Tips & Guides — 01 Mar 2021
FAQs about Affiliate Networks
94% of publishers use several affiliate networks at a time. Yet, they often confuse networks with other affiliate marketing concepts – platforms, affiliate programs, advertising companies, and so on.
We know, sorting out these terms of affiliate marketing business can be a pain in the neck. So, we decided to help you out and answer nine common questions about affiliate networks.
This post will unpack the following FAQs:
Let’s start with the primary point – affiliate network definition.
Most sources say an affiliate network is an intermediary between advertisers and publishers. Working through such a third party allows affiliate partners to reap their benefits effortlessly.
Networks allow merchants to find hundreds of reliable affiliates, streamline routine processes, and keep their business safe from fraud and conversion erosion. Meanwhile, publishers get access to great many affiliate products and offers, which let them skyrocket their earnings.
It sounds like a real deal for both sides. However, the things listed above are just a fraction of the services affiliate networks could provide.
Affiliate networks compete by offering potential customers the fullest range of services to meet their needs. Nevertheless, the standard set boils down to the following options:
Apart from it, affiliate networks may provide other help, such as boosting conversion rates, protecting a brand, and more. Publishers also can increase their income, as some performance agencies give them additional rewards and incentives. The main thing is to choose a suitable kind of network.
Like many other digital marketing concepts, affiliate networks can be classified according to various criteria. For example, if divided by their market prevalence, networks may appear as world-famous affiliate marketing giants or local players covering specific countries.
Another way to label affiliate networks is by looking at the products they let advertise. Some marketplaces prefer to work with physical goods, such as home appliances or cosmetics. It’s a favorite niche for eBay Partner Network, Amazon, and others.
Other networks favor digital products – mobile apps, PC utilities, SaaS, and more. For instance, Avantage positions itself as a digital goods and online services affiliate network. ClickBank inclines to this product category as well.
However, most of the leading affiliate networks – Shareasale, Rakuten – allow merchants to advertise digital and physical goods in various niches. Luckily, publishers can choose from a profuse variety of intermediaries.
Well, the short answer is we don’t know exactly. Let’s try to calculate the approximate number leaning on some studies and, yes, guesses.
The first metric to give us some hints is spendings on affiliate marketing. According to the Awin Report, advertisers invested $13 billion in affiliate marketing in 2017 globally. In the US, the expenditures on this type of promotion reached $6.8 billion in 2020.
The survey by Forrester found that roughly 40% of affiliates work with three networks and another 20% deal with five or more. Meanwhile, 81% of brands rely on affiliate marketing programs. According to these statistics, we conclude that there are thousands of affiliate networks worldwide.
Quite a solid part of affiliate networks are local players operating within a specific country and small performance agencies. However, there are plenty of bigger fish in this pond. Datanyze selected 63 affiliate networks and platforms with the biggest market share. Let’s meet the first ten of them.
Counting affiliate networks is a challenging task. Counting the money they make is more intriguing. Read on to find out how networks earn their income.
The only source of income for affiliate networks is charging fees to merchants. Basically, the financial model encompasses two types of payments: access fee and override.
The access fee is a one-time payment an advertiser makes to join a network. This sum is supposed to cover expenses a network bears on setting up a merchant’s account. Thus, another name for an access fee is a setup fee.
The override is the bread and butter for affiliate networks. It is an interest rate a performance agency charges above the commission, which an advertiser pays to affiliates. Sounds confusing, huh? Let’s crunch some numbers to make it clear.
An advertiser – an online retailer – pays an affiliate 5% from each purchase. The average order is $300. So,
5% x $300 = $15
$15 is a sum a publisher earns from each purchase.
An affiliate network charges 20% from a commission to an affiliate, or
20% x $15 = $3
Thus, an affiliate network earns $3 from each $300 order. A merchant pays $18 total: $15 to a publisher and $3 to an intermediary.
Another practice is to charge not a percent from payouts to affiliates but flat rates. The network can scale this sum depending on the volume of sales a merchant makes.
