If you have ever managed an affiliate program, you know the golden rule: it is absolutely not a “set it and forget it” channel. While the industry loves to tout the “pay-for-performance” model, the reality of building a scalable, profitable program involves much more than just paying out commissions.
Recently, our CEO Jake Fuller joined host Dustin Howes on the Affiliate Nerd Out podcast alongside fellow industry heavyweights Haafiz Dossa (CEO of Inflektion) and Brook Schaaf (CEO of FMTC). Together, they pulled back the curtain on the hidden costs, necessary investments, and strategic trade-offs required to build a world-class affiliate program.
Here are the key takeaways from their in-depth discussion around the economics of affiliate marketing.
1. The “Plug and Play” Myth
One of the biggest misconceptions is that you can simply launch a program and watch the sales roll in. But the panel agreed that successful brands treat affiliate as a complex channel requiring infrastructure, not just a switch you flip.
Haafiz kicked things off by highlighting two costs founders often underestimate: partner activation and creative assets.
“I remember this example where it was easier to get a $10 million annual ad budget approved than it was to spend 50K on a creative shoot. And it just blew my mind… if the conversion rates had gone up by like half a percent on that $10 million in ad budget from better creative, it would’ve been a break-even.” — Haafiz Dossa, CEO of Inflektion
Creative is frequently the most overlooked piece of the puzzle. You can’t just recycle assets from other channels; you need creative specifically designed for partners to succeed.
2. Expectation vs. Reality: The Speed of Sales
When a CMO asks for fast sales, there is often a mismatch between expectations and the reality of the affiliate relationship curve. Jake emphasized that while you can move fast, it usually requires a different kind of budget—specifically for testing and paid placements.
“The idea that you can flip a switch and an affiliate will start driving revenue out of the gate… it doesn’t work like that. It’s very relationship-based. If you do want to drive revenue quickly… do you have some budget to play around with? Can you throw out some newsletter inclusions, homepage placements? Those come at a premium.” — Jake Fuller, CEO of JEBCommerce
3. The Hidden Costs of Compliance and “Leakage”
Brook brought his decades of experience to the table to discuss the “invisible architecture” of a program—specifically regarding coupon leakage and compliance. He argued that simply having a program isn’t enough; you need neutral analytics and a strategy to combat low-incrementality touches (like last-minute coupon clipping).
“If you don’t have a relationship, you kind of don’t have leverage… The key thing is you really need to engage with that system in order to win. Think about your commission rates, your commission structure, how you’re getting that content out there.” — Brook Schaaf, CEO of FMTC
4. Where to Invest First?
When the group was asked how they would prioritize investments for a new or scaling program, the consensus was clear: fix the foundation before you pour fuel on the fire.
The recommended “pecking order” for investment:
- Funnel & Creative: Ensure your site converts and your assets are persuasive.
- Tech: Invest in proper tracking, attribution (MTA), and compliance tools.
- People: Hire experienced affiliate managers or agencies.
- Partners: only then do you aggressively scale recruitment.
As Jake summarized for CMOs budgeting for 2026:
“Make sure your technical implementation is queued up. If you’re not investing in that, you’re already behind the eight ball… Right there next [to] it is the proper affiliate manager to take care of that program for you.” — Jake Fuller, CEO of JEBCommerce
Be sure to listen to the full episode! There is so much more gold to mine, from defining “exploratory budgets” to handling return rates. Listen in, then make a plan to implement the outlined strategies.And, as always, if you’d like help addressing the issues outlined in this discussion or to talk about growth for your affiliate program, contact us today at gethelp@jebcommerce.com or schedule time to discuss your needs with us.
