The Different Players in Affiliate Marketing

Affiliate marketing is a very unique industry. It has many moving parts and is unlike any other industry out there. 

The Advertiser

When I first started out in affiliate marketing, I was a bit confused about this term. I was interested in promoting offers and generating money, so I thought I was the advertiser. I was way off. The advertiser is the one that provides the offer. They ware willing to pay a certain amount (or a percentage of revenue) in exchange for generating a lead, sale, or call. It is the job of the network to find legitimate advertisers that match their affiliates.

The Offer

This is like the hockey puck in the affiliate marketing game. Everything centers around the offer. We get at least a dozen requests per day from advertisers to run their offer. Of those we only pursue, on average, one. That’s because there are a lot of shady offers out there. There are advertisers that won’t pay. There are advertisers that will tamper with the conversion tracking. And there are offers that just aren’t good enough. Either they have been passed around like a drunken sorority girl through every network in town or the payout doesn’t make sense.

Advertisers often don’t understand that there is real work and real money spent on pushing their offers. They sometimes think that since they are paying per conversion, they don’t have to pay that much. Well I have news for you: it doesn’t work that way! Affiliates spend real money and take big risks in promoting offers. We calculate expected conversion rate, take into account the average cost per click, and see if the offer is profitable for our affiliates. If it doesn’t make sense, we pass.

The Affiliate / Publisher

This is another term that often confuses those new to the game. The term “affiliate” has become associated with fraud and low-quality traffic. This is mainly due to the way this industry was in its infancy. Now things have changed but the memories remain. That’s why you’ll see a lot of networks refer to them as publishers instead. If you’re an affiliate, you’re a publisher.

These guys are the bread and butter of the industry. Without them no money is generated for the advertiser or the network. Many spend day and night optimizing campaigns and trying to make an offer profitable for them. It’s a lot of work and not everyone is cut out for it. However once you can generate conversions profitably, the sky is the limit! I’ve known publishers in the industry that went from spending $100 a month trying to run offers to spending $100,000 a day in advertising.

The Network

And now for the final piece of the puzzle: the network. A lot of people ask, “why even work with a network? Why not go direct to the advertiser and make more money?” Because that’s not your job. It’s hard enough optimizing campaigns, pushing offers, finding good offers through networks, and staying on top of the financial side. Finding and build relationships with advertisers is a completely different job and it requires a very different set of skills. It makes more sense to work with a network that you can build a relationship with and not have to worry about getting paid on time or getting scammed by an unknown advertiser. We as a network take on that risk and do our best to make our affiliates happy. We have paid out hundreds of thousands before we got paid just to make sure the affiliates don’t have to worry about money.

We also spend a considerable amount of time sifting through bad offers, trying to find the hidden gem that converts extremely well. With the amount of data we generate, we provide valuable information to affiliates to make their campaigns profitable. We tell them what types of offers work with what type of advertising and what to avoid. For example, we had an offer that was converting at over 30% for some affiliates and 0% for others. When we took a closer look we realized that, for whatever reason, this offer works extremely well on paid search but doesn’t convert at all on display networks. We saved our affiliates thousands by providing them with this valuable information.

The number one thing we work to build is trust. Trust with our advertisers to provide us the best offers because they know we can deliver. Trust with our affiliates because they know we provide honest reporting, provide high payouts, and don’t lie to them about which offers are working and which they should avoid. Once you build that trust, you have a solid foundation for a long-term company. While payout is important, an affiliate will stick with a network they know and trust rather than work with an unknown network that offers a slightly higher payout. 

Sound management, HP

In April of 2010 HP paid $1.2 billion to acquire Palm. Palm was already on its deathbed so the only value from the acquisition of WebOS, a very clean and fluid operating system for smartphones. It had the potential to compete with Android and had a lot of potential. Yesterday HP decided to nix WebOS. It’s no longer sexy enough for HP to care about.

Now they have a new toy to play with: Autonomy. A software company in the UK. The price: A whopping $10 billion! That’s 11 times greater than Autonomy’s annual revenue of $870 million and represents about one-sixth of HP’s current market value and nearly all of the cash on hand HP had.

HP, you are going downhill fast! I’m not the only one that thinks that. Stock is down over 20% in one day. So long HP, it was fun while it lasted.

QR Codes are officially taking over the world

QR Codes are officially taking over the world

The Many Types of Affiliates

Having worked with a wide variety of affiliates, I’ve noticed that pretty much everyone falls into 5 distinct categories:

The newbie that’s interested… but too scared to try
Affiliate marketing isn’t for everyone and it can be difficult to get started. However, you have to get started at some point if you want to give it a shot. We have a bunch of affiliates that are always asking us what’s working and what they should try. Then they ask how they should advertise, which we are happy to explain. Then… nothing. A few weeks go by and they contact us again asking for different offers. If you aren’t willing to give anything a shot, this might not be the industry for you.

The newbie that can’t make anything work
This is unfortunate because the last thing we want to see is someone burn their money. It takes money to make money, especially in this industry. We try to encourage this group to keep trying and, more importantly, keep optimizing instead of switching to different offers. Even a $100 can get you a decent number of clicks and enough stats to help you figure out what you can do to improve.

The average affiliate
Decent volume, good conversion rates (often times higher than the high rollers since traffic is more controlled). These affiliates just want to be treated well and kept in the loop regarding any new offers or changes in terms. They make a decent living doing this and we are happy to work with these hard working individuals. Oftentimes we become friends over AIM chats and help them grow to be part of the next group. 

The elite high-volume high rollers
Obviously, our favorite bunch. These guys turn on traffic before we even hang up the phone. With high volume comes high demands, which we are happy to meet. Weekly same day wires, 24/7 customer support, and better payouts are the perks of being in the top 2% (which generate over 90% of conversions). The biggest issue with these guys is getting the advertisers to pay us fast enough and the inevitable caps we hit. While conversions are great, not all advertisers are capable of handling 100,000 conversions in a week. We like these problems. Very much.

Other Networks
Often times we have direct and exclusive offers that aren’t easy to get. In addition we design and host most of our offer pages, constantly optimizing to improve conversion rates. Other networks have their own base of affiliates that would like to run our offers. We work with dozens of other networks to allow them to run our offers. Our margins are thin because we want as high a payout as possible for the end affiliate, but we enjoy working with legitimate, well-established networks that know what they are doing.

and finally…

The Scammers
The allure of easy money inevitably attracts these good-for-nothing fraudsters that give affiliate marketing a bad name. This is why we review and approve each affiliate on a case by case basis and also approve them on a per-offer basis. It’s very important for us to know who we are working with. If we send fraudulent leads to advertisers, it’s us that has to answer to them. One bad apple can ruin a great offer. Scammers, we’re not the network for you!

What group do you fall under? 

Never A Dull Day

Ah… the joys of running a startup! There really is never a dull day. It’s one hell of a roller coaster. One day you are dealing with figuring out strategy, the next on how to deal with all the new volume. Unfortunately you also end up spending a lot of your time on dealing with noise: non-performing employees, legal issues, accounting, reconciling accounts, etc.