Tips & Guides — 11 May 2020
How to Manage Affiliate Program
What is the state of affiliate marketing in 2020, they ask? Is it still the same profitable as it was several years ago? From what we observe, it is. According to the data collected by WARC, almost $560 billion was spent globally on digital advertising in 2018; and the forecasts project an increase by at least 13% by 2022.
Wherever we look, companies actively work with affiliates, and we see how the industry is becoming more and more competitive. But not only big brands actively use affiliate marketing as a part of their promotion strategy. Owners of relatively new products also think about launching a partner program relatively quickly.
The reason is simple. Affiliate marketing is a great way to promote your product through partners (affiliates) who generate sales of your product through their online platforms. The bottom line of affiliate marketing is the division of responsibilities for creating a product and its promotion. You can compare this scheme with partial outsourcing of product marketing. For the owners, the advantage is obvious: you can attract a large number of “promoters” and pay them only for a final result.
-Advertiser, the product and further the program owner;
-Affiliate, also publisher or partner. Affiliates are those who promote advertisers’ products. Publishers can promote your products in different ways. They can leverage their landing pages and social media, use their email lists, write separate product reviews, add ad banners, offer coupons, etc.;
-Affiliate network (Ad network) or an agency, serve as an intermediate between advertisers and publishers;
-Customer, an online user who finds the product online and buys it.
When creating a partner program, you will need to choose payment terms to offer to your publishers. Before you make a decision, you need to understand the most common affiliate commissions.
CPC (cost per click) – a payment scheme under which you pay affiliates based on the number of clicks they generated for your product website. CPC is particularly popular among bloggers or affiliates with high traffic websites. It works for them the best as, first, they don’t need to sell anything; second, their goal is only to bring users to a page. And by clicks, they can fairly measure it.
The drawback of CPC is a probability of fake clicks – a fraudulent method of inflating the number of clicks through unethical ways like ‘bot clicks’ or merely a large group of low-paid workforce constantly clicking on ads. Luckily nowadays, there are plenty of solutions to identify this kind of fraud. And once proven that clicks were automated, for example, an unrealistic amount of clicks is coming from the same ID, an advertiser has all ground to refuse to pay for this traffic.
CPM (cost-per-mile) stands for a cost-per-mile, or in affiliate marketing terms for one thousand smallest interactions, impressions, of online users with ad banners. Because the significant half of impressions don’t reach a final conversion, this payment model doesn’t work for all ad campaigns. It is most suitable for brand campaigns where advertisers want to evaluate the number of people acquainted with the brand.
CPA (Cost per acquisition) payment scheme has remained one of the most popular for the last few years. Under the CPA affiliate model, the program pays to its affiliate upon a particular action, sale, lead, install, or registration among the most common. The commission that affiliates receive is up to the program vendor. The CPA-based pricing type mostly suits product owners, companies, and big brands who want to promote their products.
This scheme under CPA is beneficial for both sides. Affiliates can make more money, as the commission is usually higher than in PPC. For advertisers, it is a more reliable scheme, as they pay for particular results.
One more reason why so many affiliate marketers prefer the CPA payment scheme is its resistance to fraudulent patterns. CPM or even CPI (click per install) schemes are more volatile when it comes to fraud spikes.
Usually, the first advice in affiliate marketing will be to decide on a vertical, but as you already have a product, that’s not a case. Along with strategic planning, the second main decision that you need to solve is the technical side of affiliate program implementation. Right now, we observe a growing tendency among many brands to move away from working with agencies to running their partner programs independently. Working with an intermediary or independently depends a lot on the tracking technology you choose.
Do you already know which services and extra tools you need to set and run an affiliate program? In the next paragraphs, we will cover the different alternatives that you have in the affiliate industry. In case you already have a particular tool or a few in mind, it’s worth comparing them all before you make a final decision.
Affiliate program management: how do you ensure proper affiliate management, campaign tracking, reporting, and payouts?
The decision to create an affiliate program imposes additional responsibilities and expenses for the services you need to run an affiliate program. Depending on a chosen solution, you will need to either conduct a thorough analysis of the existing solutions or devote a considerable amount of time to business analysis and software development from scratch.
Affiliate networks are platforms that bring together numerous affiliate marketers. In other words, they serve as an intermediary between affiliates (publishers) and advertisers (brand, product owner).
