[{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.adamriemer.me\/affiliate-marketing\/affiliate-networks-evolved-know\/#BlogPosting","mainEntityOfPage":"https:\/\/www.adamriemer.me\/affiliate-marketing\/affiliate-networks-evolved-know\/","headline":"How Affiliate Networks Have Evolved & What You Should Know","name":"How Affiliate Networks Have Evolved & What You Should Know","description":"While Affiliate Marketing has changed from a Merchant\u2019s and an Affiliate\u2019s perspective with the tools, technologies and promotional methods available, Traditional Affiliate Network models have also begun to evolve into new business models as well.\u00a0 Some of the traditional affiliate networks have begun to evolve and offer more options for Affiliates and Merchants, while some […]","datePublished":"2014-05-07","dateModified":"2014-05-07","author":{"@type":"Person","@id":"https:\/\/www.adamriemer.me\/author\/adamriemer\/#Person","name":"Adam Riemer","url":"https:\/\/www.adamriemer.me\/author\/adamriemer\/","identifier":2,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/fda62f751f2a6c2ec2b079fedff69720852e4a65633212ffb11832454c29160a?s=96&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/fda62f751f2a6c2ec2b079fedff69720852e4a65633212ffb11832454c29160a?s=96&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"Adam Riemer Marketing, LLC.","logo":{"@type":"ImageObject","@id":"https:\/\/www.adamriemer.me\/wp-content\/uploads\/2017\/10\/arm-logo-2.jpg","url":"https:\/\/www.adamriemer.me\/wp-content\/uploads\/2017\/10\/arm-logo-2.jpg","width":600,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/www.adamriemer.me\/wp-content\/uploads\/2014\/05\/new-affiliate-network-model.jpg","url":"https:\/\/www.adamriemer.me\/wp-content\/uploads\/2014\/05\/new-affiliate-network-model.jpg","height":968,"width":948},"url":"https:\/\/www.adamriemer.me\/affiliate-marketing\/affiliate-networks-evolved-know\/","commentCount":"1","comment":[{"@type":"Comment","@id":"https:\/\/www.adamriemer.me\/affiliate-marketing\/affiliate-networks-evolved-know\/#Comment1","dateCreated":"2014-05-25 15:14:42","description":"Hey Adam,\n\nI happened across your side from list of top 25 affiliate blogs.  I'm in a bit of a pickle and wanted to see if you might be able to share some insight.  I've been brought on board to help an Italian jewelry company create their online presence as well as put together a comprehensive advertising program.  Mind you the website I can do no problem, and they people I've worked with are great.  They have a bit more work to do, but its 90% there.\n\nThe real problem is how to market their products.  They are old school but want to go heavy into affiliate marketing.  Their plan being reach out to bridal shops, photography studios and wedding venues and really anyone remotely involved in weddings.  The goal is to sign up these shops and offer them 20% commission on anything that is sold through them.   That is these shops give out the companies coupon of $200 called \"Venezia Cash\" and if the client eventually buys the shop gets their commission.\n\nI think financially they are giving an amazing offer when you consider the average price is around $5500, so commission would be $1100 on just one sale.   So I don't see any problem with getting people signed up to do this.  But honestly I don't know where to begin?  Do I email these companies? Do we call them?  Are there other affiliate channels that would work just as fine?\n\nAnyway, hope this find you well, any advice would be very appreciated.\n\nThank you","author":{"@type":"Person","name":"Justin","url":""}}],"about":["Affiliate Marketing"],"wordCount":2958,"keywords":["Affiliate Networks","new affiliate networks","traditional affiliate networks"],"articleBody":"While Affiliate Marketing has changed from a Merchant\u2019s and an Affiliate\u2019s perspective with the tools, technologies and promotional methods available, Traditional Affiliate Network models have also begun to evolve into new business models as well.\u00a0 Some of the traditional affiliate networks have begun to evolve and offer more options for Affiliates and Merchants, while some are becoming dinosaurs.\u00a0 This post is more for merchants to help them know what is coming from some of the New Affiliate Network models and the new solutions they provide the industry with.\u00a0 It can also help both Affiliates and Merchants rethink the traditional affiliate network model and start to try some of the new Affiliate Network technologies out there.\u00a0 It could also be a good read for Affiliates if you want to see another side of the industry you work in.I’m going to start with a basic overview of what a traditional affiliate network model is and then compare it to the new and evolving affiliate SaaS (software as a service) model.\u00a0 Afterwards I had the pleasure of talking to someone who helped to invent and build one of the first traditional affiliate networks and has now begun reinventing the Traditional Affiliate Network model with a new affiliate network model that can definitely be a huge win for both Merchants and Affiliates.\u00a0 It’s interesting to see what is going on and if you manage a program, you may want to pay close attention to some of the things in this post because it could save your company a lot of money while not having to remove many, if any partners.What are the Differences Between Traditional Affiliate Networks and New Affiliate Models?The Traditional Affiliate Network Model.Agency\u00a0– A traditional affiliate network model works like an advertising agency.