Note: This is a guest post by Sohel Ather. The author’s views are entirely his own and may not reflect the views of Deepanshu Gahlaut’s Blog.
If you are a new business and wants to use performance marketing in your overall business plan, starting a new affiliate program often comes into question. Affiliate marketing is an attractive proposition for businesses who want to increase their brand exposure. However, they do not usually have much information about affiliate marketing strategies and they end up spending money without getting much returns.
It’s equally important for the established businesses to get a refresher in the performance marketing sphere for continuous success.
What is Performance Marketing?
Performance-based marketing is a method of interactive advertising paid for not with a set price, but with a variable price that depends on the performance of the ad. It is a quantitative way of advertising that keeps a check on the clicks and the conversion offering a clear picture of how the marketing funds are spent and the source of the traffic/sales coming from.
So, if you are an affiliate you receive a commission for each sale you make from your website or digital network to the merchant website. Overall, it creates a win-win situation for all parties involved in the selling and buying of the products/services.
There are many terms in the performance marketing field that are synonymous and relatively defined.
- Affiliate Program is a program offered by the merchants that provide the affiliates the option to promote their products and services in return for a commission.
- Performance Marketing Tracking Platform is a tool that enables the businesses to track and control the affiliate connections and the marketing campaigns all one under one dashboard.
- Ad Network is basically an entity that plays the role of a relationship mediator between the merchants and the affiliates. This way, the merchants have enough time to concentrate on the promotion and the publishing offers.
- Advertiser/Merchant is the person/entity that owns the products or services who pay the affiliates to bring the desired traffic to their brand along with increased profits.
- Publisher/Affiliate is the one who promotes the products or services on behalf of the merchant by bringing in targeted traffic to their websites via different digital channels such as blog, email, social media etc. They get paid for each sale or for the total profits earned as per defined commission agreement and a pre-set user actions that are also trackable.
- Traffic are actions that can be measured against an ad, for instance, number of clicks, and the sales.
When your inclined to explore performance marketing, you may come across two options – register with a running ad network or purchase an affiliate program software to run your own affiliate network.
Let’s see the pros and cons of both the options. This will help us better understand the difference.
A) Buying Affiliate Program Software for Performance Marketing
An affiliate tracker offers a convenient way to efficiently manage the marketing efforts of the businesses, relationships with the affiliates, and much more. The best part is, that as a business you are able to manage all this under one dashboard. Some of the best affiliate trackers like LeadDyno helps to keep track of the clicks and conversion in real-time.
This further enables you to manage your advertising expenses and helps make an informed decision. The tracking platforms have a stark difference from those of the ad networks, as the tracking platforms offer an unbiased approach.
You would not find any offer marketplaces here, however, relationship with the affiliate is managed directly by the user. Moreover, the tracking platforms these days are self-service oriented and require management on a day-to-day basis offering a direct understanding of the affiliate relationships.
B) Get Associated with an Ad Network
As a merchant, you get a marketplace full of affiliates/publishers provided by the ad network who are interested to promote your products and services on their own blogs, websites, or marketing channels. An ad network more like an agent or a mediator helps connect the affiliates with merchants.
It not just helps the merchants to reach a larger base of the audience, but also helps the affiliates to find affiliate programs matching the type of the traffic. These ad networks usually supervise these connections and adopt the management role.
Although an expensive choice, as a merchant you get the opportunity to promote your products and services conveniently with the help of a wide range of affiliate channels.
So, while you are investing in an affiliate tracking software or signing up with an ad network, there are some important aspects that should be considered along with their pros and cons.
1. Upfront Expenses
When it comes to pricing, it’s crucial to know the different costs related to the ad networks and the tracking software. For ad networks, there are high chances of a fee for a sign up in comparison to tracking platforms that require minimal promotional expenses. The budget is mostly to market the program to acquire more affiliates.
Tracking platforms also come with a free trial period compared to ad networks that may require more expenses on advertising.
2. Expenses in the Progress
There are separate expenses in the progress as you sign up for an ad network or a tracking software. In a tracking software, the management cost of the software is what a business needs to consider as it may make a big difference in the salary of an individual working part-time or for someone working full-time. While the management expenses are higher, other expenses in the program are negligible.
On the other hand, cost of management is lower with ad networks, but all other expenses in the progress are comparatively higher. Ad networks are known to charge a percentage of the affiliate payouts or a share of the sales done through the affiliate program. While the percentages may be different, the network is as high as 30% of user purchases.
Less time is spent while managing the affiliates in an ad network, however, the ad network is paid by the tradeoff to manage the affiliates and to have less exposure over the data. A tracking program, on the other hand, needs more time, but also gives you the possession over data-supported decisions and enhancements.
4. Affiliate Relationships
There’s an open line of communication with affiliates helping to get a number of benefits while signing up for a tracking program. This direct communication with the affiliates helps build trust that makes the affiliates more interested in the offers. It also includes perks like identifying and rewarding the best affiliates and assuring them that they are in sync with the business objectives and that there is complete transparency.
On the contrary, communication with affiliates is bare while joining ad networks. In the majority of the cases, it’s absent.
So, if you are interested in a long-term affiliate program and you are vying for scalability and sustainability, investing in an affiliate program software can prove to be one of your best decisions for long-term growth.
Sohel Ather is a passionate SEO, blogger, and digital marketing strategist. You can find him and connect on LinkedIn.