Free Networks v Paid networks

[Hero]

Tweet

As another example compare a network charging an override with one charging nothing: -
With override: Merchant pays £13, Network takes £3, Affiliate gets £10
With no fee: Merchant pays £13, Network takes nothing, Affiliate gets £13

Do you know of many companies giving their technology, infrastucture, personnel hours for free? Unless they do more business with the merchant, like "give us your ppc and we'll throw in affiliate marketing for free", I don't see how they will be able to sustain their business for long. Would you, were you a merchant, opt for that? Would you trust them to do a proper job in teh freebie? I would be sceptical, not that free services aren't of high level, but I would be wary (of the one-sandal man).

Surely an affiliate network is simply a broker between the 2. It provides systems, and infrastructure that is vital to both parties (affiliate and merchant). I don't personally see any reason why it should be the merchant that is charged for that. Of course typically the merchants have bigger wallets that the affiliates so that may be the reason.

As an affiliate, I am selling my traffic to merchants, via a broker (an affiliate network). So if you drew comparisons with other markets, you'd expect the affiliates to be paying the affiliate networks commission. Say selling a house, the seller pays the estate agent.

In your example, and following your logic, the buyer of the house would need to pay the agent.
As an affiliate you're not selling anything to anyone. You offer your services and you expect to get paid for them. Not you paying because you are creating workload for merchants and networks alike! (shame on you, bad affiliate!)
It's not a matter of who has bigger wallets; I know plenty of affiliates who make much more money than some merchants, and would be easier to charge them instead of the merchants

[axod]

In your example, and following your logic, the buyer of the house would need to pay the agent.

I wasn't saying that... just remarking that I as an affiliate, sell exposure, traffic, leads and sales, to merchants, through an affiliate network.
So if affiliate networks were the same as estate agents, it should be me, the affiliate, paying their commission.

However, I think the point is that (I assume) there are a lot less merchants than there are affiliates. So the affiliate networks have to do work finding appropriate affiliates for and on behalf of each merchant....

I think most of the affiliate networks add something good to the mix though (Apart from the ones that don't pay! )

[Rich]

I wasn't saying the network should take no fee, I was using an extreme example to show where the money the network was taking would end up if they didn't take it.

Try this one: -
30% override: Merchant pays £65, Network takes £15, Affiliate gets £50
25% override: Merchant pays £65, Network takes £13, Affiliate gets £52

The amount a merchant can afford to pay is fixed. The amount the network charges doesn't affect how much the merchant pays, but it does affect how much the affiliate can earn. If a network charges more the merchant pays the same but the affiliate would get less.

Does that help show that network fees are, at least in part, born by affiliates?

[drivetowin]

Whether network fees are borne by the merchant or the affiliate is a debate which can go on for hours and is really a bit futile, at the end of the day it is how much the merchant has to pay which is important - after all if affiliates had to pay then we would start demanding account managers and that really would throw the networks into a frenzy - some of them have enough trouble providing an affiliate support person let alone a dedicated account manager.

On the issue of override and monthly fees - it is in everyones interest that networks are financially sustainable in the long term - after all as affiliates we have a contract only with the network - so if the network gets into financial difficulties and goes into liquidation everyone loses, the merchants lose fees they have already paid, the network employees are out of a job, and the affiliates kiss goodbye to their hard earned commissions.

With regard to the free / management fee argument I've got mixed feelings - my personal view is that free networks are bad for the industry - controversial - yes, but that's me

OK, heres my reasoning (with a merchant hat on) - if I can have something for nothing - I am more likely to set up an affiliate scheme but I have little incentive to really make it fly - after all if it doesn't convert then it hasn't cost me a penny (and if I'm lucky I'll have got a fair bit of branding for free in the process).

If I've spent a few thousand getting off the ground, and have a bill of x thousand per year just to keep it running, I'm going to do my hardest to make it work, cos if I don't either I as the business owner (or in a larger company, my boss, or the board) are going to start asking questions on why we are spending all this money on our affiliate programme.

[Mitchy]

Originally Posted by AndyMitchell
You really need a proactive affiliate manager though. And as Hero is normally first to respond to threads like this, that is an indicator in itself!

Slap! You'd better not mean that I spend more time on the forum than managing my accounts! Slap!

Hero, I meant that you are proactive and on the ball! If a little touchy!

Keith, do you think that all free networks are bad for the industry, or just the newer ones that seem to be touting 'no setup, no monthly management' as a pitch to prospective merchants. Whats your opinion on the more established free networks?

[Rich]

Whether network fees are borne by the merchant or the affiliate is a debate which can go on for hours and is really a bit futile, at the end of the day it is how much the merchant has to pay which is important - after all if affiliates had to pay then we would start demanding account managers and that really would throw the networks into a frenzy - some of them have enough trouble providing an affiliate support person let alone a dedicated account manager.

I guess that's partly my point, Affiliate's could be treated better. Also, you can't really say the debate on who pays is futile because how much the merchant pays is important, the point is that affiliate's do pay at the moment but it is hidden.

From your post on different commission levels on different networks

And sometimes it's because the network chooses to take less of their override and so there is more money to pass on to the affiliate - this can sometime happen if a merchant launches on a second network and the second network is trying to attract (or poach) affiliates from the original network.

Surely, if a lower override means more money for affiliates, that shows that affiliates are paying for the standard override?

[sean.h.parker]

I very much agree to Jimmy, as merchant it would be easier to give out the override rather the affiliate being asked for it.

Merchant makes a heavy profit on a single sale and paying some extra $s wont be a problem .

[drivetowin]

Rich

Yes that's true re the override - having read my post again I realised I could maybe have worded it better - what I meant to say was that it is only the merchant who parts with hard cash - yes there is an argument that the override is deducted from our potential earnings but we never actually 'pay' - if you see what I mean - gawd this is easy to say sitting in front of someone and very hard to put into words to be read.

Andy - my opinion on free networks applies to all, old or new - maybe it's just me but I know that projects where I have a financial investment get more of my attention than projects where I just have an interest.

[Gavinio]

It's related to the other thread about pricing on different networks (in terms of commissions differing.

How would you feel if a programme were to offer (all based on £39 CPA for merchant)
£30 on X network
£35 on Y network
or £39 in house?

5 years ago, tracking alone was worth paying for - now you can get decent tracking technology cheap. What you get for your money now, is access to affiliates, interface and account management. All networks need to offer VFM in one way or another - and to add value if they are to maintain and attract new merchants and affiliates.

[Aceicol]

Andy - my opinion on free networks applies to all, old or new - maybe it's just me but I know that projects where I have a financial investment get more of my attention than projects where I just have an interest.

Keith, what if the merchant you were dealing with were putting there money into employing a dedicated affiliate manager as opposed to paying the monthly and setup fees, as will possibly be in the case I am talking about. There will be the same investment yet the Merchant feels that they may be able to offer more with the use of a manager rather than a setup fee.

I'm not trying to suggest your point is wrong as it definately isn't, but can you see that the financial investment has come from a different angle?

Alex

[Scratch2Casher]

After my experience with a few of the free networks around, I can only say that I got exactly what I paid for.