Broadly speaking, you have two options:
1. Set up your program on an affiliate network
2. Run it in-house, with the help of affiliate marketing program software
Each option has its pros and cons that we will review in the following lines.
Overview of Affiliate Networks
You can think of affiliate networks as mediators that connect merchants (affiliate programs) and publishers (affiliates). They provide affiliate tracking and reporting solutions, along with program maintenance and payment solutions.
What Do Affiliate Networks Offer?
If you join an affiliate network, as a merchant, you can expect to receive:
- Hosting for creatives and product feeds
- Technical support for setting up and maintaining your affiliate program
- Tracking and reporting tools
- Marketing tools
- Affiliate payment solutions, and more
As Geno explains in his Affiliate Program Management: An Hour a Day, affiliate networks are often referred to as affiliate solution providers. This is due to the fact that the merchants joining them do not have to use additional affiliate tracking solutions.
Indeed, if you decide to join a network, you won’t have to invest in any additional affiliate tracking software. More than that, you will be guided through the process of setting up your affiliate marketing program. You will receive instructions and support on how to:
The support and solutions that affiliate networks often make available and the fact that they allow you to, potentially, connect with hundreds if not thousands of potential affiliates make them a great starting point for beginners to affiliate marketing. But, of course, everything comes for a cost.
How Much Does an Affiliate Network Cost?
Each network has its own requirements but most charge some or all of the following fees:
- Setup/activation fee – A one-time fee you need to pay when joining the network in order to activate your account and be able to set up your affiliate marketing program.
- Minimum initial deposit – Some networks will request that you deposit a minimum amount when setting up your merchant account. Think of it as a guarantee that you can pay your affiliates and the network for the performance they drive in.
- Transaction fees – All networks will charge you these: sometimes tying it to a percentage of the commissions you pay to your affiliates (between 20% and 30%), sometimes to the affiliate-referred sales amount (between 2% and 3%, respectively).
- Other charges – Some networks will impose a minimum fee for the months when you do not reach their minimum thresholds for the above-described payments. Others have a monthly access fee meant to cover various maintenance services.
These fees can represent an important part of the overall costs of running an affiliate program. However, they should be only one of the factors you take into account when deciding which affiliate network or networks to join. We will discuss other factors later in this post.
In the meantime, you can get a pretty good understanding of various affiliate networks charge by reviewing this analysis of the major U.S. affiliate networks. We update it frequently — to keep the finger on the pulse of any changes.
Should You Join Multiple Affiliate Networks?
Many merchants mistakenly believe that joining more than one affiliate network will give them access to more affiliates and help them drive more sales. You should not make the same mistake. As Geno already explained in this post of his, this practice could actually harm your affiliate program.
It is better to join one or two networks and focus on recruiting strong affiliates and activating them than to distribute your efforts and resources across several networks. With multiple platforms, there’s always a risk of losing your best affiliates to some small affiliates who turned to cookie stuffing or other unwanted activities.
One of the circumstance when joining several affiliate networks is a good idea is when you’re tapping into international markets and you are joining networks covering different target regions.
To choose which networks to join, you need to identify the available networks and compare them.
Affiliate Program Networks Available
Not too long ago, we compiled a comprehensive analysis of the largest affiliate networks in the USA in a post entitled Affiliate Marketing in the USA: Market Size by the Numbers. According to our findings, the largest affiliate networks in the U.S. are:
If you’re based abroad or targeting international markets, we have also covered the affiliate networks of China, the Middle East, Eastern Europe, Germany, Russia, and other regions in corresponding posts. Don’t hesitate to use the search bar to locate the information you need!
Once you have a list of the networks catering to the region/regions you’re interested in, you can compare them to identify the one(s) you should join. There are a few factors you should take into account in your comparison.
Factors to Consider When Comparing Affiliate Networks
As mentioned above, network fees should be one of the factors you consider when choosing which affiliate network to join. Here is a list of other five important factors you should take into account:
- Ethics – The network you join should have clear policies against spyware and adware, as well as other rogue affiliate techniques.
- Technology – You want to join a network that offers advanced technologies, tools, and capabilities (phone order tracking, data feed import tools, support of video creatives, etc.).
- Popularity – The more popular the network you join is, the more affiliates it will connect you with. It is up to you to recruit from those affiliates, but it helps to have access to a larger database.
- Support – Most affiliate networks promise it, but not all deliver equally on this promise. You want to join a network that cares about its merchants and provides the support you need when you need it.
- Affiliate rules and relationship – As a merchant, you have to look at the network you choose through the eyes of your affiliates. Would they be comfortable joining that network? If the answer is negative, it might mean losing affiliates. Also, you want to know who controls your relationship with the affiliates. If the network you join does not disclose the contact information of its publishers, you will want to build your own database, to be able to contact them directly.
Once you’ve reviewed the available networks taking these factors into account, your decision should follow naturally. Just don’t make any moves before reviewing the alternative to affiliate option — namely running your program in-house.
Overview of In-House Affiliate Tracking Software
As mentioned above, the alternative to joining an affiliate network is running your program in-house, on affiliate program software. If you want to and your budget allows it, you can follow the example of Amazon and build your own software. Most merchants, however, prefer to choose an already available solution and get started.
