Affiliate marketing has reached almost every industry, providing a new way of endorsing products, gaining passive profits, and automating sales.
Table of contents
- Why Should You Start an Affiliate Network?
- Benefits of Using an Affiliate Software
- Disadvantages of Affiliate Networks
- Can you start hosting your Affiliate program on your own?
About 80% of clients who want to promote their product and affiliates (individuals or organizations that spread the word about the client’s goods or services) profit from some kind of affiliate marketing technique.
However, is affiliate marketing program really that great?
Let’s find out the facts.
Why Should You Start an Affiliate Network?
Starting an affiliate network is a fantastic opportunity to expand your business. It allows you to enroll an army of affiliates who will sell your company’s goods or services for you.
However, there are two options to get an affiliate program:
- you can host it yourself, or
- join an affiliate network.
From here, you might be wondering what you’re going to do. When you start the affiliate program, do you want to host your own affiliate program, or do you want to join an affiliate network?
In this article, I’m going to explore the benefits of hosting your own affiliate network instead of joining the affiliate network.
First, we will cover the main benefits of using affiliate software (such as Scaleo) to build your self-hosted affiliate program. This will show you why online vendors are going out of their way to get affiliate software to host their own programs. After that, we will discuss you the drawbacks of affiliate networks and why people prefer self-hosted affiliate programs over them.
Benefits of Using an Affiliate Software
Affiliate software is used to build your own affiliate programs.
This means that an online retailer no longer has to code his own affiliate program on his website. Instead, the app can be installed on the server or integrated as SaaS through API, and the affiliate software can be launched quickly.
In some apps, you can start an affiliate program in just a few clicks. All you need to do is follow their directions, and you’re good to go.
Nowadays, affiliate business is so popular that there are plenty of affiliate apps, software, and scripts to choose from. Most of them, especially the paid ones, are secure, robust, and reliable.
So, why should you use affiliate software? Here are some of the advantages.
Most affiliate software charges a monthly subscription fee. However, the price is considerably lower than that of the affiliate networks. If you host your own affiliate software, you pay a fixed monthly fee for affiliate software. In the case of an affiliate network, however, you will need to pay a membership fee along with a transaction fee for any referrals made by your affiliates to you through the affiliate network.
This clearly illustrates how the use of your own affiliate SaaS is a “cheaper” choice in the long run.
You know in advance the amount you need to pay per month. This will allow you to budget your expenses accordingly, which will save you money in the long run.
When joining external affiliate networks, you need to pay a monthly membership fee anyway, so you might as well create your own affiliate program and never pay referral fees.
Even if you find an affiliate network that is free to join, you would need to cut a percentage of the sale for every legit referral or lead. This can take a serious toll on your earnings, given that you still also need to pay your affiliate commissions.
That’s not the case with your own affiliate programs.
More Control Over Your Affiliate Program
The previous section naturally leads us to the fact that not only your own affiliate program will cost you less, but you will also have full control over your program and fees.
Creating your program in an affiliate network may sound enticing because you don’t have to dive into affiliate program settings and manually set up offers.
Have you read our blog post – how to find good affiliate offers?
However, this is going to make you lose some leverage in your processes.
Affiliate networks prefer to determine the amount they can receive with any valid transaction. This means that you basically pay for allowing you to use their network.
One day, there could be a problem with your affiliate program. This is because it is hosted exclusively on the website of the affiliate network. This also means that if the website is compromised or has a downtime, the affiliate program will go down with them, and referrals, clicks, and transactions will stop.
Moreover, the affiliate network could set some limits. They might not allow you to use certain methods to promote your affiliate program or restrict you because of the niche you operate in.
On the other hand, you and your affiliates can promote your affiliate links in whatever way you want with your own SaaS affiliate network. You don’t need to comply with any rules other than your own.
As you can see, creating your own affiliate program through white label affiliate software is a better option if you want more control over your affiliate marketing work.
No-Risk of Competition
One of the irritating aspects of affiliate networks is that they sometimes ask affiliates to sign up for their website before enlisting them as ‘affiliates.’
It may seem like an easy method at first glance.
If they want to be your affiliate, simply sign up, fill in a form, and become a part of the network.
But what you don’t know is that this will open your affiliates to a list of competitors’ affiliate deals that they will be able to advertise as well.
By creating your own affiliate program to promote your services or goods, your affiliates are yours only.
They will not be able to access a list of other items that they can sell in the same niche. All they will see is your products, nothing more.
That way, you have their undivided attention and, hopefully, their fullest effort.
Affiliate networks may ‘steal’ your affiliate’s attention to another vendor with a higher commission and more lucrative bonuses.
You Can Tailor Your Affiliate Program to Your Own Needs
As the online marketing industry expands, the need for online marketers has also increased. There is a need to encourage affiliates to sign up and start selling something. This includes:
- hosting affiliate competitions,
- designing incentive packages, and even
- customizing an entire affiliate platform for unique needs.
Since someone else operates an affiliate network, you cannot use all types of customization on their system. You are limited to just using a limited set of features inside the network.
Full customization of your affiliate program can only be achieved when running your own affiliate program with software available to developers. You can generally either customize it yourself or get it tweaked for you for a small fee.
You Can Protect Your Affiliates and Customers.
