Working With Affiliate Networks

This summer, our agency worked with a direct response client who wanted to buy lots of ad inventory very quickly. This client also had very firm cost-per-action (CPA) goals. We worked with affiliate networks to achieve these goals, both because they charge on a CPA basis and have plenty of inventory.

Working with affiliate networks can be tricky. It pays to learn about them and their idiosyncrasies.

Affiliate networks are different than a typical media buy negotiation. These publishers represent an advertiser’s offer to a group of affiliates they’ve selected to take part in their network.

The “offer” works this way: The advertiser posts how much it’s willing to pay for an acquisition and presents all the creative units it hopes to run for that CPA offer. That offer is displayed on the network for any affiliate partner to pick up and run on its site. Affiliate networks offer a slice of the advertiser’s CPA as the partners’ payout.

Major affiliate networks include: Advertising.com, Commission Junction, ValueClick, PrimaryAds, The Vendare Group, and AzoogleAds.com. Of course, there are many more.

Often, these networks don’t reveal that many of them represent the same inventory. One affiliate partner might be part of any or all of the above networks. What’s more, one network could present another network’s offer to its affiliates (and take its own piece of the action along the way). Run on enough of these networks, and they pretty much all become aware of your advertisers’ offers. They all knock at your door, and they’ll know if you offer a sweeter CPA deal to another network.

Since they all partner with one other, they know (or the sites within the networks know) exactly what you offer everyone else. The sites can force you to offer the same price across the board, or drop your buy in one network and pick it up in another.

Like I said, it gets kind of tricky.

What’s more, networks try to get their partners to accept their own offers over offers from other networks. This can give rise to those, “What the #$%^! is going on here?” moments.

This summer, we ran a campaign for a client and found major discrepancies between what a partner’s systems reported and what our third-party ad servers reported. Our partner showed it drove significantly more traffic than the third-party ad server indicated. This lead to frustrations all around, up to the point where that partner threatened to pull our campaign if we couldn’t figure it out.

As this went on, we got phone calls from other publishers on the buy, asking for a piece of creative they saw running. The problem? Our shop hadn’t produced that piece of creative. We dug around and discovered the partner with the discrepancy issues produced that creative. It was running without client or agency approval. Voilà, the source of the discrepancy.

Once we pointed this out to the partner in question, discussions became much less heated.

This was just one of many crazy mishaps we ran into when working with these networks. Yet for direct response clients, it’s all worth it.

Affiliate networks are great if you have a strict CPA to meet for a client. They are structured on a CPA model, will basically accept any creative you produce, and can deliver a ton of inventory if you play the market right.

My advice: Pick 10 or so networks. Offer all the same CPA, but about 25 percent less than your goal. Once the creative starts running, see who delivers the most volume and the most qualified leads. From there, optimize by giving the three or four most-promising networks a higher CPA. Grant these partners exclusivity with certain offers. In doing so, they’ll continue to work very hard to get your offer out there.

A couple warnings:

  • All affiliate networks know everything that’s going on and exactly what you’re offering.

  • Pay attention to the margin different networks take on your offer.
  • Be careful. Networks can slip extra creative into the rotation or alter materials you provided.

Some companies will deal with this market for you. But the more links you add to chain, the more is taken off the original offer. This, in turn, means the payout isn’t as high as it could be.

A final note: If you need a sudden increase in campaign volume, this is one way to do it. If you want to ramp up, just increase the payout. You can corner the market by increasing your CPA, either forcing everyone else to pay a higher CPA or pricing them out of the category altogether (much like search CPC bidding).

In doing this, you get a good idea of what the market pays for similar acquisitions in your category. Some networks, such as Advertising.com, offer a bid system. It works much like a search engine’s, allowing you to immediately change the bid if you want to increase or decrease CPA or volume.

What’s your experience dealing with the wild and woolly world of affiliate networks? Do you find them helpful? Do you use them for clients with goals other than direct response? What was the outcome? Let me know.

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