\u00a0 The traditional affiliate network at some point decided to start managing programs instead of being a tracking solution with cookies and basically competes with agencies and in some cases can try to take the job of the in house affiliate manager.Side note:\u00a0 (Letting an affiliate network manage an affiliate program in my opinion is always a horrible idea.\u00a0 I have yet to find one where the Merchant’s best interest or a value adding Affiliates’ best interests are kept in mind.\u00a0 I am happy to audit your program for you if a Network has been involved and tell you if anything that could be causing financial damage to your company is currently happening.)Networks have a large publisher base which is appealing to Merchants, but that same publisher base is available across every major Affiliate Network so there really is no actual difference affiliate-wise in the traditional affiliate networks.\u00a0 There is one small exception with one of the traditional affiliate networks (which I consider the\u00a0best traditional affiliate network) that enforces a stricter policy towards some of the negative practices like adware.\u00a0 This means that some of the largest and most well known Affiliates on the traditional affiliate networks are not allowed in this one.\u00a0 It doesn’t mean all of them are not allowed, but some of them aren’t.\u00a0 This affiliate network also exhibits and recruits at blogging shows, content shows and other places you don’t normally find the other traditional affiliate networks at which builds their user base of value adding partners with their own following to add value to the merchants on their network.Pricing\u00a0–\u00a0 The pricing model of a traditional affiliate network is based on a percentage of sales generated or commissions earned.\u00a0 Many of the networks used to go off of the Affiliate’s Commissions, but some have changed for very strategic and tricky reasons.\u00a0 This section can save you a lot of money if you are a merchant!\u00a0 I go through the largest way to lose money into the best way to save money.Gross sales – Move your network fees to Net Sales.\u00a0 The reason you want to do this is because if you get returns, fake orders, etc… you aren’t making money so why would you pay the Network, the Affiliates and any bonuses to agencies or other parties when you didn’t earn anything.\u00a0 Net Sales is much better if you are paying on a percentage of sales, but still not the best option.Net Sales\u2013 This is better than gross sales because you are only paying on full sales that are commissionable.\u00a0 However, this is also a huge waste of money if you got talked into changing from paying network fees that were based on Affiliate Commissions.Affiliate commissions – This is the best option if you use a traditional Affiliate network for your program.\u00a0 I don’t know for sure, but probably the main reason some traditional affiliate networks moved away from this is that they lost money when people realized that coupon sites ranking for your url + coupons don’t add much if any value or to the merchant.\u00a0 When merchant’s realized this they started lowering the commissions on these sites ranking for their trademarks or urls + coupons or setting their commissions to zero.When the commissions were lowered from the standard commission rate to a fraction of what it was, the traditional affiliate networks lost money which could be a reason why some of them have changed their pricing models to be based off of sales instead of what the Affiliates earn.\u00a0 By changing to Gross or Net Sales, they are able to make more off of the merchants even though there is still little to no value being added and the Affiliate’s commissions have been decreased.What does this mean for you as a Merchant?They’re making money off of the net sales even though you already realized that you have low value partners or no value partners that are still in your program.\u00a0 Even though those partners are getting paid less, now your network fees have increased because it is based off of net sales instead of what the Affiliates earned.\u00a0 Now you should be asking yourself why should they make more when little to no value was added and is also the reason you decreased or removed commissions from the partners.\u00a0 When I have a % of sales as part of my compensation, as of now I only have it on value adding partners and very clearly explain what is value adding and what is not which is why my clients trust me.Regardless of how you are charged by an affiliate network, you should always calculate the fees your are paying them as both a percent of sales and a percent of commissions. This way you can make sure you are getting a fair rate. For example, if you pay affiliates 3% of sales and your network charges you 1.5% of sales, this works out to be 50% of commissions \u2013 which frankly is not a good deal. Conversely, if you pay affiliates 15% of sales and a network charges you 30% of commissions, this equates to 4.5% of sales \u2013 again not a competitive rate.Tools –\u00a0Traditional affiliate networks offer tracking, affiliate payments, and a few bells and whistles.\u00a0 Some affiliate networks offer internal email tools, while others offer more advanced things like storefronts, video players, datafeed integrations, and widgets.