These affiliate tracking solutions provide the interface and infrastructure needed for managing your affiliate program. You can choose between software that you install on your own server, and software that hosted remotely.
Generally, affiliate software allows you to create an admin panel from where you can set up and manage your affiliate program. It enables you to add affiliates and give them access to their own management panels.
As a merchant, you get all the tools and features you need in order to perform your affiliate marketing activities. Expect to be able to set up program rules and policies, add products and creatives, track leads and sales, communicate with affiliates, manage payments, update program, and more. Of course, all these come for a price.
Affiliate Software Costs
Depending on the affiliate program software you choose, you may have to purchase it or subscribe to it. Some developers provide both options. Buying the software usually costs more upfront, but can bring you savings in the long run.
The costs can range from $30 to $300 a month. While the price difference between various software options may seem huge, you should not rush into making a decision. Many affiliate tracking solutions come with a basic offer and add separate fees for various functionalities. If you don’t pay attention, the costs could increase considerably.
Unless you are willing to put up with the hassles of migrating your affiliate program to another platform, there are several factors you should consider when reviewing the options available.
Factors to Consider When Choosing Your Affiliate Software
Some popular affiliate software options available are HasOffers (by TUNE), Partnerize, CAKE, PostAffiliate Pro, LeadDyno, and Refersion. Comparing them and choosing the best one for your needs is entirely up to you. However, there are a few factors you should take into account:
- Integration with e-commerce platforms (BigCommerce, Shopify, Volusion, 3dCart, etc.) – A major plus in easier integration of proper tracking.
- Ease of use – Depending on your technical skills, you should settle for software that is easy to set up and use, otherwise, you might not be able to use it or it will take you forever to learn how to do it.
- Features – You should not care about bells and whistles, but make sure the software you choose has all the features you need.
- Support – Live chat, 24/7 support can get you a long way when you’re setting up or updating your affiliate program, so make sure your software provider offers it.
- Free/demo trials – The best way to assess the suitability of a particular affiliate software solution for your program is to test it. Therefore, narrow down your list of options to those that come with free or demo trials and see what they have to offer.
- User reviews – Checking out user reviews can be a great way to assess all the above criteria and build expectations. Just make sure the reviews and opinions you base your decision on are genuine. As you may already know, reviews are a common affiliate marketing technique. Unfortunately, not all of them are honest.
Affiliate Networks vs In-House Affiliate Software
Having understood all of the above, how do you choose between an affiliate network and in-house-based affiliate tracking software?
It is already obvious that both affiliate networks, and in-house affiliate software solutions come with their share of pros and cons. Let’s outline these in the below table: to compare these options side-by-side.
In-House Affiliate Software
|• Possibility to connect or be exposed to thousands of publishers
• Publishers on the network often go through a careful vetting process
• Potential connections to high-quality affiliates
• Support with program setup
• Access to add-on services that allow for outsourced affiliate program management
• Reliable and intuitive interface hosted on network’s servers
• Freedom to integrate affiliate marketing with other types of marketing
|• No fees applied to transaction fees or affiliate commissions
• Easy to predict costs due to fixed pricing
• More freedom in affiliate program customization, management, and marketing
• The possibility to buy and own the software
• Lower long-term costs compared to affiliate networks
• The possibility to choose a software solution suitable for your specific needs
In-House Affiliate Tracking Solutions
|• They can be costly (especially when you get locked in lengthy contracts with high monthly minimums and transaction fees)
• Only network publishers can join your program. Third-party publishers have to join the network before having access to your program.
• Anticipating costs and planning your budget can be challenging.
|• Installing and using the software can be challenging.
• You will need to market your program as a non-network-based one.
• There will be no network-based affiliate recruitment opportunities (as there will be no network)
Besides these differences, there are two more important aspects you’ll want to take into account:
- Payments – Affiliate networks handle your payments to affiliates with options that publishers have already accepted (minimum threshold, methods, frequency). If you run your affiliate program in-house, you will have to find solutions that are convenient for all your affiliates (be it PayPal, Payoneer, or something else)
- Management – Many merchants mistakenly believe that, if they join an affiliate network, they no longer need to worry about affiliate program management. As Geno explained in this post of his, network-based programs need management as well (just as in-house-based ones do)
Final Advice on Choosing Your Affiliate Software
Our comparison of affiliate tracking software solutions could continue. However, the above considerations should be enough to help you make a decision. It is important to note that it is, also, possible to combine the two options available, and this approach may even yield excellent results.
However, this is not something you want to do when you are launching your first affiliate marketing program. Considering that some of the most important merchants in the U.S. chose affiliate networks (Target and Adidas are on Impact, Walmart and Best Buy on Rakuten, Zappos and Wallgreens on CJ, Wayfair and NFL Shop on ShareASale, and the list could go and on) we recommend that you follow their lead and launch your program on an affiliate platform. Later on, you can think about adding an in-house option or switching to in-house solutions altogether.
No matter if you decide to set up your program on an affiliate network or run it on an in-house tracking software, do not neglect the importance of professional affiliate program management. It is the best solution to avoid mistakes, make the most of the available resources, and drive the performance you dream of.
If you cannot find an affiliate program manager to hire or you would rather avoid employment hassles, there is always the option of outsourcing. Should you need help with your affiliate program management or have any questions related to the above information on affiliate tracking solutions, contact us or drop a comment below!