Network charges high in the UK?

[PhiltheBear]

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Hi,

I hope this is a good place to post this as it's a general issue. Firstly, let me say that I run some websites and partake, as an affiliate, in various networks. I have no complaints, as an affiliate, about what they do for me.

However, I'm about to set up a new website from which I will be selling a single product. It's a fairly niche product which will retail for about £150. I'm looking to pay affiliates on a sale only basis a commission of about £25. Oh, and my product is pretty well UK only, which does limit the market a bit.

My problem is that I'd like to do this via a network (just to keep my life simple). When I investigated the networks in the UK they all seemed to charge upfront fees, for which in most cases boil down to them giving me a couple of lines of code to put on my site. Secondly, they then want to charge me a fixed monthly fee (why, I do not know). Thirdly, they want to charge 30% on top of the monies I pay to affiliates. Fourthly, they then want me to promote my site to potential affiliates.

Because I have US contacts I had a look at some of the networks there. Firstly, almost none charge an upfront fee. Secondly, almost none charge a fixed monthly fee. Thirdly, in some cases the 'on top' fee was less than 30% and fourthly, they promote my site to potential affiliates.

Am I missing something? It seems to me that I'd be better off getting some sort of affiliate management software and doing it myself. But then I'd, presumably, have a credibility problem.

Anyone have any suggestions? Comments? Or is this just another part of UK rip-off culture?

Phil

[Azam.net]

When I investigated the networks in the UK they all seemed to charge upfront fees, for which in most cases boil down to them giving me a couple of lines of code to put on my site.

Unfortunately, getting to the point of giving a merchant those "couple of lines" can take months. When networks pitch to clients, their presentations can take countless days of painstaking work to put together. Then, when they've won the contract, the real hard work starts. Get paperwork completed. Sort out payment procedures. Advise merchants on how to improve and streamline their sites. Get merchants to add those two lines of code (you know how many merchants you have to email and phone a dozen times before they get it right?) Then you arrange for the creative to be done. Deep-links. Content unit integration. Product feeds. Affiliate recruitment. It goes on and on and on... and most networks will do that just for a few hundred quid sign-up fee. I think that's quite a bargain.

I don't have sufficient knowledge of the US scene to be able to compare, but I doubt most of the networks which are free of sign-up fees would be able to offer a premium level of support. Contrary to what the sales guys on the networks will spin, setting up and launching an affiliate program if done properly is a time-consuming and highly complex affair.

[tbp]

I agree that the Affiliate Networks fees do seem expensive, but then you`ve got to think of how much work it would be if you set up your own program.

Not only do you have to support the affiliates, keeping the tracking working 24 / 7, you have to keep track of how much each affiliate earns and arrange payments for each affiliate at the end of month. If you have a busy program with thousands of affiliates, then it would take a hell of a lot of time to keep track of the payments and process each payment to the affiliates.

A lot of the networks have made a lot of improvements to their services this year, adding services such as content units affiliates can put on their sites with minimum coding knowledge, extending the take up from the affiliates and increasing the merchants coverage. I`ve noticed a big increase in the amount of support offered as well by many of the major networks. It would be very difficult to offer the same level support yourself.

The fees do seem quite high, and I can't comment on how they relate to fees for networks in other countries, but the way I see it if you did their job yourself in house, you`d be paying a lot more out in terms of the time it would take to do their jobs.

Assuming that you have the costs factored into your prices, you can still make a good profit from affiliate sales!

[yesasia]

I can assure you that all the top US networks charge a very high fee. There are some self service networks that charge nothing, but they will not promote you, unless you pay them a management fee. These self service networks will also run UK campaigns.

[John Jupp]

There are also networks that are sort of in between. The minimum entry level is just that...your program is entered in the network's database. To receive promotion by that network you need to pay significantly more. Then if you seriously wish to promote the program you may also wish to consider paying for a Consultant to act as a Virtual Affiliate Manager. This alone will cost anything up to $2,000 to $4,000 a month part time.

Top affiliate programs will have up to £50,000 or more spent on them to launch. Medium sized programs will still spend up to £30,000 and the smallest of programs even with a £55 entry level will still spend significantly more in terms of preparation so the final cost will still be a few thousand.

