In recent years many advertisers have been moving their affiliate programs in-house from previously having been managed by affiliate networks. There are many (good) reasons for this shift, and I’d like to address these in this article. I will also go through some of the reasons why this might not be the best course of action for the advertiser, and finally I want to give my thoughts on a better approach to the subject. So! What are the reasons for advertisers shifting their affiliate programs in-house?
Main arguments for in-housing
Control and efficiency
With the affiliate part of their businesses growing and the revenues increasing, it is understandable that the advertisers want to be in control of this growing channel. With “control” we mean the possibility to interact with their affiliates directly, the power to adjust commissions immediately, and the possibility to view and review performance data without the need of any middleman. All valid reasons and understandable.
Who knows your business better than yourself? No one. When gathering all the data through all the channels, it is you, the person in the business, who knows best how to interpret the data and how to best adjust accordingly. With the growing amount of data sets available it can become increasingly hard to consolidate all the data in one place and draw the “right” conclusions from it.
No one-size-fits-all solution exists
The issue with many affiliate networks has been (and is still) the fact that they do not know your business, your visions, and your goals as well as you do. This also means that they might (will!) be suggesting affiliates, channels and traffic sources that do not necessarily fit your brand.
Knowing where the traffic is coming from is key to understanding what traffic works for you. Sadly, however, there are still many affiliate networks that either provide zero transparency (publisher details are not given at all) or very limited transparency (name of publisher is given, but that’s it). This is naturally a problem for any advertiser wanting to work directly with great publishers to increase revenue for both parties. The affiliate network sometimes sees itself as the gatekeeper between publisher and advertiser so that the advertiser will not steal “their” publishers. You can see this clearly with some networks even imposing harsh sanctions in their terms of service for this “theft” (suffice to say that any network doing this clearly has nothing good to contribute to your business, if you work with this kind of partner, get out while you can).
Looking at the main reasons above, it is clear that there are some issues in the affiliate network model that are problematic for the advertiser to say the least. There is, perhaps, also a very common misconception around affiliate networks where the advertiser wants immediate growth on a CPA (cost per action) model without needing to invest any time (and hopefully very little money) at all. On the other hand, many affiliate networks think along the same lines, but in reverse: “Let’s just onboard them and start blasting all the traffic there is, no matter the quality, and hope that something sticks”. You can probably see where I am going with this: There is a clear dissonance between the expectations of both the networks and the advertiser.
The tech provider argument
If you ask any tech provider, they will tell you that THEIR super-duper technology will save the day and give you everything you want and need to run the programs yourself and increase revenue with the sky as the limit. Well, sorry to break it to you, but the technology is almost always totally blown out of proportion. Every single technology platform out there that I know of has the same core functionality simply displayed in a different way with more or fewer bells and whistles attached to it and it is, simply said, not rocket science.
Is the truth somewhere in the middle?
So, looking at the above points I think it is fairly clear that there is a gap between fully in-housing affiliate marketing on the one hand and fully outsourcing it to an affiliate network on the other. It is my experience (about 10 years of it) that the truth is somewhere in the middle and not so dramatic as people looking to sell headlines (and tech platforms) would have it. Put simply: There is no point for an advertiser to in-house mundane account managing tasks that affiliate networks simply are better at. There is equally little point in outsourcing affiliate marketing to a network that does not have a strong enough incentive to build your success. What I know works, is a combination of both in what we call a Partnership HUB. In this hybrid between the two we will take the best parts of both worlds and skip all the bad parts. Does this sound like marketing bs and hyperbole? Yes of course it does. Is it that? Absolutely not.
Harnessing the good sides of the networks and tech platforms and combining them with the insight and expertise only the advertiser can have is the way forward. It must, however, be made abundantly clear that the one cannot manage without the other. The advertiser will need the help of the network in managing tasks such as publisher payouts, recruitment, tracking, reports, etc. while the network will absolutely need the help of the advertiser in steering the offers and campaigns in the right strategic direction, help with finding new partners, and the holistic insights of the total marketing situation that only the advertiser can have. With a Partnership Hub we can look at the list in the beginning of the article and tick it off one by one, so let’s go back to them:
Control and efficiency
A good Partnership Hub will…
*…provide you with the ability to control everything either directly by yourself, or indirectly through your account manager
*…help you with consolidation of data and contacting sources and publishers
*…monitor the traffic on your behalf
*…make sure that the partners are paid out in a timely fashion
No one knows your business better than you do. This is true, but with the help of a Partnership Hub you will also gain the insights of the affiliate world and gain access to partners you normally would not have access to. See the Partnership Hub as someone who introduces you to potential partners and helps you find new ones in addition to the ones you onboard.
No one-size-fits-all solution exists
This is the very point of a Partnership Hub – We understand the fact that the best results are found when combining the expertise of all parties under one roof with a clear division of labour. Together you can achieve better results than going at it alone or simply outsourcing.
This is key. Any partner that does not give you absolute and full transparency towards the source of the traffic should be considered iffy at best and fraudulent at worst. We have seen what can happen when two partners that fit each other’s needs are introduced to one another and we want to facilitate these interactions because they usually do what we all want: Increase revenue for all parties involved. Note that by “transparency” I mean full contact info of the partner when needed.
I think it’s fairly clear that the current discussions are way too polarised where you have an either-or scenario for affiliate marketing – In-house 100% or outsource 100%. Combining these two by taking the best of both worlds is, in my opinion, the clear way forward. The truth is almost never black and white and the same goes for this topic. The “techies” out there will always say that they have the golden key that will solve all problems. The networks will always say that they have the best publishers and best account managers to fulfill all your affiliate marketing dreams. The truth, however, is in the middle where you have a balance and synergy of the inputs of all parties involved. You might ask how I can claim to know all this (and you should!) and I will happily answer:
I have seen the evolution of this market for over ten years and having started with the Partnership Hub model I can see that this is by far the most efficient way forward that I have seen. Don’t believe me? Give me a call or drop me an email and we can talk about it! I’d also be very happy to set you up with your very own Partnership Hub because as we all know: The proof is in the pudding.