Early on in any company’s foray into affiliate marketing as a merchant, each has a choice to make: do you join an existing affiliate network, or do you start your own?
Let’s delve into the pros and cons of each option.
Joining an existing affiliate network
Pros:
The biggest benefit of signing up with an existing one is just that: it’s already established. There’s no need to build your affiliate partners from the ground up. Almost any business can sign up with a network and get immediate access to publishers in your vertical.
This also means that you can do your research and vet the networks to see which are already highly rated and trusted. If other merchants in your vertical have expressed success with a certain network, you can go in with some confidence that it will work for you too.
Additionally, there is no platform to build and maintain. All the online tools you need to track, maintain, and communicate come with the package. Like anything, there is a learning curve, but most large network programs have vetted UI that shouldn’t be too hard to manage.
Bottom line: joining an established network saves you ramp-up time and is convenient.
Cons:
Obviously, businesses pay for the cost of having someone else do the setup work for them. There is a setup fee (as high as $5000). There is often a deposit required to open a new account. From there, the network will take a percentage of either your revenue or the commissions you pay out. These range anywhere from 1–2% of revenue to 15–25% of commissions. And to ensure the networks make money off your account, there is usually a monthly minimum you’ll need to pay out regardless of how much ROI you see. Finally, once you start scaling, you will usually have to pay more money to get more affiliates. It all adds up to a lot of fees!
After that, the biggest con to joining a network is the loss of control of your affiliate marketing. The good programs will let you customize a few things: nixing a specific partner, creatives, etc. But overall, you’re part of a system and you will have to adhere to their policies, their rules, their definitions of fraud, and their quality control. For brands with a very specific image they want to portray in all aspects of their marketing, they may be frustrated with playing by a strict set of rules.
Also, businesses should be aware that links back to your site will be redirected through the network’s site (this is how they track clicks, after all). If you care about SEO at all, this is definitely a con to think about.
Bottom line: Joining an existing affiliate network can be very expensive, to the point where it is out of the range of some SMBs, and the loss of control can be difficult for businesses.
Creating an in-house affiliate program
Pros:
It’s yours. You’re the boss. What you say goes. By building your own network and management platform (even if it’s as simple as an Excel spreadsheet to track commissions), you have complete control of who you work with, how they market your service/products, what commission to pay out, and everything in between. There are no policy changes to worry about, ever. You set the brand, the tone, and the way your affiliate marketing is run.
If it wasn’t already clear by this point, it’s much cheaper. Even if you build a platform or purchase a white-label one to use, the costs are far less than what you’d be paying out each month to be a part of an existing network. Maintenance fees are negligible, and if your in-house affiliate marketing isn’t paying for itself and them some, you’re doing it wrong.
Also, while some networks have a layer of fraud protection, creating your own network gives you full control of weeding out fraudulent affiliate links. Remember, you set your own policies, so if an affiliate doesn’t meet your standards, you can simply not pay a fraudulent commission.
You will have a much more personal relationship with your affiliate partners. Since you’ll be vetting and working directly with them, like any partnership, the results will most likely be better. One reason? Since there is no middle-man taking a bite out of the profits, you’ll be able to afford a higher commission rate to pay out which will attract higher-tier publishers and influencers.
Cons:
It takes effort and work to find, reach out to, and maintain your affiliates. It’s a newbie mistake to think building professional relationships doesn’t take time. They do, and though they are ultimately worth it, there’s no denying that there’s an investment of energy that needs to be made here.
Thus, it can take time to expand your network. While joining one takes you from zero to sixty, building one is a more gradual approach. For this reason, if your business doesn’t have the time or patience to build, you most likely won’t see great ROI. Good affiliates take time to find and patience to cultivate.
Finally, you’ll need to take a little time to understand basic metric to gauge the health of your affiliate efforts. Understanding your customer LTV (Lifetime Value) and the basic KPIs aren’t too difficult, but they are a little bit of math you’ll need to do before and during your affiliate marketing program.
As you weigh the pros and cons of either approach, know that there is a “hybrid” model of affiliate marketing that can also be a third option. By using a white-label affiliate marketing platform, and still leveraging an affiliate marketplace, you can get the best of both worlds. Read our post linked here to learn more about how a hybrid model can work for your business.
There you have it. The pros and cons of joining vs building. What works best for your business? And if you want help building your own, we’re here to help.
