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Different Types of Affiliate Programs
There are three different types of affiliate programs, each of which is described in more detail below.
With an “In House” affiliate program, perhaps the most familiar of which is Amazon.com, the merchant or producer uses a commercially available software program to set up and manage a large number of marketing affiliates. As well as specialized software, this also usually requires engaging an affiliate manager to oversee the program. The chief advantage of setting up and hosting your own affiliate program is that you can set it up exactly the way that you want to. You can set compensation plans different from the industry norms if you want, as well as develop your own contracts and affiliate rules. Hosting your own program may also increase margins as you save on commissions with no middle management tier to pay for. Of course, this may be offset by your own start-up and management costs.
Most affiliate programs are hosted by third-party specialist service companies, such as myaffiliateprogram.com. They supply the infrastructure necessary to support both the merchant and the affiliates. The advantages to a merchant is that a third-party provider will usually manage the signing and support of affiliates, including tracking referrals, collecting payment information and providing technical support.
As with the in-house solution, with third-party hosting, the commission payment structure and exact terms of affiliate support is left completely up to the merchant.
In some cases, the affiliate third-party service company may collect and offer similar themed programs together and offer them as an affiliate network (see below for more on affiliate networks).
An affiliate network is a combination of various affiliate programs grouped together around a common theme or interest and promoted to potential affiliates who are already providing websites that serve those interests.
For a merchant, joining an existing affiliate network can be an easy way to ramp up a new affiliate program. However, care must be taken in choosing the correct affiliate network to meet your needs.
The leading affiliate networks are:
Different networks have different pricing models, some will demand a set-up fee from a new merchant, while others will ask for a lump sum up front as a deposit against the first payments. Nearly all will take some sort of percentage of the commission paid, so new merchants should always factor that into any margin calculations.
Some networks concentrate on simply building large numbers of affiliates, regardless of their track record for attracting new business. When looking at potential networks it is worth considering the quality of the business per affiliate, rather than just the raw number of affiliates already signed to a network.
Different networks also have different approaches to help you market your services. Some are very much “hands off” and do little more than list your program in their directories. Others are more full service and will assist with creative decisions as well as proactively promote your program. As a merchant you should decide which suits your needs the best.
Another consideration is: do you want to be in the same network as your competitors? Maybe being listed along side one or two could be positive as it fosters competition, but being listed among a large number of people in the same market can just dilute the message and lead to a crowded marketplace.
From an affiliate’s perspective, the networks offer a number of advantages.
Several affiliate networks give affiliates the ability to manage and track all of their relationships from a single place. Some networks offer a service to consolidate checks from multiple merchants into a single monthly check.
Affiliate networks are generally open to anyone wishing to join them. In fact, some are totally open with no checking of site relevancy or the amount of visitors to a site. However, more and more networks are starting to insist on a minimum number of verifiable visitors to your site prior to sign up.
Different networks also have different approaches in listing the merchants they represent; some are open and display full directories, while others offer just a taste of the sort of merchants they represent, and only allow access to the full list after sign up and approval.
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