When advertisers begin their planning for their affiliate marketing channel, they often make a stop at JEBCommerce and have a long list of questions, concerns, ideas and a whole list of preconceptions about the channel. We do our best to walk them through each of those preconceptions, educating them when we can and always steer them in the right direction. Many of their questions are similar, and when they are similar, I think “BLOG POST!”. Today’s questions is one of the most common ones we get from advertisers/merchants who are starting from scratch with no affiliate program and they have a huge concern about cost. “Why don’t I just launch on a private platform to save costs?”
Ah yes, there it is. The networks charge fees, usually a percentage of sales, and many advertisers do not want to pay them. Maybe you are in the same boat, so let’s chat shall we?
What is the difference between a private network and a public one?
Let’s start here. When people in our space say public network, they usually mean Commission Junction, LinkShare, ShareaSale, AvantLink, Impact Radius and similar organizations. They may also be speaking about Affiliate Window and Tradedouble if they are in the UK or global. These public networks are amazing marketplaces, bringing together many merchants/advertisers and hundreds of thousands of affiliates in one marketplace. Affiliates integrate with one network and receive easy opportunities to work with many advertisers. Advertisers get access to these affiliates without requiring them to integrate yet again. There are also huge tech advantages as the networks work on tools and features to enable better relationships and more actions.
Private networks are either single deployments of public networks (not many do this, but some white-label their technology), proprietary technology the advertiser developed on their own or add-ons or plugins to the advertisers e-commerce solution that enables tracking of traffic and payouts to partners who are driving traffic to their site – aka affiliate marketing. These are usually one offs that require affiliates to integrate with each one separately and are often not associated with any marketplace of relationships.
What are the typical reasons we hear for launching privately?
There are a few primary reasons. The first is usually cost. The public networks typically charge a bounty or a commission (2-3%) on each transaction running through their network. When revenue reaches astronomically numbers, cause they always do right, fees can be quite large. Typically, private networks, you may throw in Hasoffers and Cake in this group, have a one time fee, a monthly fee or in the case of plugins or add-ons included in e-commerce software, there is no cost.
The next reason is perceived ease of deployment. Integrating yet another pixel or tracking solution may put your tech team into apoplectic shock. The add-on that comes with the platform they just launched can be turned on with the push of a button and makes your tech guy very happy.
Others launch on proprietary solutions because the major networks do not provide the tracking flexibility that they require. Mortgage companies can fall into this as do other lead gen companies that have very complex commission schedules that are so far out of the norm, a big network may not be able to handle it as well as the advertiser wishes.
Yet others believe they do not need the marketplace or recognition that networks provide. They feel they are big enough that good partners will come find them regardless of where they are.
In your opinion, when does it make sense to launch on a private solution?
So glad you asked that question. I really feel this interview is going so well ;). I didn’t want to answer this question by myself so I asked my crack staff for their answers. Joanna, Jon and Brian chimed in with some great answers. Allow me to summarize.
A private platform solution is a great idea when:
- Your brand is so strong and well known that everyone wants to work with you
- You already have a vibrant affiliate program and affiliates are willing to go where you go
- There is some advantage to affiliates for moving to your private solution (more tools, more resources, more commissions etc)
- The brand is mature
- Cost of spend is the main metric you follow
I’d add something else. The networks provide a HUGE amount of technical expertise, support and thought leadership. Does your team? How many are dedicated to ensure uptime, feature improvements, stability etc. If you have a large tech team with dedicated resources to this project, then it may be a good idea.
Great, so when is it a less then great idea to launch my affiliate program on a private network?
Again, great question. I think you are reading my mind. I asked the same group this question.
Launching on a private platform may be an awful idea when:
- You have a new brand
- Your affiliate program will be brand new
- Brand recognition is low (compared to Target, Amazon and ebay)
- Industry is a small niche space
- You have limited or no technical resources
- You are in an emerging market
- Cost is not so much an issue as acquisition
- Industry segment is hyper competitive
- Tracking is overly complex
- All your competitors are on the networks
A longer list right? That isn’t all either. Most times a private network may be a great idea to launch besides a public network, but often, CJ, LinkShare, SAS, Avantlink and ImpactRadius are the way to go. We have launched and managed almost 200 programs in the 10 years we have been in business and most work best on the networks. The networks remove friction from the marketplace. They make it easy for you to establish success quickly and they provide the technology and support. And they all do an amazing job at that.
That being said, a private solution can work. Just ask Amazon and ebay. But also think about their tech investment when you do.
