Running an affiliate marketing program is a complex task. First, you have to find affiliates to partner with, and then figure out how to onboard and manage your affiliates. This includes creating and distributing affiliate links, tracking the purchases made through each link, and compensating each affiliate for the sales they help make.
Luckily, affiliate marketing is a large industry with companies dedicated to helping businesses start an affiliate program of their own.
To start an affiliate program, you can either use affiliate software or go through an affiliate network. In this article, we go over both options and help you decide which of the two is best for running your own affiliate program.
Before you start an affiliate program
Affiliate programs have been around almost as long as ecommerce platforms have. And for good reason. Affiliates are one of the main drivers behind online business success.
In an affiliate program, you provide links to your products (known as affiliate links) for bloggers, social media personalities, and other creators to place within their content. Whenever a sale is made through one of these links, you pay the creator a commission on the sale.
This win-win scenario allows your affiliate partners to earn some extra money, while also helping you grow your business.
A standard affiliate program requires creating unique links for each affiliate, tracking the conversions made from each of those links, determining how much each affiliate has earned, and then paying all your affiliates their commission.
Fortunately, you won’t have to set up this complicated system yourself. Specialized tools are available to make the affiliate process much easier.
The question is: Should you use affiliate software or an affiliate network to manage your affiliate program? Let’s compare.
What is an affiliate network?
Affiliate networks connect companies who are interested in running an affiliate marketing program with registered content creators who are interested in promoting products for money. By building up a pool of participants from both sides, affiliate networks make it easier to fill out a list of affiliates – businesses don’t have to manually find affiliates themselves. Once companies and affiliates are connected, the affiliate network acts as a middleman.
Companies are charged a fee to have their affiliate program listed on the network. Once the program has been approved according to the network’s specifications, it is listed on the site and ready to accept applications. Companies can then screen and accept any affiliates who seem like a good fit for their program.
Interested affiliates, on the other hand, sign up to the network (usually free of charge) and can browse the database of companies with affiliate programs. When they find a company with products and a commission structure they like, they can apply to join that company’s affiliate program.
Aside from making it easier to find affiliates, a network will also take care of managing a company’s approved affiliates. The affiliate network provides all the links, handles accounting, and sends commission payouts.
However, these third-party networks essentially serve as marketplaces. And as a company, you’ll be actively competing for affiliates with other companies on the network. You’ll also have to pay additional “finder’s fees” to the network whenever an affiliate makes a sale.
What is an affiliate marketing software program?
Affiliate marketing software programs are an alternative to using networks for tracking and managing affiliates. These out-of-the-box solutions allow you to build your own affiliate program and use software to handle what would otherwise be left to an affiliate network.
Similar to a network, affiliate marketing software will generate affiliate links for you, handle all aspects of affiliate tracking, and automatically send commission to your affiliates.
Although affiliate tracking software does require you to find your own affiliates, it offers the benefit of not having to pay an added fee for every sale.
Affiliate software is also easily customized to the company’s needs, which allows more control than if a program was run through an affiliate network and subject to their rules.
What are the similarities between affiliate software and affiliate networks?
Affiliate software and affiliate networks provide a lot of the same functionality. Both of them are designed to make it easy for businesses to manage affiliate partnerships with little effort. Each option offers the ability to:
- Register affiliates who wish to join your program
- Create affiliate tracking links and distribute them to affiliates
- Track an affiliate’s sales
- Provide branded assets to each affiliate to aid them in promoting your products
- Compensate affiliates with commission as soon as they help make a sale
How does affiliate software differ from an affiliate network?
Despite their similarities, there is a clear difference in the philosophy of affiliate marketing software and affiliate networks. This difference lies primarily in the amount of control held by a company as it finds and manages affiliates.
