Free Networks v Paid networks

[Aceicol]

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Recently I've been tempted to advise a few of my clients to go with a few of the free networks. There are quite a few around at the moment and my reason is that they only get paid from the override so need to work more for there money.

I'm not saying the paid networks don't work for there money as I know plenty work there guts out, but I have had an experience before where the network didn't really do a great deal for us, apart from take our monthly fee (I won't name them as I've worked with them since an they are a lot better nowadays).

Also I understand that some of the newer free networks may not have as many affiliates but there are some networks owned by some big players in the market now so surely that would be an incentive on its own.

Basically I was just wonderering what other peoples opinion is.

[Hero]

I work for what you refer to as a "paid" network (em, actually, it's monthly fee network) and I'm not trying to pitch us to you, that's not my job, I'll just try to explain how the industry works.
With the "paid" networks, depending on the level of service you opt for, your fee is adjusted. With the "free" (ie no monthly fee) networks, you don't have much option to the support you get, it's self managed, take it or leave it.
You will use the "free" network's technology, their interface, their servers, their affiliates, hopefully their payment system too. For the little while it might take to use their payment system, you will have paid nothing for using everything else. The network will hope to make that up from the override when your program starts performing. Their risk is great, they absolutely need the program to perform, and therefore are very selective as to who they take on board, with their rejection rates high up. This prevents the smaller and niche merchants from joining them, as well as those who don't have an inhouse affiliate manager and cannot have one in the short term.

Having said all that, I have worked with "free" networks as a merchant and they have been fantastic. :-)

So, all in all, success of the program comes down to your site, your products and how you construct your affiliate program, rather than the network you're with.

[3wdl]

I work for what you refer to as a "paid" network (em, actually, it's monthly fee network) and I'm not trying to pitch us to you, that's not my job, I'll just try to explain how the industry works.
With the "paid" networks, depending on the level of service you opt for, your fee is adjusted. With the "free" (ie no monthly fee) networks, you don't have much option to the support you get, it's self managed, take it or leave it.

One of the top Affiliate networks in the country is not a monthly fee network and allocates account managers to work on your program, so not strictly true

[Hero]

One of the top Affiliate networks in the country is not a monthly fee network and allocates account managers to work on your program, so not strictly true

God, James, let me finish editing first!!!!

Great photos, btw, a mastercard moment of yours

[Azam.net]

I'll certainly recommend WG as a good "paid" network. A couple of WG clients are friends of mine and they tell me that WG makes an effort to promote them and provide a good service. That's not something that can be said for some other fee-based networks.

As regards "free" networks, they have their place too. As mentioned above, there's the extra incentive to push a merchant, because no sales = no revenue for them.

From my Affiliate Management hat, I usually place my clients - usually small retailers - on one fee-based network and one free one

[sean.h.parker]

Well that is a preatty one this way the merchant gets to have the tase of both and can decide or may be improve his services from the network side....

[Mitchy]

I'd suggest that your choice of network would come down to what sector you are targetting, combined with your budget, combined with your overall aim for your affiliate program.
In some cases, the more you pay, the more support you get. However, some 'free' networks offer more support than some paid networks! Equally, a paid network may not work for a certain merchant, whereas a free network might.
Its a mixed bag, you don't know unless you try!
One of the best ways to find the most suitable network is to ask merchants in a similar sector, then ask affiliates which networks (from the ones the merchants have suggested) they would prefer you to join.
Everyones a winners!
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!

Cheers

[Hero]

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!

[Matthew Wood]

What if someone decided to launch a network that had no override? (or a very low one) - how would that affect the mix?

To be honest I'm surprised a company has not revolutionised the industry by launching something mainstream. If someone did, would it be bad for merchants and affiliate marketing, or are we establshed enough now that it would not matter?

Matthew.

[pricethat]

What if someone decided to launch a network that had no override? (or a very low one) - how would that affect the mix?

To be honest I'm surprised a company has not revolutionised the industry by launching something mainstream. If someone did, would it be bad for merchants and affiliate marketing, or are we establshed enough now that it would not matter?

Matthew.