Apart from setup fees and overrides, networks may charge for customer support and payment processing. Some agencies also require annual renewal fees for enduring merchant partnerships.
As you can see, affiliate networks often have quite a tricky system, which includes regular payments, setup fees, and so on. No wonder working out the volume of initial investments can be a conundrum. Let’s break it bit by bit and figure out how much joining a network could cost you.
The setup payment sum depends on the particular network’s policies and target audiences. Agencies, which require no entry payments, target startups with tight budgets and provide essential services. The higher the access fee, the more robust set of solutions, tools, and features the network offers.
Most networks ask an advertiser to make a deposit in the beginning. The money goes to a merchant’s account, and advertisers are supposed to use it for payouts to affiliates. It’s the target audience that defines the sum. The bigger an advertiser is, the more they could spend on affiliate marketing.
Commission for processing payments is a more familiar story for solutions that combine affiliate network and eCommerce platform functions. The services concentrating on affiliate marketing are unlikely to charge these fees, as they mostly live off overrides.
In 99% of cases, override is a percent of payouts to affiliates. Schemes where a network charges a fixed monthly fee is quite a rare thing.
The average override is 20-30%.
However, there are some strings attached to this condition. Let’s say an advertiser gets too few sales, suggests low commission rates to affiliates, or rarely makes offers. The network’s chance to get a profit from such merchants is pretty fat.
To stay safe, most intermediaries set the minimum they can charge an advertiser. The sum varies from $35 to $500 monthly. So, if a merchant’s sales volume amounts to $0 this month, a network still earns something.
Interestingly, networks rarely require setup fees or commissions from publishers, which makes these third-party services a great solution. However, a performance agency won’t let everyone in. To become a new affiliate, a candidate needs to pass selection.
Joining a network comes across as a piece of cake for affiliates. You choose a marketplace, go to the website, and apply. Voila! Nevertheless, one of the most frequently asked questions from potential publishers is “Why hasn’t a network accepted my request?”. Here are a bunch of tips to help you get approved and become a successful affiliate.
Clicking the “Accept” button before even reading the headline – yes, we did it too. However, it’s worth reading the affiliate network’s terms and conditions thoroughly, as they can change the game for a publisher. For instance, the chosen agency may specify that it doesn’t work with coupons, while an affiliate planned to use them as a primary promotional tactic.
Most of the affiliate networks will ask you to explain what promotion tactics and know-how you’re going to use. So, it’s better to keep the set of your most effective methods at hand. To impress an affiliate marketer, give a clear and detailed answer. Yet, avoid creating an essay – try to stay concise.
Lying in an affiliate network application is like lying during a trial – bad, bad idea. Hence, staying honest with your answers is always helpful. Describe your business model, promotional property, previous experiences and performance, and personal data without distortions or equivocations.
Lack of marketing experience may be a warning sign for major networks. Luckily, an affiliate can lean on their matching skills. For instance, if you used to work with PPC or took any affiliate marketing training, it increases your chances of being accepted. Notice that it’s better to prove this expertise with case studies or certificates.
Stick to the tactics above, and you’ll double the odds of being approved by an affiliate network. Successful affiliates will get access to the most lucrative offers from carefully picked merchants.
The network’s approval process for new affiliates may seem harsh. However, the agencies check advertisers just as meticulously. Here is the information a prospective customer should provide to an affiliate network:
As you may guess, affiliate networks wouldn’t approve the companies with poor performance. Specific requirements to advertisers’ financial and marketing results vary from one service to another. Some intermediaries take aboard merchants that generate several million dollars in sales. Others look for businesses with monthly revenue equal to hundreds of thousands.
Networks make handling affiliate marketing a pleasant experience both for advertisers and publishers. These services help find credible partners, facilitate routine operations, and provide analytics, fraud-protection, and support. Meanwhile, a network as a type of business can bring sustainable profits and scalable results.
Are you thinking about launching your affiliate network? Follow our comprehensive guide, which will teach you how to build a network in seven steps. To make your start smoother, consider using an affiliate marketing management platform, such as Affise. Our solution will help you begin a business with relatively low investments and supply reliable services to your customers.
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