You can compare affiliate software with affiliate networks based on the following criteria:
|Affiliate software||Affiliate network|
|Finding affiliates||You’ll need to find affiliates, but can recruit anyone you like||Network finds affiliates for you, but you only have access to the network’s affiliates|
|Promotion||You’ll need to promote your program, although the software may automate some promotion||Network promotes your program, but alongside all other competing programs|
|Engagement||Software helps boost affiliate engagement||Difficult to engage affiliates|
|Ownership||You own your affiliate relationships||The network owns your affiliate relationships|
|Tracking||Full access to all your detailed tracking data||Network owns tracking data, and can choose to keep some crucial data private|
|Customization||Full freedom to customize your program||Forced to fit within constraints of the network|
|Costs||You pay for the software costs, and then a commission only when an affiliate makes a sale||You pay a joining fee, a commission when an affiliate makes a sale, and a “finder’s fee” to the network (also for every sale)
* Some networks may impose other fees
|Competition for affiliates||You don’t compete directly with other companies||You compete directly with other companies on the network|
|Risk||Lower risk, since the payments are performance-based||Higher risk, as there are additional fees that make it a bigger investment|
We’ll break down the points in more detail below.
An affiliate network has already done the hard work of assembling a large group of willing partners for your affiliate program. However, your partnerships are limited to affiliates registered on the network. The network functions as a middleman throughout the entire process.
Affiliate software is just the opposite. While the hard work of finding affiliates to partner with is up to you, you’re free to recruit affiliates anywhere you like. Software gives you complete control over registering and managing your own affiliates.
By hosting your program on a well-known network searched by registered affiliates, networks do a lot of the heavy lifting to promote your program for you. Of course, you’ll be competing with other companies for the attention of those affiliates, so any extra effort on your part to stand out is beneficial.
The right affiliate software will have some marketing automation tools to automate some of the routine tasks of promoting your affiliate program. But for the most part, you’ll be promoting your affiliate program on your own.
Affiliate networks just host your program – they don’t help you engage affiliates. Rather, the goal of affiliate networks is to connect as many affiliates with as many companies as possible. This is because a network makes more money when affiliates join multiple programs within the network. Networks usually don’t provide tools to help you motivate affiliates and keep them active in your program.
Conversely, affiliate software serves a company’s interests, even when it comes to engagement. The best affiliate tracking software helps you boost affiliate engagement with automated program promotions. This is extremely helpful for keeping affiliate partners in the loop and getting them excited about selling your product.
Ownership of affiliate relationships
Networks make no money if you partner with affiliates outside their platform and skip the middleman service they’re providing. As such, they keep full control of affiliate relationships on the network. They’ll handle all communications and other affiliate management.
In contrast, affiliate software grants full control of affiliate relationships with the business that started the affiliate program. This allows you to communicate smoothly and nurture close relationships with your affiliates.
Both options track the commission that affiliates earn and use data to send payments. The difference lies in what data you’re allowed to access. With a network, they keep information about the affiliates, and most of the key metrics about performance. The network owns your affiliate data.
Affiliate software gives your business full access to all data collected by the platform. Since you own all the data, you’ll be able to track an affiliate’s performance in detail. This will let you refine your program in an informed way and improve its performance.
Under the hood, affiliate networks use similar software to what you can acquire on your own. While this software gives the owner a great amount of flexibility in how things are set up, a network will have a single setup that fits their own preferences. Anyone who joins the network will need to follow whatever configuration the network has decided on.
But when you control the affiliate program with affiliate software, the full range of configuration options becomes available. You’ll be able to apply your desired commission structure – including more complex setups like recurring rewards, tiers, and time-based offers. You can customize the look of the affiliate program to fit your brand, so it is clearly all your own. Plus, you can properly integrate the program with all of your existing software to track leads and sales.
Affiliate networks make money through a host of recurring fees. In addition to the initial joining fee, they collect fees on every sale generated through the program, in addition to the commission you pay affiliates. Depending on the network, there may be other fees as well.
When you purchase affiliate software, you pay the initial fee and then have no more financial commitments to the developer of the software. You will, of course, still be responsible for paying the commission to your affiliates when they make sales.
Your commission structure and commission rates are a big determining factor in how well you can do with an affiliate network. You’re directly competing with every other merchant on the platform, and competition on networks can be fierce. You may be required to pay more commission than you’d otherwise have to. Networks are a highly competitive environment where affiliates can shop around for the best commission. And even once you sign up affiliates, their resources will be split between you and any other programs they’ve joined.
When you use affiliate software, you’ll sign up affiliates who may or may not be shopping around for other programs to use. However, being outside a network means there’s no direct competition between your program and others.
