Should you build your affiliate program in-house or use an external network or service?
Among the first decisions to make when you decide on getting involved in the affiliate channel is this: Should you build an in-house program, or sign up with one of the affiliate networks or SaaS service providers like Impact? What are the pros and cons of doing either and how do you best navigate this decision?
The Case for In-House
There are numerous ways of setting up an in-house program, from completely building your own over a broad spectrum of plugins and addons, to advanced software packages like Tune. The main reason for choosing to build internally is normally always the same: cost savings. Keeping key partners off platforms where they could find alternative advertisers often comes in second. We consider this second argument less valid as it assumes the partners are not able to otherwise look around on their own.
With an internal program there is no network override fee, no platform costs that increase with transactions or, at least, they are lower than they otherwise would be. Another consideration would be minimum fees. However, there are both solutions in-house and among networks that allows for no minimum fees, though these are rarely best-in-class.
Still, with marketing departments often very cost conscious when it comes to new channels, cost savings is a powerful argument. What are really the benefits of an external solution and does it outweigh the potential savings of lower costs.
The Network Effect
We have previously written about the differences between affiliate networks and SaaS platforms when deciding on the best solution for your affiliate channel. While there are definitely big differences between these, they do also have some clear characteristics in common that sets them apart from the in-house programs.
Publisher Access
Existing external platforms already have a publisher pool that can be engaged. This means that instead of having to go out and identify every publisher on your own, you already have access to a wide base. This significantly speeds up the initial recruitment for the program and, combined with our second point, means that you can start building your program from day one.
Existing Integration
The publishers on existing platforms have already integrated with them. Especially for publishers who rely on API integration, this is a huge difference. Integrating a new API takes time and effort. However, if they are already integrated, they can use their existing integration. This makes it much easier for them to join programs, which in turn makes it easier to convince them to take up the offer. This is another factor that allows for much better publisher access on external platforms.
Publishers who are already on the platform also know and use the reporting and potentially have access to more offers to get them above the minimum payment threshold. Adopting a new platform with separate login, reporting and payment etc is mostly not attractive which means recruiting them to such is much harder.
Trust
While this may be less of an issue if you are a very well-known brand. However, if you are an SME, it is an issue. Publishers will be less keen to sign up with a brand they do not know and rely on their tracking and payment. This will further limit publisher recruitment which in turn slows down the growth and potential of the program.
The Verdict
Whether you have an in-house program or use an external hosted service, they come in all shapes and sizes, some with minimum fees, some without.
However, when using an external service, the fees grow more with transaction volume. How much more depends on who you are working with.
Is this higher cost justified?
Yes it definitely is! As has been noted in the above, when using an external network, you get a number of advantages that can help exponentially grow your program. This includes access to both an existing publisher base, an existing API integration which further widens the publisher access and the trust of the publishers overall. All of these factors help you reach many more publisher and thereby grow a broader, wider and stronger program.
Are you looking to start selling through the affiliate channel? Then get in touch with us today at Lodestar Marketing.