The difference between a value added service and an Affiliate Program

I absolutely love Affiliate marketing and Merchants love when they have value adding programs that add incremental value.  What some merchants and many webmasters don’t always understand is that there are different ways to approach recruitment and different tools that aren’t 100% Affiliate Marketing, but they are services with payouts and not actually pure Affiliate relationships.  I’m going to use travel blogs and Travel Agents for this example and define what each of them are.

  • Affiliate programs – Affiliate programs are where the Affiliate places a banner or text link on their site, or even a storefront and then sends the end user to a merchant for the transaction.  (There is a lot more to it, but this is a basic description for this post’s needs.)
  • Value added services – A value added service is something that the webmaster or company owner would have provided anyways because it adds value to their end users and something that could get the user to come back and refer friends to their site.

So here’s the issue and a couple of examples.

Since webmasters and company owners would already place these value added services on their sites free, the owners of the tools probably won’t pay for sales or the use of their tools.  It is something the webmaster will benefit from because of the additional tools and services they can provide their visitors with.  At the same time, some tool providers are willing to pay the webmaster or company money for the sales just as a way to say thanks.

The reasons that this is not 100% Affiliate Marketing when there is a payout is that:

  • The webmasters and company owners would have placed the tool on their site anyways because it adds value to their visitors.
  • The actual service or information is being delivered on the webmaster or company’s own site and not a Merchant’s site.
  • There doesn’t have to be a payout.

The problem when you have one of these services and you are beginning your distribution campaigns is that the minute you say payout or commission, everyone thinks Affiliate Marketing and forgets that they are adding a new offering to their website visitors.  Some of the webmasters and company owners are also forgetting that by offering this tool they could provide a better user experience and create more referrals because of the service.  Now I will admit, many Bloggers and Webmasters have been burned by Affiliate Marketing when they joined programs that weren’t managed right.  This is the reason they may be cautious if you mention a payout.  The funny thing is that when you don’t mention commission and you just offer them the free system, you get a much better response rate.  To me it doesn’t make any sense why someone would put it up for free, but when you offer them a payout on sales to be nice they all of the sudden don’t want to do it.  Anyways, regardless of reasons, there is a big difference between a site value adding service or tool that pays a commission and Affiliate Marketing and you should approach recruitment and distribution differently.

They are both very similar since they payout, but one has the transaction taking place on a Merchant’s site and the other takes place on the actual Webmaster, Travel Agent or Blogger’s site.  To pitch an Affiliate program you talk about commissions, to pitch a tool that adds value and has a payout, you talk about the better user experience and additional offerings the website owner or company owner will be able to offer.  Here are two examples for Travel Agents and Travel Bloggers.

Currency Converters. Many travel sites have a travel tools section.  One of the most common tools you may find is a currency converter.  Not only do they place them for free because it adds value to their visitors, but they don’t think twice about it.  The currency converter shows conversion rates in real time on the Blogger or Travel Agent’s websites and enables their clients and visitors to see how much their money is worth for the countries they are traveling to.  It is a value added service that usually does not have a payout and that webmasters and company owners constantly place on their sites anyways.

VisaHQ’s Travel Agent plug ins.  I do have to be honest and let you know that I am currently managing their Travel Agent and Travel Blogger program.   The VisaHQ tool enables Bloggers, Travel Agents or anyone with websites dedicated to specific countries to have their visitors apply for US Passports and travel visas online and on their site.  Instead of just showing a widget or banner ad, VisaHQ will white label their system with your sites branding and you can install it through an iFrame or other means to make it so that your visitors and clients never have to leave your site.  This is something that not only ads value to your end users, but VisaHQ also pays you for each sale.  The tool itself is a value add that people want, the payouts are just VisaHQ’s way of saying thank you for using the tool.  VisaHQ also has an Affiliate Program, but you don’t get the tools with it.  Instead you get widgets and links like you would find in a regular Affiliate Program.

There is a big difference between a value adding tool or service for your website and being in an Affiliate program.  The tool will add value to your site directly, while an Affiliate link will drive the person to the Merchant’s site.  You could easily argue that customers will refer other people back to a coupon site because they found the best coupons, or that because you have a storefront on your Affiliate site or blog that you could get referrals if someone wants to buy the same thing you bought.  The difference is that the person still left your site to buy that product and can just as easily refer them to the Merchant directly.  In the case of the coupon site, the Merchants are adding value to you by giving you the code and you are making commissions, but the purchasing and sales are not happening on your site so that is why I am not counting this in this post.  You could also argue out that deals engines add value because they provide deals on airline tickets or hotels, but at the same time, if they are not also giving you the booking portal for your site, you are still sending your visitors elsewhere instead of keeping them on your site.  The difference between a value adding tool with a payout and an Affiliate program is that the tool lets the purchase and everything happen on your site (for the most part) and with an Affiliate program, you are referring the person somewhere else and the end user is aware that they have left your site.

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4 thoughts on “The difference between a value added service and an Affiliate Program”

  1. Hi Adam,

    You’ve highlighted a very fine distinction. In fact, if more merchants focused on providing value-added tools and services that website owners and online marketers could offer their audience, I suspect their affiliate programs would be much more successful.

    Interesting your choice of tools to discuss here: I used to have a money converter on my site as a convenience to those in my readership who traveled internationally. (I think I removed it because of some security flaw but this is a reminder to find another one.)

    Enjoyed this article. Too bad I’m not in the travel niche! 🙂

    1. Thanks Vernessa. If more merchants could find a value or service to offer they could not only get more solid relationships, but they could get more long term placements because of the relationship where they are both adding value to each other.

  2. White Label Travel Affiliate

    Hi… you have explained very fine and clear distinction between a value added service and an Affiliate Program”. I liked your post.

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