Although it varies per network, some may require you to pay a recurring fee to be part of the platform even if you have no affiliates. This could result in you spending more to be part of a network you’re not getting any value out of.
Affiliate software typically has a much better ROI, as you only pay when an affiliate makes a sale. And because the payment is a percentage of the sale, you’ll never have costs that exceed your income.
Why should you stay away from an affiliate network?
The operators of an affiliate network are looking out for their own profits. They favor the affiliates and themselves far more than the businesses looking for partnerships. Because of this structure, there are several reasons why you should stay away from affiliate networks.
Affiliate networks are costly
The recurring fees of affiliate networks make them the less attractive option. Some of those fees can be quite high, with up to 30% of your sales (on top of what affiliates earn) not being uncommon. Setup fees, recurring maintenance fees, and even monthly fees are also fairly common among affiliate networks. Even worse, many networks aren’t transparent with these fees, making it more difficult to reach ROI.
You compete directly with other businesses
The high fees charged by networks reduce the amount you can afford to offer affiliates, but the highly competitive nature of the network means you also need to offer the highest rates to get the best-performing affiliates.
Smaller businesses have little hope of competing with what larger companies on the network can afford to pay. And larger brands must still spend extra time and effort to stand out from the competition.
Network affiliate relationships are largely transactional
Since your communication with affiliates on networks is limited, it’s difficult to build relationships with them.
Affiliates are largely there to join as many high-paying programs as possible and earn as much commission as they can. They join networks to shop around for the best deal, and there are few incentives for them to build a lasting relationship with your brand.
This arrangement also means affiliates might not have used your products, making them inauthentic advocates on behalf of your brand.
The best affiliates are ones who have used and enjoyed your product. Networks aren’t well-designed to find partners like that.
The network owns affiliate data
Even the smallest business now has access to affiliate software that can track data on nearly every aspect of the company. This data can then be used to inform management decisions.
Unfortunately, networks don’t share the program data needed to assess the performance of your affiliates, which makes it difficult to get an accurate picture of the program.
Your business doesn’t control the affiliate relationship
As the middleman, the network controls the affiliate relationship. Without a way to regularly communicate with your affiliates, it’s nearly impossible to foster authentic connections. This is a huge downside, as a large benefit of affiliate marketing comes from sincere word-of-mouth recommendations that require a deeper connection between affiliate and merchant.
Your pool of affiliates is limited
Ideally, you want as much access over your potential affiliates as possible. A successful marketing strategy depends on finding affiliates who will advocate effectively for your product. While you can invite affiliates, they still need to join the network before they can register for your program.
From there, you’ll be inviting them onto a highly-competitive marketing platform where they may find a better deal. They could even potentially end up working as affiliates for one of your competitors.
What is the advantage of using affiliate software instead of an affiliate network?
Nearly all of the downsides of an affiliate network are removed when you choose affiliate marketing software instead.
Aside from having to find your own affiliates and promote your program, no additional downsides are introduced. Here are just a few reasons why software is a better choice than an affiliate network:
- Software has no additional fees, and is therefore more cost effective
- With no direct competition for affiliates, your fees can be based on what you can afford rather than what you need to compete
- Modern affiliate marketing software is easy to install and setup, allowing you to get your program up and running quickly
- You have complete control over how you choose to communicate and build relationships with affiliates
- A complete set of detailed performance reports allows you to track KPIs and make more informed decisions about the program
- As the owner of the software, you can configure it to your liking rather than having to fit the constraints of a network
- By hand-picking affiliates who love your brand, you can nurture more authentic advocates who go beyond the transactional nature of networks
- Software automates the most difficult parts of setting up an affiliate network, freeing you can focus on what matters
Of course, for maximum benefits, you’ll need to choose the right affiliate software for your business.
If you want to see how to best run your program, our Referral Rock affiliate software can help. We’ve built our tool to offer easy setup (no developer skills needed!) and plug-and-play integrations.
There is no shortage of affiliate networks out there, each with snazzy marketing campaigns trying to convince you they’re the best place for your business.
But the control provided by affiliate marketing software, along with the reduced cost and increased ROI, make it the obvious choice for any business who wants to reach the full potential of an affiliate marketing program.