Do you need an Affiliate Network?

If you are generating leads, probably not, if you are running a Cost-Per-Action campaign, where you only pay out if there is a transaction, than you probably do want to use a network. For CPA campaigns, the two major networks are Link share and Commission Junction. If you have the capacity to pay out a nice premium per sale, it is probably a good idea to work with one of these networks. Your risk is limited and their margins and fees are reasonable.

On the other hand, if you want to generate leads, either co-reg leads or full leads, using an affiliate network is a much trickier business. First of all, what is an affiliate network? I had worked in online marketing for over 8 years, and I really didn’t know exactly what an affiliate network did. That was, until I went to work for one. An affiliate network is basically a fancy term for a lead broker. The network either has direct offers, or it is picking up offers from other networks. They hire young folks with little or no experience to call around and see if they can find someone to fulfill on the leads. Sometimes they will call other networks, or sometimes they will call site owners, or list owners, who are the “affiliates”.

I have done many things in my life, surveyed, sold cars, taught English, and of course spent ten years in this racket. But the slimiest people I have ever met were definitely in the affiliate marketing business. They beat out cars salesman, and barely overtake a crowd I worked with in college who bought bad debt from small businesses, paying out only when they collected. But that is another story.

The margins in affiliate marketing are usually over 40%, and there is little or no transparency. I remember working on a very large campaign for a well know hair replacement company. They said they wanted all leads sourced, but we only had one source, one guy produced all the leads, but we didn’t say that, so we put different sources on his leads. One day they called and said they wanted to kill one source, oh, too bad, so we just changed the source code, they came from the same place anyway.

Did we actually know how to generate a lead for the hair guys? No. No idea. Why try and generate a lead when you can just buy them? So much easier. That is the reality of the affiliate marketing networks. For making a few phone calls, they will tack on a nice 40% margin. But imagine they did actually generate the leads, why would you want to outsource the marketing of your product, better do it yourself. Better to know where your customers are and how to reach them.

If you do feel compelled to enter the world of affiliate marketing, demand transparency. I would demand a list of sites where my campaign is running, and only allow them to I-frame my page. That means that the affiliates send traffic to your page, which is shown on their website. This way you can measure traffic and conversions and see if anything strange is going on. Do not allow anyone to ever post leads do you. You are guaranteed to get at least 50% garbage. What is garbage?

In the affiliate world garbage means incentivized leads, promotional leads, opt-out leads, you name it. Scary stuff, sign up for this offer to enter into a raffle to go on a date with Beyonce. And your leads are for trading software.

Affiliate people love to talk about the soup, that is some garbage and some good leads to keep those marketing managers happy. Affiliate networks do not earn their margins. Better to find sites that fit your target and discuss with them ways they can generate leads for you. I remember one client, big franchiser, spent well over 1 million dollars, and used maybe 40 sources. At the end of the year, we find out that almost all the sales came from one source, the most obvious one, the one that best fit the target.