When advertisers begin their planning for their affiliate marketing channel, they often make a stop at JEBCommerce and have a long list of questions, concerns, ideas and a whole list of preconceptions about the channel. We do our best to walk them through each of those preconceptions, educating them when we can and always steer them in the right direction. Many of their questions are similar, and when they are similar, I think “BLOG POST!” This question is one of the most common ones we get from advertisers/merchants who are starting from scratch with no affiliate program and they have a huge concern about cost. “Why don’t I just launch on a private platform to save costs?”
Ah yes, there it is. The networks charge fees, usually a percentage of sales, and many advertisers do not want to pay them. Maybe you are in the same boat, so let’s chat shall we?
What are the differences between private and public networks?
Let’s start here. When people in our space say public network, they usually mean Ascend, LinkConnector, Commission Junction, LinkShare, AWIN/ShareASale, AvantLink, Impact and similar organizations. These public networks are amazing marketplaces, bringing together many merchants/advertisers and hundreds of thousands of affiliates in one marketplace. Affiliates integrate with one network and receive easy opportunities to work with many advertisers. Advertisers get access to these affiliates without requiring them to integrate yet again. There are also huge tech advantages as the networks work on tools and features to enable better relationships and more actions.
Private networks are either single deployments of public networks (not many do this, but some white-label their technology), proprietary technology the advertiser developed on their own or add-ons or plugins to the advertisers e-commerce solution that enables tracking of traffic and payouts to partners who are driving traffic to their site, also known as affiliate marketing. These are usually one-offs that require affiliates to integrate with each one separately and are often not associated with any marketplace of relationships.
What are common reasons for launching privately?
There are a few primary reasons. The first is usually cost. The public networks typically charge a bounty or a commission (2-3%) on each transaction running through their network. When revenue reaches astronomically numbers, cause they always do right, fees can be quite large. Typically, private networks, you may throw in Hasoffers and Cake in this group, have a one time fee, a monthly fee or in the case of plugins or add-ons included in e-commerce software, there is no cost.
The next reason is perceived ease of deployment. Integrating yet another pixel or tracking solution may put your tech team into apoplectic shock. The add-on that comes with the platform they just launched can be turned on with the push of a button and makes your tech guy very happy.
Others launch on proprietary solutions because the major networks do not provide the tracking flexibility that they require. Mortgage companies can fall into this as do other lead generation companies that have very complex commission schedules that are so far out of the norm, a big network may not be able to handle it as well as the advertiser wishes.
Yet others believe they do not need the marketplace or recognition that networks provide. They feel they are big enough that good partners will come find them regardless of where they are.
When does it make sense to use a private network?
A private platform solution is a great idea when:
- Your brand is so strong and well known that everyone wants to work with you
- You already have a vibrant affiliate program and affiliates are willing to go where you go
- There is some advantage to affiliates for moving to your private solution (more tools, more resources, more commissions etc)
- The brand is mature
- Cost of spend is the main metric you follow
I’d add something else. The networks provide a HUGE amount of technical expertise, support and thought leadership. Does your team? How many are dedicated to ensure uptime, feature improvements, stability etc.? If you have a large tech team with dedicated resources to this project, then it may be a good idea.
When is a private network less ideal?
Launching on a private platform may be an awful idea when:
- You have a new brand
- Your affiliate program is brand new
- Brand recognition is low (compared to Target, Amazon, eBay, etc.)
- Your industry occupies a small niche space
- You have limited or no technical resources
- You are in an emerging market
- Cost is not so much an issue as acquisition
- Industry segment is hyper competitive
- Tracking is overly complex
- All your competitors are on the big networks
That’s a longer list, right? It isn’t complete either. A private network may be a good way to get started, but more often than not the major networks are the way to go. We have launched and managed over 300 programs since 2004 and most work best on the public networks. They remove friction from the marketplace. They make it easy for you to establish success quickly and they provide the technology and support. And they all do an amazing job in those areas.
A private solution can work. Just ask Amazon and eBay. But consider the investment(s) they’ve made before you commit to a solution.
If one-on-one guidance would be helpful, please reach out to us at gethelp@jebcommerce.com or schedule time to discuss your needs with us.