Sounds like matt wood is sounding out the possibilities

[Rich]

What if someone decided to launch a network that had no override? (or a very low one) - how would that affect the mix?

I was thinking along those lines last night. I still see it being common belief that merchants pay networks but the way I see it is, as the networks take a cut out of the transaction between merchants and affiliates, the cost is born by both of them. What would happen if a network twisted this round and said they would not charge merchants but would charge affiliates a % fee?

For example:
Using the current setup and a 30% override.
The affiliate gets £10, the network gets £3 override and the merchant pays £13

Now assume there is no overrride for the merchant to pay, but affilates have to pay a 23% fee. (you'll see why 23% in a moment)
The merchant can afford to pay out £13 so they pay the same amount. This goes to the affiliate but they have to pay the network a 23% fee. 23% of £13 = £3 (roughly). It would make sense for the network to take their fee before passing the money on to the affiliate so the final position is: -
The affiliate gets £10, the network gets £3 fee and the merchant pays £13, exactly the same as the current set up.

Just because a network says merchants pay the charges, doesn't mean it isn't costing affiliates money and that affiliates needs arn't as important.

I think a network with a different pricing stucture would be an interesting addition and the current situation could benefit from a nudge to see if there is a better sollution than 30%. As for it being bad for affiliate marketing, there is a risk that the combination of low quality merchants and underfunded networks could turn bad but there will always be offerings at different levels in a market and the market will find the right balance.

[Hero]

I'm having a bit of trouble understanding how someone could justify charging the affiliates a fee, Rich. "You're generating administrative costs and we need to take a fee for that"?

[pricethat]

I was thinking of doing one completely for free including all the server costs and maintenance just to piss the people off that are being paid money to do a shoddy job, but to be fair it is easy to whine about 30% but the cost of getting some of these big brands is huge, it is easy to waist a year in negotiations, travel, expenses infrastructure, looking the part etc.

Even if you did it cheaper it would not actually get you a whole load of good, take the network that i am sales manager for here in Germany, we dont charge maintenance charges, we dont charge setup costs we are stock market listed company on the frankfurt exchange so we have a good standing and all we get mostly is oscommerce shop enquiries all day long, very rare do you get the big brands chase you and the ones that do chase are the cdwows of this world that are on every affiliate network and their families.

Yes someone could come along and reshake the pricing but it would not shake away from the fact the networks do actually or have done an extreme amount of work despite their failings. And nowadays 30% seems a lot for scripts that are already there but you dont take into account the many years where people have worked and were not making any money, surely they deserve a return now.

It would be very easy to start an affiliate network, i already have a complete network built but its never going to start because it does need revenue and stability for affiliates and infrastructure and that does not come from chopping prices.

You start that game and it will be no good for any of us, if this is the service we get at 30% do you honestly think that service will increase at 20%. For one i think it would be damaging enough just during the time it takes the networks to learn to operate under those margins.

Also take economies of scale, some networks have turnovers of in excess of 200 million euro and their profits after tax are only 5-6%, that is no different to most businesses, in fact worse. Ok they need to reform and of course they will but in most cases that reform means we wont be getting payments 2 or 3 times a month, we wont so many other things either.

of course competition is good but in the Uk it is getting bad enough as it is, each network is so paranoid about loosing a client to another network that they lie to customers or dont explain what it is they have to do or teach them anything, just sign this, its just like media buys etc, price war on the 30% will just lead the merchants to finally being the control of any network.

[Rich]

I'm having a bit of trouble understanding how someone could justify charging the affiliates a fee, Rich. "You're generating administrative costs and we need to take a fee for that"?

Exactly! Isn't that the reason you charge merchants an override at the moment? What I'm just trying to show is just beacuse the money comes from the merchant doesn't mean they are the only one paying something.

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.

Looking at those figures, who is paying the network when they charge an override?

[axod]

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.

Thats just my 2c anyways.. I think the current norm works pretty well, although I'm only looking at it from an affiliate point of view.

I'm having a bit of trouble understanding how someone could justify charging the affiliates a fee, Rich. "You're generating administrative costs and we need to take a fee for that"?