Affiliate Network vs. Your Own Affiliate Program: The Hard Choice

Without a doubt, affiliate marketing is one of the most effective ways to maintain a steady stream of high-intent leads besides earned media. The numbers don’t lie: affiliate marketing spending in the United States has grown 300% over the last decade to reach $8.2 billion, with 15% to 30% of all sales being generated through affiliate programs.

However, as profitable as affiliate marketing can be if executed well, one question constantly weighs on the minds of merchants: should I create an affiliate program on my own, or should I join an established affiliate marketing network and draw customers from there?

Without any further ado, let’s review both options.

Learn affiliate marketing through and through with Phonexa’s Affiliate Marketing Podcast

Option 1 – Joining an Affiliate Network

Enrolling in an affiliate network is the path of least resistance. If you’ve never dealt with an affiliate network, here’s what it is:

• An affiliate network, or affiliate marketing network, is a platform that connects businesses willing to buy traffic (known as advertisers or merchants) with businesses willing to sell traffic (known as affiliates or publishers)

Affiliate marketing networks don’t just connect advertisers and affiliates but also provide them with beneficial partnership conditions like a reasonable price and quality of leads, affiliate tracking, fraud protection, and more.

Long story short, affiliate networks make your life easier by (a) enabling a huge pool of affiliates to tap into and (b) running and supervising your affiliate campaigns.

 

Source: Understanding Affiliate Marketing Ecosystem

The Pros of Joining an Affiliate Marketing Network

Unlimited Choice of Affiliates	Top affiliate marketing networks unite hundreds and thousands of affiliates, so you can always tap into a stream of leads while getting the target lead quality at the target price. On the other hand, if running an affiliate program on your own, you will have to start from scratch and gradually grow your network as you gain footing in the game.
Cost-Effectiveness	Joining an affiliate network is free, and you only pay a commission from sales, leads, or clicks on affiliate links. You pay for what you get with little to no upfront costs and no risk.
Unlimited Reach	An affiliate marketing network gives you access to advertisers from multiple related niches, making it possible to tap into untapped markets and test specific audiences. At the same time, you can set your own safety mechanisms like a budget limit or lead quality screening.
Access to Affiliate Software	Most affiliate marketing networks will provide you with affiliate program management software that tracks your affiliates, analyzes your campaigns, and issues payouts. No less important, some affiliate networks will even provide white label affiliate software that you can brand as your own proprietary software.
Fraud Prevention and Compliance	Affiliate networks employ sophisticated fraud prevention measures like traffic quality control, conversion validation, payment verification, and more, maximizing the performance of leads, clicks, or conversions you pay for. Likewise, affiliate marketing networks usually comply with the FTC Guidelines, the CAN-SPAM Act, and other nationwide and local compliance requirements.

An advanced affiliate marketing network will put you in the driver’s seat of the trade by allowing you to choose the demographics, locations, devices, and other parameters of the audience you want to tap into.

The Cons of Joining an Affiliate Marketing Network

Joining an affiliate network is the easiest of the options, but you will have to overcome several potential problems before you can gain profits from affiliate lead streams:

• Fierce competition: You won’t be the only advertiser in your affiliate marketing network – there will be hundreds of them fighting for your leads. All things being equal, the highest price wins, which might lower the cost-effectiveness of your network-inspired lead gen campaign.
• Lack of control: Even despite the rigorous screening most affiliates undergo, you may not always guarantee the quality of the traffic sources and methods they use to generate traffic. Dirty tricks like cookie stuffing, brand bidding, or cookie dropping might take a toll on your campaigns if your affiliate network is not strong enough to prevent them.
• Commission costs: Affiliate marketing networks can eat away your profits quite significantly, charging up to 30% of the affiliate’s commission earnings. For every $1,000 paid in affiliate commissions, you might have to leave $300 on the table.

Finally, it may not be the best idea to rely on a single affiliate marketing network as your primary traffic channel. In the ever-dynamic realm of affiliate marketing, things can go awry quickly, from changes in legal requirements to shifts in search engine algorithms.

Who Should Join an Affiliate Network Over Creating an Affiliate Program?

Joining an affiliate network – or several ones for risk diversification – might work best for small businesses with limited resources, companies under time pressure, those unwilling to spend their resources on affiliate programs, and those trying to figure out how things work before committing to an independent affiliate program.

 

Source: Understanding Affiliate Marketing Ecosystem

Option 2 – Running an Affiliate Program on Your Own

Creating an affiliate program on your own is quite challenging, yet by no means impossible, with quite a few inspirational examples out there. Top affiliate marketing networks like Amazon Associates, Awin, and ShareASale unite hundreds of thousands of affiliates, with smaller brands also running independent affiliate programs.

How To Create an Affiliate Program in 5 Steps

Step 1 – Set Your Goals

First of all, you need to decide what you want to achieve with your affiliate program based on the current state of the market, affiliate program competitive analysis, and your value proposition.

Whether you are to tap into complex markets – say, a real estate affiliate program or an insurance affiliate program – or less competitive markets like digital goods or beauty, you must gauge the numbers in the first place.