\u00a0Unfortunately most of the \u201cinnovation\u201d in the past decade has been evolving the same tools. But as we\u2019ll see next, that this is changing with a new breed of affiliate network models and marketing management solutions.The New Affiliate Model \u2013 a SaaS solution.A Tracking Solution.\u00a0 Not an Agency \u2013 the new age of affiliate marketing is dawning and there is a paradigm shift regarding the role technology plays. In the old world model, the network is both the technology and the services bundled together. In the new world the technology is decoupled from the services providing advertisers two benefits. 1) A solution that is focused on technology innovation and thus creating solutions for advertisers, agencies and affiliates to help them grow their businesses. 2) A better service model leveraging third-party agencies, which eliminates any potential conflict of interest the networks may have between their business\u2019 success and the advertiser\u2019s success.Pricing \u2013 The network model is basically a media model \u2013 the more you spend, the more you pay the network. For example, if you payout $100,000 to affiliate partners on $1,000,000 in sales on a traditional affiliate network model, you will most likely pay the network $20,000 – $30,000. If you double your sales, those fees double as well. However the new SaaS pricing model is a fixed licensing fee based off of technology usage (typically clicks and\/or conversions). So for that same $1M in sales you might only be paying a fraction of the network fees. These costs savings can be reinvested into your affiliate program to cover the costs of more internal resources, adding an agency, or doing more placement buys with top affiliates, all of which will drive more topline revenues helping to make you more profitable.Tools \u2013 If there is one thing that hasn\u2019t changed in the affiliate industry, it is new features and tools to automate manual processes and make Affiliate Marketers\u2019 lives a little easier. For years we have all lived with the same basic toolset that existed 10 years ago, with the exception of a few vendors for datafeeds, video and coupons. The new SaaS solutions are driving innovation by building out better reporting capabilities, tracking, and other tools that provide more controls and data for Merchants and Affiliates.\u00a0 These new systems help automate manual processes and give you more data to better optimize your ads, posts and audience which means you can potentially make more money.The New Affiliate Network Solution – An Interview With Todd Crawford.Now I’d like to introduce you all to Todd Crawford who was one of the original people at Commission Junction and helped to develop this multi-billion dollar industry from it’s infancy to it’s continued growth which has yet to peak.\u00a0 Todd is a long time Affiliate Network and Affiliate Veteran who has been through almost every change and evolution the industry has seen.\u00a0 Because he was one of the original people to build one of the first traditional affiliate networks and is also one of the people who built the new affiliate model, he is the perfect person to talk about the evolution of the affiliate network, why there needed to be an evolution and what we can expect for the future.\u00a0 (The opinions and statements in the interview may or may not reflect the opinions and ideas of Adam Riemer Marketing, llc.\u00a0 They are solely here for educational purposes.)Q:\u00a0 Todd, you helped to develop the traditional Affiliate Network model and have now moved onto to be the innovator of a brand new way to provide solutions for the performance marketing industry.\u00a0 What caused you to want to reinvent the wheel, take it to the next level and how have you begun to do this with your new affiliate network Impact Radius?A:\u00a0 When I left CJ in early 2006, I felt that the core technology was commoditized and innovation had stagnated.\u00a0 When I got together with my old partners from CJ to build Impact Radius, we now had the opportunities to build what we always thought the next generation of performance marketing needed.\u00a0 This would include improved tracking (i.e. multi-layer tracking), a more cost-effective pricing model, more transparency into data and attribution, the ability to have more control, and everything else we always wanted to include.Q:\u00a0 Can you tell me a bit more about the multi-layer tracking options available on Impact Radius and why this is better than the traditional affiliate network model?A:\u00a0 We support tracking using cookies like most online advertising, but what we do differently is that we have additional capabilities like tracking on the merchant’s domain instead of a generic network domain.\u00a0 Tracking on the merchant’s domain provides a higher level of tracking integrity (network cookies are commonly washed by anti virus or cookie\/ad blocking software) because the cookies are set within the advertiser\u2019s domain. \u00a0 While a browser can block a network cookie, it is highly unlikely that they would block a cookie directly from the merchant’s own domain.Cookie blocking software like anti-virus and malware protection look for the common ad serving and tracking domains (i.e. affiliate network, ad servers, etc.).\u00a0 Because we can use the merchant’s domain it will not trigger the ad blocking so the cookie remains in place and you can track more sales and data.In the event that the cookie is compromised at the point of checkout then our fingerprint tracking technology matches the click to the sale to ensure proper crediting of the conversions.