Why do merchants continue to use an affiliate network?

[john123]

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Hi

I am currently writing a report on affiliate marketing for an e-commerce module at uni and found this site – and boy is it useful! Whilst writing about the benefits of affiliate marketing for merchants, I kept asking myself Why do they continue to use affiliate networks for reporting, management etc. I have read that advertisers have to pay them a large override commission – So would it not be a lot cheaper for all companies to use there own reporting and management program, like ‘Amazon’, who I think run their own affiliate program? Are affiliates not allowed to move to individual programmes once they are signed up to TD for example? Do merchants/affiliates have less protection? I would really appreciate your thoughts on this matter to help my grade! Or have I completely missed the point in the affiliate marketing world??! If I have please let me know!

Many Thanks

John

[getvisible]

Hi John

In business, cost is but only one consideration. It may not have to pay overrides if you ran a programme in house. But it would take a lot of hard work to get the exposure, quality of communication and payment mechanisms sorted in house.

Most people in business want results but not at the expense of a nervous breakdown. Networks generally act to take that stress away from merchants and offer their experience and expertease that would could cost more to get reduced results if they hired someone to manage all the areas that the networks cover.

It all depends on the business's balance of cost, control, business approach, accounts systems etc. So some companies prefer to use networks, some wouldn't.

Lee

[drivetowin]

The main reasons merchants use a network are :-

1. Exposure to a wide range of affiliates
2. Simplified administration, one invoice a month instead of hundreds or even thousands
3. No need to implement and maintain their own tracking systems
4. Lots of affiliates will only deal with merchants who are on an affiliate network and steer well clear of independents unless either

a) they have an exceptional product / offering or
b) they are Amazon!

Why do affiliates prefer to use a network

1) Simplified accounting
2) On the whole - trusted tracking
3) Most schemes have a payment threshold (as do most networks but its far easier to reach 25 pounds a month promoting 100 merchants than it is promotiing one)

[Keith]

here's a thread on the subject John http://www.a4uforum.co.uk/showthread...threadid=22609

[Dynamoo]

All the above points are valid.

However, consider this too: from a merchant point of view, using an affiliate network is just another form of outsourcing.

Take as an example a small electronics retailer. They may well outsource their supply logistics, eCommerce systems, web design, order fulfillment, delivery, returns, finance functions, human resources and the nuts and bolts of marketing. Outsourcing an affiliate programme would be a natural thing for them to do.

Many business these days just act as some sort of creative glue that makes all the different bits of outsourcing work.

[matbennett]

We switched from an in-house program to a network run one about a year ago.

There were a lot of considerations at the time, but the two biggies were:

1. Simpler accounting/less cheques to pay
2. Many affiliates will only work with networks

At the time I would have put greater exposure on the list as well, but I don't really believe that to be that accurate now.

[john123]

Hi

Many Thanks for your responses - I can now give some good examples of the pros and cons!

Just another question though, Are merchants allowed to run an in house program as well as a with a couple of networks? This to me sounds like an ideal solution to access affiliates and run and in house for affiliates that trust them and saves the merchant ££.

Thanks Again

John