For any budding business looking to broaden its online footprint, affiliate marketing networks can be enticing. You get instantly connected to a massive community of coupon sites, bloggers, and other affiliates that peddle your products around the web. And unlike other forms of online marketing, you don’t pay for the ad upfront; you pay commission on the sales it drives.
Although affiliate marketing networks can boost sales in the interim, this spike in revenue can come at a stiff cost. And if you don’t look before you leap, you could end up throwing away money – or worse, tarnishing your brand.
The Hidden Costs of Affiliate Networks
When you go on a network, you’re at the mercy of affiliate marketers who are incentivized to drive quick sales. They don’t get credit for building your brand, so they won’t consider these factors when marketing your company. Depending on your business, participating in an affiliate network could be not only ineffective, but also detrimental.
For example, if you’re an up-and-coming fashion, health, or beauty company that lives off of branding, affiliate networks can manipulate your brand image – whether that’s by running ill-placed or deceptive ads, leveraging coupons, or trying to use your branded keywords on search to milk more money. However, for companies or products that don’t rely on branding power, such as shower cleaners, this wouldn’t be an issue.
Many brands are drawn to affiliate networks because they don’t have to pay ad costs upfront. But it doesn’t always balance out. If it’s a terrible product, marketers lose because they risked money. If it’s a great product, you could end up overpaying marketers.
Most affiliate marketers use tactics like branded keywords to get that revenue, so if you eliminate those two aspects, affiliate marketing becomes a very small channel and proposition.
Consider Your Goals
Affiliate networks – and even affiliate marketing in general – doesn't work for everyone, but that doesn’t mean they don’t work for anyone. You need to do some due diligence and reflect on your goals before jumping into an affiliate marketing network or scrapping the idea altogether.
What are you trying to accomplish with online marketing? If your objective is to build a long-term brand and regain your brand equity, affiliate networks aren’t a wise choice. If you’re a discount brand looking for an efficient way to boost sales, joining an affiliate network can get you there.
Established brands also stand to gain from affiliate networks. Just look at The Biggest Loser Bootcamp. Because the boot camp is attached to the well-known “The Biggest Loser” brand, affiliates chose to brand it even though the online boot camp side was new. In this case, the affiliate network helped give the boot camp a brand boost.
However, if your company needs to retain brand value, you must do very direct affiliate marketing by using specific publications, influencers and partners. You shouldn’t even touch the network.
By recruiting relevant sites willing to take the risk, you can get placements on reputable sites that your audience is actually engaging with. For example, let’s say you’re a fashion brand, and Nylon magazine offers to run ads on a cost-per-action basis. That would make sense. Nylon probably won’t do that, but if you can negotiate with smaller publications, you’re paying them to help you out only once a sale comes through. In such cases, affiliates are beneficial.
If you decide that joining an affiliate network is the right move for your brand, take these five steps to maximize the value:
- Ask about potential publisher-brand fits. You can vet an affiliate network by discussing publishers that would make sense for your brand.
- Don’t sign any long-term contracts, if possible. Affiliate networks don’t have to be truthful. If you sign a yearlong contract, you’re locked in regardless of the outcome, so be wary of that.
- Find out how it drives and monitors gains. Always investigate how a network oversees affiliate activities, and ask about its main sources of revenue. If a large percentage of leads come from couponing and branded keywords, what results will you see if you limit these tactics?
- Talk to others in the network. Ask the hard questions, such as: How much growth have you seen since launching on the affiliate network? What did the timeframe look like? As with any other company, also ask for references.
- Calculate your tipping point. Affiliate networks essentially act as middlemen — buying ads for less. At what point will you end up overpaying for sales? If sales are exploding and you want to continue down the affiliate road, you might be better off reaching out to affiliates yourself.
Affiliate networks are fickle territory. What works great for one brand might result in a branding disaster for another. Don’t let the prospect of sales make you blind to reality. Reflect on your goals, and weigh the costs of affiliate networks before sealing your fate. By taking these steps first, you can capitalize on the perks of affiliate networks or make a smarter investment elsewhere.
Have you had successes or lessons learned with affiliate marketing? Let us know about your experiences in the comments.