As much as you want to keep your affiliate and customer account information safe, you cannot do that on an affiliate network.
You simply have no control over the data that is being passed through the network.
In reality, all of the affiliates in their network are considered to be ‘their’ affiliates and not yours.
This means that these affiliates or clients can be reached by e-mail without your permission. By joining the affiliate network, you’re joining the pool of affiliates, advertisers, and clients and have no idea how the information will be handled. While this may allow you to communicate with more affiliates and sellers, it may also reveal your affiliate details.
You Can Grow Your Brand.
What brand name do you promote when you advertise your affiliate program? Are you promoting a link in your domain, or are you promoting an unbranded link within your affiliate network?
Affiliate networks tend to have their own URLs. This also means the backlinks and traffic is doing their domain a favor.
Although this is convenient for you and doesn’t require any hassle from your side, you lose the ability to brand your business simply because it shows that you rely on a network to sell your product and do not have your own.
Running your own affiliate program would promote your brand.
It helps you to promote a link to your website and blog as well. Instead of promoting a link from an affiliate network, you are now promoting a page from your own domain.
As you can see, running an affiliate program yourself really has its’ advantages. On the other hand, let’s now look at the key reasons why some businesses don’t like affiliate networks.
Disadvantages of Affiliate Networks
Although affiliate networks are common, there is a reason why some affiliates and businesses avoid or stop using them altogether. In this section, you can learn about some of the drawbacks of affiliate networks.
The High Costs
The expense is the biggest drawback of the affiliate networks. Although some of them might be free, as we have already mentioned, you’re going to be shocked how much they can cut from every good transaction you’ve made with them.
Worse still, they might also have a monthly fee. Today, if you are a struggling entrepreneur on a budget, this might not be as appealing to you, given that you will have to pay your affiliate commissions on top of your membership fees and transaction fees. Once you count them all – it will add up quickly.
The Registration Barrier
All affiliates have to register on the (third party) affiliate network’s website. Otherwise, they won’t be able to promote your products. This means that each and every affiliate must go through the network. All of their data will be registered on the network, and you may not have access to this information. While some networks allow you to contact affiliates, larger networks such as CJ and ShareASale – don’t. This registration barrier is often enough to force merchants to seek alternatives.
If you think the high cost is bad, you’ll be shocked that some affiliate networks still charge higher rates. In this pricing model, they charge a higher fee depending on the number of affiliates or referrals you have made. This means they’re not going to quote a fixed price. Instead, the price is higher based on performance.
As a merchant, you’re not going to like this.
This is why most merchants abandon affiliate networks for self-hosted or SaaS programs. As we have already mentioned, they are much cheaper and predictable.
The Affiliate Exposure Problem
There is also a challenge to competitors in affiliate networks. As I mentioned earlier, any affiliate that signs up doesn’t just sign up for your program. They also get to sign up for other programs as well. It doesn’t matter if they’re in direct competition with your product. The fact that your affiliate is exposed to so many different affiliate product choices is just not good for business.
The Lack of Customization
Customization or white labeling inside the affiliate networks is simply not feasible.
In reality, there’s not much you can customize apart from your own info.
Networks will have all set up for you – your affiliate page, your deal page, the offers, the design, the settings. However, you’re not going to be able to alter almost anything.
So if you want to configure your software and have full control over the set of rules and the design, colors, look and feel – you will have to opt-in to run your own affiliate network.
The Lack of Credibility
When you promote a link tied to your affiliate network, what do others see? They see a small-time marketer who has no resources to run his own affiliate program and only has time to sign up for an affiliate network just to start making money quickly.
Many people will get the impression that you cannot invest the time and money in your affiliate program.
So, should they trust you for along term business?
Promoting a link outside of your brand weakens your reputation.
It is much easier to promote a page in your domain than to promote a page in a well-known affiliate network.
Marketers or e-commerce vendors know that.
Big brand companies always have their own affiliate program tied to their domain name. It doesn’t matter if it takes them some time to set up and configure. It’s worth it in the long run because it will immediately improve their reputation.
There are really many reasons why traders choose self-hosted affiliate programs. Cost is one of the key factors. Lower prices mean higher income. Any business owner who wants better income will just miss the network and go to the affiliate software. Monthly payments don’t really matter. What counts is the average expense that is considerably lower for self-hosted affiliate services.
Can you start hosting your Affiliate program on your own?
As a merchant, are you running and owning your affiliate program, or are you just using a network?
If you are thinking of starting your own affiliate program, check out Scaleo. This fully customizable white label affiliate software allows you to have full control over your affiliates, sales, transactions, and other data points.
Affiliate marketing, in general, has shown its potential to produce more and more successful business opportunities. Despite the apparent downsides listed above, affiliate networks remain a lucrative revenue source and are an effective tool for attracting new clients to your website.
Affiliate networks have plenty of advantages, which we will cover in our upcoming post next week. However, if you are a merchant looking to add an affiliate program to your current website (be it Shopify, WooCommerce, or anything else) – setting up your own affiliate program on your own domain is the best option.
Your own affiliate program will:
- Save your money in the long run,
- Help you promote your brand and build trust,
- Draw all the traffic to your domain,
- Allow you full control over the affiliates, transactions, commissions, and settings,
- Offer a wide range of customizations.
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