The Pros of Creating your own Affiliate Program vs. Joining An Affiliate Network

I’ve always believed that as an eCommerce business, if you want to really go for it with Affiliate marketing you’d be crazy not to use an Affiliate network – use them for the access to the software, the acounting side of things, and to give you access to a wide range of affiliates.

Well, I was recently interviewed by Arlen Robinson for his podcast eCommerce Marketing Podcast and after we finished recording we ended up having a long chat about Affiliate marketing (Arlen’s area of expertise, he runs OSI Affiliate). 

Arlen is a believer in the exact opposite of using an affiliate network – to self-host your affiliate program.

So I asked Arlen to put a blog post together explaining the reasons you might want to skip the networks and go it alone:

Having an affiliate program is great. It allows you to recruit an army of affiliates that can promote your business for you. However, there are two ways to have an affiliate program – you can host it yourself or you can join an affiliate network.

From here, you might be wondering about what you should do. When you start affiliate program should you host your own affiliate program or should you join an affiliate network?

Today, I’ll discuss the benefits of hosting your own affiliate network over joining an affiliate network. First, I’ll go over the major benefits of using affiliate software to create your self-hosted affiliate program. This will show you why online sellers go out of their way to learn an affiliate software to host their own program. After that, I’ll show you the disadvantages of affiliate networks and why people prefer self-hosted affiliate programs over them.

Benefits of Using Affiliate Software

Affiliate softwares are used to create self hosted affiliate programs. Through it, the online seller no longer needs to code his own affiliate program in his website. Instead, the software can be installed and the program can be easily launched. In some softwares, you can launch an affiliate program in just a few clicks. You just need to follow their instruction and you’re ready to go.

Why use affiliate softwares? Here are some of the benefits that I have observed.

Lower Costs

Some affiliate softwares may charge a monthly fee. But the price is significantly lower compared to that of affiliate networks. While you pay a fixed monthly rate for affiliate software, you may need to pay a membership fee along with a transaction fee for every successful referral that your affiliates do in affiliate networks.

This shows how using an affiliate software is a better option. With it, you know the amount that you need to pay per month. This will allow you to budget your expenses accordingly. And in some cases, you may even need to only pay one-time for a lifetime license. That will really save you money in the long run.

In affiliate networks, you may need to pay them a monthly fee for membership. And even if this is free, you may need to give them a percentage of the sale for every successful referral. This can take a serious toll on your profits considering that you also need to pay your affiliate commissions.

But that’s not the case for self-hosted affiliate programs. In it, you just need to pay the monthly fee (or a one-time payment for lifetime licenses) for the software along with your domain and host. And you’re done. No need to worry about paying some transaction fees.

More Control Over Your Program

Hosting your program in an affiliate network may seem attractive because you don’t have to fiddle with the settings of your affiliate program. But this will let you lose some control over your processes.

Affiliate networks tend to dictate the percentage that they’ll earn for every successful sale. This means that you have to pay them just for letting you use their network.

There can be a security issue in your affiliate program. This is because it is hosted entirely in the affiliate network’s website. This means that if the website gets hacked or has a downtime, your affiliate program will go down along with them.

The affiliate network may set some limits in your marketing methods. They may not allow you to use certain methods to promote your affiliate program. With a self-hosted affiliate program, you can promote it in any way you like. You don’t need the permission of a network to do this.

As you can see, using affiliate software or having a self-hosted affiliate program is a better choice if you want to have more control over your affiliate marketing process. Studies also show that word of mouth marketing has and always will be one of the most effective ways to spread the word.

No Risk of Competition Exposure

One of the irritating things about affiliate networks is that they often ask affiliates to sign up to their website before enlisting them as ‘affiliates’. On the surface, it may seem like a simple method. If they want to be your affiliate, they sign up, see a form and sign up to the network. But what you don’t know is that this opens your affiliate to a list of affiliate offers that they can promote.

By self hosting your affiliate program, your affiliate is yours alone. He doesn’t get to view a list of other products that he can promote in your website. All he will see is your affiliate program – nothing more. So his focus is on you alone.

Whereas, affiliate networks exposes one affiliate to a long list of possible products that they can sell. This can instantly ‘steal’ away your affiliate to go to another product with a higher commission and more attractive benefits.

You Can Customize Your Program to Your Own Needs

As the industry of online marketing grows, the needs of online marketers have also evolved, From signing up to an affiliate network just to sell something, there are now some needs such as hosting contests for affiliates, creating reward programs and even customizing an entire affiliate program for really specific needs. Since affiliate networks are managed by the owner, you cannot do all forms of customization on their system. In fact, they may already have a set of rules that you need to follow. Full customization can only be done in self-hosted affiliate programs that have softwares that are open to developers.

