The Role of Networks in Affiliate Marketing

Affiliate marketing is becoming an increasingly complex channel. There was a time when the role of an affiliate was simple. They would sign up to promote a single merchant, and the process of converting a customer was simple. The customer would click an affiliate link, a cookie would be set, and if the customer converted before the cookie expired, the merchant would pay the affiliate.

Those days are long gone. Today, affiliates usually promote more than one merchant, and competition between affiliates is fierce. If a customer visits more than one affiliate before converting, who gets the commission? The affiliate that set the first cookie, or the one that sealed the deal? To make matters even more complicated, many consumers start product research on one device, and then complete the transaction on another. Some merchants support multi-channel marketing, but tracking conversions across channels is difficult for individual merchants. It's here were affiliate networks start to come into their own.

There was a time when joining affiliate networks was a waste because you could often get better rates by affiliating directly with a merchant. Today, networks offer enough benefits that those concerns aren't worth worrying about. Networks offer a degree of quality control - the best networks will only take merchants that are relatively reliable. In addition, they have sophisticated tracking technology that can improve your ROI and make it easier to optimize your campaigns.

When you work with a small merchant, you're relying on that merchant to have a good enough infrastructure that they can reliably track your conversions, identify dishonest "brand bidders", and generally look after their affiliate program. If you need access to XML feeds or a sophisticated API to populate your site, you may be out-of-luck if the merchant has never put that data together before.

When you work with networks, you can be more confident that the program is well run. Networks have their own tracking technology, and help the merchants integrate it. It's easier for the merchants to pull information from that tracking code and generate reports that will catch the black-hat affiliates, and you get to enjoy sophisticated reporting that helps you keep track of what you're owed and understand what works and what doesn't.

Networks are getting some competition from agencies. Advertising agencies are trying to build their own teams of affiliates, bypassing networks and taking their own slice of the online marketing pie. Agencies are appealing to merchants because the good ones can be a one-stop-shop for all of their marketing needs, including CPC, CPA and traditional advertising, as well as guest blogging, link building and other marketing techniques. For a mid-tier company with a limited budget, an all-in-one strategy can be quite appealing. However, for affiliates themselves, working with an ad agency that does not have the tools or expertise to help with creatives or provide access to data feeds may not be attractive.

Networks will need to evolve if they want to continue to attract merchants, but for affiliates themselves they remain a good option. If you have a good working relationship with a merchant already, there's no need to stop working with them, but it is worth keeping an eye on what the networks are doing, especially if you want to start focusing on mobile, click to call, or other cross-channel conversions.