for something on your software, let me throw something out there. I've probably seen every software package out there in the past month looking for something for me. I find the market sadly lacking, for what I specifically want. To me there are three real important features - 1. direct product linking (find a way to integrate it with the product database, maybe during the install or in the config prompt for the various bits of info you need and which db it comes from), 2. subid codes that affiliates can use and get reports on(ie they can make up their own to test and target - things like subid=123456) and 3. different categories of affiliates (ie one category could be for super-affiliates with a higher pay rate since they are performing better, or even things like "inside" vs "outside" affiliates where inside sites are related to your site in a greater way than just sending traffic to the store for a commission and might have different pay rates). And for me, a fourth one is mod_perl. no php, no asp... straight up, blazing fast, let me get my hands dirty mod_perl. :)

From an interface perspective, I love the old art.com program before they switched over to linkshare. Good info for affiliates, easy to understand and reporting on individual product sales, that was a nice package.

Just my thoughts on what I found missing in the market for my requirements. good luck if you decide to go forward with it.

[thaedge]

smackman you are evil, cgi? Man I dont know the last time I touched that stuff. Must of been when I hacked at it well enough in college few years back to get a B in the class. I suppose I could bust the books out of the box in the attic or something. Im a CF coder and trying to take up PHP as well, thus why I was leaning on PHP. CGI would make more sense, but would also take me forever to relearn and write it. By that point Im not sure if I would be doing it for the good of the program and my pocket book or to force myself to learn cgi type stuff again. Thanks however for your other feedback, I didnt think of some of that stuff, as well I will take a peek at art.com b4 they close the old affil site later this month.

[smackman]

Evil? :) Yeah, I guess that's another whole topic, but personally I pretty much refuse to learn php for a lot of reasons that I won't bother with here. I'm glad you find the suggestions helpful. Go with what you are comfortable and with what the market demands, I may not be the market. Good luck.

[buckworks]

The existence of a large pool of webmasters with CJ et al. might not be such an advantage as it would seem at first glance. The problem I see would be that the most savvy affiliates would probably view you as a competitor, and would find it more profitable to develop traffic directly for the merchants rather than sending visitors to you.