As an advertiser, you can sign up for a particular affiliate network, create your program, set rules for affiliates, and start attracting publishers to your program. The affiliate network will be responsible for all settings and functionality vital for proper management of the platform. And this is one of the advantages of joining an affiliate network. You pass all major responsibilities, such as finding tracking and reporting technology, partial affiliates recruitment, and further communication with them. Joining an affiliate network makes it much easier to find your profile affiliates to promote your products. There are plenty of good affiliate networks out there, just to name a few AffiliNet, Amazon Associates, Clickbank, Commission Junction, Rakuten, RevenueWire, ShareASale, Webgains etc. Google them and many others to check advertisers and publishers reviews.
Some affiliate networks specialize in particular niches, thus primarily target the ones that cover your niche. Regardless of whether you plan to recruit affiliates within the network or to attract some from the side, being in a niche network will ensure you a broader database of affiliates.
Possible payment plans
Having assumed that at this step, you already have a strategy and know which payment plan goes with your campaign. When choosing an affiliate network, ensure that a network provides this payment plan.
You want to join a popular network with thousands of affiliates and a solid reputation. Do your research on the networks. Check affiliate forums and learn what people say about it.
Fraud Prevention Policy
With affiliate fraud being one of the main challenges in partner programs, you can judge the trustworthiness of an affiliate network by its policies against ad fraud. Check which measures a network applies to protect programs from fraud in their ad campaigns. You can look for the most widespread measures such as click-level fraud detection, rejection of IP duplicates, or rejection of conversions based on the CTCT report; or for integrations with ad fraud prevention platforms, such as FraudScore, FraudDefence by Inmobi, Forensic, Fraudshield.
Your success also partially depends on your account manager. Everyone who works with networks gets an account manager once they register in the network. Account managers guide you through the network rules and settings. Certain setup or ongoing issues do not lie on the surface. Sooner or later, you will need help with some settings or business insights on how to run the program more effectively.
The cost of working at an affiliate network for you as an advertiser consists of several line items:
Trustworthy networks with a significant amount of publishers will charge you a one-time setup fee upon the registration. The fee may vary from $500 to $2000. The setup package usually includes the help with the technical setup of a program and onboarding for your team.
Smaller networks may not charge you anything upon registration. But keep in mind that they have a smaller database of publishers and may not bring you the same advertising coverage.
The significant part of your final price for working at an affiliate network is a commission from your sales that you will pay to a network. On average, commission amounts to 20 – 30% of what you give affiliates. Besides, extra costs may arise for additional services and custom settings.
In gambling niche, some networks may charge you a first-time deposit. Nowadays, it is widely used as a guarantee that advertisers are determined to work on the platform and promote their affiliate program. The size of a deposit varies a lot, from one dollar to several thousand dollars.
You may have to pay a small fee if your affiliate program does not reach the needed minimum threshold in terms of clicks, installs, conversions, etc. Some networks introduce these fees to cover monthly platform maintenance in case your program doesn’t yet bring profit.
Beginners may think, why not join several networks? Multiple networks mean more publishers and hence more sales channels to promote their affiliate products. In reality, it is not like that.
Let us explain.
While for publishers it makes sense to be present in different networks, it doesn’t make the same sense for advertisers. Publishers are looking for more affiliate programs they can join, and by joining new networks, they find new programs. If advertisers join another network, they will encounter a considerable number of the publishers they already work with. If 20% of all publishers are new, advertisers can consider themselves lucky.
But there are certain fraud-related risks, and 20% of new publishers may not make up for this risk. You risk running into fraudulent affiliates who may emulate several actions from different networks and claim multiple commissions when, in reality, it is a single transaction. And with multi-day cookies and multiple touchpoints, you may not even prove them wrong.
Probably the strongest argument in favor of joining several networks is the intention to go internationally. Joining several networks may be the only way to tap into various geo markets.
Some may ask what they should do if they want to partner with particular affiliates, but for some reason, they refuse to work on the network an advertiser uses. And it happens occasionally. You may try to understand the reasons and talk to the network representatives.
But at the same time, you probably should think about moving your business to a SaaS affiliate platform and concentrating on growing your affiliates there.
And this leads us to the second option that you have when you start a partner program – in-house affiliate program at an affiliate management software.
Contrary to some misperceptions, creating your partner program on a separate platform doesn’t imply being responsible for the technology. Absolutely no. What advertisers need to do is to choose an affiliate management platform, in a similar way, they choose an affiliate network.
Affiliate tracking and management platform are dedicated to affiliate programs software, which means that they are built with all needed functionality in mind. Once you get a subscription, you create your program in a similar way you do it on the network. With the main difference, that now you are the owner of the program, and you have access to all data on ad campaigns.