You can Protect your Affiliates and Customers

As much as you want to keep the details of your affiliate and customer accounts secure, you cannot do that in affiliate networks. In fact, all affiliates in their system are considered ‘their’ affiliates and not yours. This means that they can promote to these people via email without your consent. By joining an affiliate network, you are joining a community. While this may allow you to connect with more affiliates and sellers, it can also expose your affiliate information.

You can Strengthen Your Brand

Whose brand are you promoting when you promote your affiliate program? Are you promoting a link in your domain or are you promoting a link in your affiliate network? Affiliate networks will often have a page for your program. This can be in a subdomain or page in their site. While this is convenient for you, it may not do so well with branding. This is because it shows that you are depending on a network to market your product.

Having a self hosted program strengthens your brand. It allows you to promote a link from your site. Instead of promoting a link from an affiliate network, you are now promoting a page right from your own domain.

As you can see, self hosted affiliate programs truly has their own benefits. Next, we’ll look into the main reasons why some merchants don’t like affiliate networks.

Disadvantages of Affiliate Networks

While affiliate networks are popular, there is a reason why some merchants avoid them or quit them altogether. In this section, you’ll find out some of the disadvantages of affiliate networks.

The High Costs

The major disadvantage of affiliate networks is the cost. While some of them may seem free, you’ll be surprised on how much they can get from every successful transaction that you made with them. In worse cases, they may even have a monthly fee. Now if you are a struggling entrepreneur who is on a budget, this may not be as attractive to you considering that you also have to pay your affiliate commissions on top of your membership fee and transaction fees. Once you compute them all, you’ll realize that it is just too much.

The Registration Barrier

All affiliates are required to sign up in the affiliate network’s website. Else, they will not be able to promote your program. With this, each and every affiliate has to go through your affiliate network. All of their details will be registered in the network and you’ll have no access to this information. This registration barrier is often enough to drive merchants to look for self hosted options.

The Increasing Prices

If you think that the high cost is bad, you’ll be surprised that some affiliate networks even charge increasing prices. In this pricing model, they charge a higher fee based on the number of affiliates or referrals that you have made. They don’t quote a fixed fee. Instead the price goes higher based on performance.

As a merchant, you’ll not like this. In fact, anything that can lower your profits should be avoided. This is the reason why most merchants forego affiliate networks for self hosted programs. Self hosted programs are so much cheaper and predictable.

The Affiliate Exposure Problem

There is also a threat in competition in affiliate networks. As I have mentioned earlier, every affiliate that signs up don’t just sign up to your program, they also get to sign up to other programs as well. It doesn’t matter if they are in direct competition to your product, the fact that your affiliate is exposed to so many different affiliate product options is just not good for business.

The Lack of Customization

Customization is just not possible with affiliate networks. In fact, there is not really much you can customize aside from your own details. Networks will have everything for you – your affiliate page, your offers page and the like. But you’ll not be able to customize anything.

The same is true for the actual affiliate program. Self hosted programs are powered by affiliate software that can be customized fully but affiliate network programs can’t be customized at all.

So if you want to customize your program and have complete control over the rules, self host your affiliate program instead.

The Lack of Credibility

When you promote your affiliate network link to other people, what do they see? Often, they’ll see a small-time marketer who has no money to host his own affiliate program and only has the time to sign up to an affiliate network just to start making money.

Promoting a link outside of your brand often dilutes your credibility. It is far better to promote a page in your domain than to promote a page in a well known affiliate network. Marketers or ecommerce sellers know this. So they choose to host their own affiliate program instead. It doesn’t matter if it will take them some time to set up the program. For them, it is worth it for it will instantly boost their credibility.

There are truly many reasons why merchants prefer self hosted affiliate programs. One of the major factor is the cost. Lower costs means higher profits. Every business owner who want better profits will just skip the network and go for the affiliate software. The monthly fees doesn’t even matter. What matters is the overall cost which is significantly lower in self hosted affiliate programs.

Will You Start Self Hosting Your Affiliate Program?

Is your affiliate program self-hosted? If not, you are losing money. Self hosting your affiliate programs is significantly cheaper than affiliate networks. Affiliate networks often charge a transaction fee for every sale. This can add up especially if you are getting thousands of orders each day.

Also, there are some things that you can only do in self-hosted programs. Self hosting your program can help build your credibility and allow a lot of flexibility. With it, you can have your program right from your own domain and customize the look and feel of your affiliate pages. Also, you can choose a software or edit the software based on your needs. There will be no rules that govern over you as in the case of affiliate networks.

What do you think? Are self-hosted programs for you? Tell me all about it below.