\u00a0 Our fingerprints combined with our domain-based cookies help keep track of more of your Affiliate sales. We can also include other marketing channels along with the affiliate channel so you can get more data and make better decisions with your marketing budgets which is critical for today\u2019s savvy marketers.Q:\u00a0 Historically Affiliate Networks use a percentage of Net Sales or Affiliate Commissions as a revenue stream.\u00a0 Why do you feel this shouldn’t apply in today\u2019s market?A:\u00a0 Because technology has become commoditized, it doesn\u2019t makes sense to charge a percentage of revenues or commissions.\u00a0 Advertisers should be paying based on the usage of the technology.\u00a0 We have a usage model that provides you with an allotment of clicks and conversions to meet your specific needs.\u00a0 So with a usage based pricing model, the costs are a fraction of what you would pay a traditional affiliate network model.Q:\u00a0 You have different fees based on the way the partner finds you, how did you decide this was the right way to go?A:\u00a0 The main reason an advertisers works with Impact Radius is because they know who their top partners are and already have a direct relationship with them. These partners are critical to the success of the channel because the typically drive 90%-95% of the volume. These partners are migrated over as \u201cdirect partners\u201d and are covered by their SaaS licensing terms. There is always a desire to find new partnerships that you are not aware of.\u00a0 That is why we created the marketplace, which gives advertisers the ability to discover new partners.\u00a0 If an advertiser finds a new affiliate in the marketplace, they pay an incremental fee (a percentage of affiliate commissions) just on those partnerships.Q:\u00a0 You mentioned that there is more transparency with your new Affiliate Network model than a Traditional Network Model, can you tell me a bit more about that?A:\u00a0 Transparency is a big part of our value proposition. \u00a0Like the marketplace I told you about before, we do not want to get in he middle of two companies that want to do business together.\u00a0 You have access to all of the information you need to do business together \u2013 Impact Radius doesn\u2019t obfuscate any of the information.\u00a0\u00a0We also provide you with more information about how we track the sales \u2013 were they tracked by fingerprints, promo codes, cookies, etc.\u00a0 Data is a two way street and both the advertiser and their affiliates need to see the whole picture to understand where there are revenue opportunities or where they might be leaving money on the table.That’s just one data point.\u00a0 We try to be as transparent as possible.\u00a0 We try to provide as much data as possible so you know what’s going on.\u00a0 Another example is giving you traffic and conversion by device.\u00a0 If you have a lot of traffic but little to no conversions from mobile phones, you can now test and see what is happening, provide a tracking solution or a better experience for a mobile device.\u00a0 This helps your company by identifying potential issues and letting you optimize in order to strengthen the overall health of your affiliate program.Q:\u00a0 You provide solutions for other channels besides Affiliate.\u00a0 Can you elaborate why this is a solid piece of the future of Affiliate Network models?A:\u00a0 Yes, we do. We have found that it is vital to see the whole picture and not just what is happening in the affiliate or paid search channels. From an affiliate manager\u2019s perspective, it is important to understand not only how the customer is interacting within the affiliate channel but how they are also interacting with other marketing channels. With the exception of affiliate, all other media channels have a cost associated with them regardless of whether revenue results from the marketing dollars. For example, if you buy 100 clicks from Google, you pay for those clicks even if they never resulted in a sale. So it is important to not only know when an affiliate was credited with driving a sales but also when they were involved and you didn\u2019t have to pay them. These assists can help you better understand the true value of your affiliate partners. Outside of the affiliate channel, the other marketing team members also want to know how their media is interacting and affecting overall costs and revenues. These types of insights help everyone see the same picture and allows them to compare \u201capples to apples\u201d more easily and more accurately. The point I want to make clear is that if you aren\u2019t able to see the whole picture, you cannot optimize the affiliate channel correctly.I’d like to thank Todd for taking the time to talk to us about the new Affiliate Network Model.\u00a0 I highly recommend you check out Impact Radius so you can see the new features mentioned in the interview and you can follow Todd and Impact Radius on Twitter at @ToddCrawford & @ImpactRadius."},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"Affiliate Marketing","item":"https:\/\/www.adamriemer.me\/affiliate-marketing\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"How Affiliate Networks Have Evolved & What You Should Know","item":"https:\/\/www.adamriemer.me\/affiliate-marketing\/affiliate-networks-evolved-know\/#breadcrumbitem"}]}]