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BUT: they compete with you and might grab even more valueable market share.
Dare to share how you address this concern?
Differentiation, only run multi-tier affiliate programs for products and services that are just remotely related, actively building down-lines? There are many ways of addressing this, what's yours?
made me think about the aff. model and the web - i wonder if there are any folks out there who really work harder on developing their downstream business than their own natural sales - i know that when i go looking for affs, i find tons of content sites that don't have any aff links (some don't even have adsense) - seems like someone could specialize and do well here?
For one UK program, I've increased volumes for the merchant from my own 100 leads per month to around 7,000. I now make a smaller percentage from the 7,000 leads than I did from the 100, but overall it's a lot more money.
And as for cannabalising my own productivity of 100 leads by creating my own competitors - who cares :)
This said, I know a lot of amazingly productive affiliates, which gives me an unfair advantage with this sort of thing.
As mentioned above - if you are connected to your second tier and you know they'll deliver, it's a no-brainer. Otherwise, your concerns are justified in that it may kill a currently successful income stream.