[Sanela LDL]

I am an affiliate manager of UK's Tour Operator, Leisure Direction. We have an inhouse program and are about to join our third network too. From my experience, no network so far was able to replicate the success we had with our in-house program. We invested in time and technology to build an in house program and it took about 1 year from the initial concept, but it was all worth it.

It takes time to build the reputation within the affiliates and that is always ongoing, but, no network has proved to be able to promote the program better than we do ourselves, although it is exactly the same program, no real differences at all, so, it is all in the promotion and personal approach. Network's fees can be high without any guarantee of any success. If you had an employee that you were paying to generate you business, you would have get rid of them very quickly if they produced as little results as networks do in our case.

Within Leisure Direction we were looking at networks as an additonal opportunity that we must pursue, however, currently with experience to date, nothing more than a neccessary evil as it opens us to larger affiliate base, but it will take a lot lot longer to develop those relationships through networks and making them perform. But we are prepared to hang in there a little bit longer and perhaps be proven wrong or find the networks that is a natural fit. I certainly do not agree that networks charge management fees when they actually do not manage your program exactlyl and certaily do not promote it in many cases. It should all be on performance only. My view anyway...

[Qui Gon Jinn]

Does anyone have a comparison chart of network rates? It could be interesting to see what they charge and compare innovation or extra affiliate/merchant tools & support in relation to the expense & if there is any reason why a merchant would opt for more expensive options. I have no idea on their pricing so would be interesting to see.

[jess1]

Qui: I have last years aff marketing guide, but Im not sure Im allowed to give out that info as you have to subscribe to e-consultancy.com so... sticky wicket

[Sanela LDL]

good idea. I am sure I had something not long ago for all the networks that we used as a guide to the charges when we were making a decision on which one to join. But, that would probably not include small networks, so, would not give a complete overview. I'll see if I can dig it out...

[Qui Gon Jinn]

if the information is freely available anyhow & cross checked then i guess it would be okay.

[jess1]

Nope I cant do it, ahhhh shame.
Maybe Each network on the forum could add a note about prices, but... probably will be too paranoid to post. I did try sorry :0(

[taramoar]

Our experience in dealing with most of the networks in the UK would suggest that fees are entirely dependent on the programme and the volumes projected (and who you know helps too!). You can bet that a big name brand that’s going to one exclusive network is not paying any set up/monthly fee or the usual 30% override.

And while I agree that the fees in the UK are significant it is becoming more and more competitive so we’re seeing a bit of a drop.

Tara

[Gavinio]

The VFM varies depending on what sort of programme you're running. If you view a network as a tracking tool then...
CPA Campaign paying £1 per app. 50 clicks per app (average). Network cost is 30p = 0.6p/click.
Loans campaign paying £100 per app. Expensive, targeted traffic - 20 clicks per app. Network cost is £30 = £1.50 per click tracking costs.

[speedtouch]

i just signed up with a well known UK network and they charged me no upfront fees or monthly fees - just 30%

[Mitchy]

Our experience in dealing with most of the networks in the UK would suggest that fees are entirely dependent on the programme....

Completely agree.

Qui: Any network rate card can be open to negotiation. Although this can depend on to what extent the network values their own service. Some networks will remove all set-up costs, monthly fees and reduce override if they think a big brand program will boost their portfolio. Others though, will stick by their guns and even if they reduce fees slightly, will know the true value of their service and cost accordingly.

Speed touch: There are at least three uk networks which do not charge a set-up or monthly as standard. Two (possibly three) of these pick and choose their programs very carfeully because of this. If they don't think their 30% override fee will make up costs for set-up, monthly fees and profit, they won't take it.

An observation on the US...
Aren't the network fees so low because there is so much competetion? If so, and given that the US is in some ways (apparently!) ahead of us in terms of online, are we heading for that situation in a couple of years?
Personally I think not - we seem to have a handful of big (although at least two 'smaller' ones deliver absolute quality in terms of servcie) networks who are truly dedicated to making progress and development - I think it is these that will dominate the marketplace in a few years. Any other thoughts (without taking th thread off track...!)

Cheers


Mitch