Here are some statistics that might help you choose the right affiliate market, according to the Affiliate Marketing Benchmark Report from Influencer Marketing Hub:

• The three most popular affiliate markets are retail (44%), telecom & media (25%), and travel & leisure (16%).
• The most rewarding affiliate marketing product categories are SaaS (up to 70% commission from the sale amount), finance (up to 40%), eLearning (up to 30%), and beauty & health (up to 30%).
• For 67% of marketers, affiliate fraud is a concern, with 69.1% having experienced affiliate fraud at least once in their career.

Wonder how well you are protected from affiliate fraud? Complete this fraud prevention quiz.

 

Source: Affiliate Marketing Benchmark Report

Step 2 – Choose Your Payment Model

The payment model defines whether affiliates will be comfortable monetizing their traffic, so it makes sense to combine several popular commission types:

• Pay Per Lead
• Pay Per Sale
• Pay Per Click
• Pay Per Action

You can offer any commission structure depending on your business objectives, from cost per lead affiliate programs to pay-per-call programs to hybrid programs where every affiliate can choose what they are paid for.

 

Source: Affiliate Marketing Benchmark Report

Step 3 – Choose Your Affiliate Software

With affiliate marketing SaaS software growing increasingly popular – 73% of marketers prefer it to affiliate network software – there’s almost no viable alternative to renting your software from a third-party provider. Even though you have less control over such software because you don’t own it in the background, while-label affiliate software appears as your own proprietary platform on the affiliate’s side while serving your marketing goals perfectly.

The market offers affiliate software of any type, from simple free affiliate link tracking software to opensource affiliate software to multi-tier affiliate software to comprehensive solutions like Phonexa’s Lynx that synergize affiliate programs with your other marketing efforts.

 

Schedule a free consultation to learn more about Lynx and how it integrates into Phonexa’s performance marketing ecosystem, or order your all-encompassing affiliate marketing software suite right now if you already know the ropes.

Step 4 – Design Creative Materials

Promoting through an affiliate program goes far beyond placing an affiliate link on the publisher’s website. Different affiliates utilize different promotional channels – social media, blogs, landing pages, etc. – each of which requires tailored strategies and promo materials. For example, Instagram followers are more likely to react to quality images, whereas TikTok audiences are most susceptible to visual storytelling.

 

Source: Statista 

To set your affiliate program apart from the competition and increase the quality of inbound affiliate traffic, you should develop creative materials for every type of affiliate you are going to partner with. Aside from textual links, these may include banners, product images, email templates, landing pages, infographics, case studies, testimonials, and product data feeds.

And if you’re really determined to make things simpler for your affiliates, let them use your affiliate software and assign a dedicated affiliate program manager to help them set up and run your affiliate marketing program.

Step 5 – Launch Your Affiliate Marketing Program and Onboard Affiliates

Double-check your affiliate program agreement before you kick things off.

Pay attention to the following:

• Definition & interpretation of the terms used in the agreement
• Application process and acceptance
• Payment terms and commission structure
• Affiliate program compliance
• Consequences of affiliate program violation

For some programs – for example, a health affiliate program, a business loan affiliate program, or an insurance affiliate program – it’s extremely important to ensure that your affiliate agreement is enforceable, clear, and comprehensive. It might be a good idea to consult with a legal professional to make sure you are on the safe side.

 

Source: Understanding Affiliate Marketing Ecosystem

Who Should Create an Affiliate Program Rather Than Joining an Affiliate Network?

It might be a good idea to create your own affiliate program if you want more control over your campaigns, are an established brand with a substantial following, seek direct relationships with affiliates, and – most importantly – have resources to manage the program.

Last but not least, owning an affiliate program and enrolling in third-party programs run by affiliate network platforms are not mutually exclusive. You can effectively combine both strategies to maximize exposure, running affiliate programs on your own and leveraging affiliate network marketing programs at the same time.

Frequently Asked Questions

What is white label affiliate marketing software?
While-label affiliate software is software that you can rebrand as your own. Although developed by a third-party provider, white-label affiliate marketing software will look as if it’s your in-house product. That said, in most cases, white label affiliate marketing software still belongs to the provider.

What is a white label affiliate program?
A white-label affiliate program is an affiliate marketing program developed by a third-party company that you can use under your own branding. The main advantage of while-label affiliate programs is that you can leverage the expertise of the service provider while not developing the software on your own.

What is open-source affiliate tracking software?
Opensource affiliate software is software with freely available source code (on platforms like GitHub, Bitbucket, or SourceForge) that you can take and modify to create your own branded affiliate software. Open-source affiliate tracking software is free, but you need someone to deploy, maintain, and manage it, which means you will likely need some budget to run such software effectively.

What are sub-affiliate networks?
Sub-affiliate networks are the networks created by higher-rank affiliates in affiliate marketing.

Here’s how sub-affiliate networks work:

1. An affiliate joins a tiered affiliate program run by an advertiser or affiliate network.
2. The affiliate invites other people (sub-affiliates) to join the affiliate program, creating his own sub-affiliate network.
3. For each sale generated by sub-affiliates, the higher-level affiliate receives a commission.

Sub-affiliate networks are a win-win for affiliates and advertisers. The former can make passive income from affiliate marketing, whereas the latter can grow their reach exponentially, drawing more customers without extra effort.

Are there affiliate programs that don’t require a website?
Most affiliate programs don’t require a website on the advertiser’s side. You can convert your customers through landing pages, online marketplaces like Amazon and eBay, over the phone, via email, and in physical stores.