From this standpoint, advertisers win in terms of transparency and access to broader analytics, what is a bottom line in ad campaigns optimization. Quite often, advertisers move to create their programs after doing advertising for a while or even using the services of affiliate networks. Also, new advertisers who already expect a huge volume of affiliates and ad campaigns consider launching their campaigns at the SaaS platform straight away.
Analytics is an essential part of any affiliate program. Based on the received data, advertisers can form proper judgments about what worked and what didn’t and respectively update future campaigns.
For some customization may seem not very important upfront, but it will play a difference in the long run. Customization, in general, consists of three levels: incorporating a company’s brand and design, system configuration for particular operational processes, and the possibility of new modules implementation. The best option will be to go with a platform that allows all three levels. In this way, you can be sure that along with your business growth, the platform will always meet your needs.
Tech support plays a huge role in any tech business – you are never alone with your program. Prompt assistance from tech support can save you much time figuring how to handle certain setting issues. And better look for 24/7 support. Ad campaigns don’t have a stable eight working hours day, and can indeed be more effective during evenings and night time.
Integrations with 3rd party services
For the operational workflow, you will probably need some other services as well. Check the existing integrations that a platform offers. Pay attention to the most demanded, such as fraud prevention, billing services, CRM, eCommerce platforms, BI tools, etc.
If you would like to integrate with a particular operational service, which is not yet “plugged” into the platform, the integration will depend on API terms. If a platform offers a feature-rich API, then conducting any future integrations won’t be an issue.
The price for “renting” a SaaS platform will be billed monthly and is estimated primarily based on the amount of clicks, conversions or the revenue you generate or expect to generate per month. Bear in mind that there may be some extra fees for additional services or future integrations.
Don’t get confused if you see tracking solutions starting with $40. Those are solely trackers that affiliates can use only for tracking clicks. They can start with $40 and be up to several thousand depending on the amount of clicks and domains.
But this is not a solution for you if you are launching your own program. You need a more advanced solution where you can manage advertisers and affiliates, optimize ad campaigns, in other words, create your own network – you need a full-scale affiliate management solution. The price for it can range from $300 to thousands of dollars.
If you consider moving your program from a network to a SaaS platform, you may have concerns about the platform migration and the whole data transfer process. It used to be an issue that hindered many advertisers since they had multiple offers to transfer. But with technologies advancing to solve particular challenges, it is no longer a problem. Now you can seamlessly transfer your data with an automated data transfer tool, CPAPI. It is already integrated with hundreds of sources and does all work for you. Owing to the API integration established between sources of offers and your system, CPAPI accesses raw data and imports it following the rules of the recipient system.
The third option of running a partner program is launching it on a dedicated in-house software.
Developing software from scratch is an option that not everyone will take upon. At least, it is not an option for a newbie. Advertisers or networks that decide to have in-house software are usually big brands with vast volumes of ad campaigns and numerous customization requests. Brands like Amazon and eBay, for example, run their partner programs on in-house software.
To start with in-house software, you will first need to find a company that provides a dedicated development team. You will begin by identifying technical requirements and conducting a business analysis of the whole development course. And once the developers start their work, depending on the level за complexity, it will take them several months to finish the project.
The cost of developing in-house software will be much higher than the two above mentioned options. Developing an in-house software for affiliate management may cost you from $250,000 up to $500,000. And that’s not all yet. Add rough $15,000 of monthly expenses on developers to maintain the stability of the platform, and costs on servers. The final price range is very broad. Everything depends on the volumes you work with. A more accurate price can be available only after proper business evaluations.
Which one is better? With the variety of available options at the market, it’s evident that going with the first option, the SaaS platform, is wiser. Key arguments – faster and cheaper.
Of course, advocates of in-house solutions will emphasize the transparency and security of in-house solutions. But with modern days security and privacy regulations, there is no way that tech providers will exist unless they perfectly fall under data security and privacy requirements. You shouldn’t be tricked by that. Instead, think about the time that would be spent on a solution from scratch. Not to mention the time to find specialists who know exactly what an affiliate partner platform must have.
Let’s wrap it up!
It never hurts to compare and see for yourself. Especially with the free trial period that SaaS platform offers, you have time to try and make an informed decision.
Affise offers a 30-day free trial with accompanying full onboarding. You can try it straight away!
Your company is searching for a full technology stack to drive affiliate business?
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