Advertising

Affiliate Program Costs, a Biased Opinion

Patrick Hearron

This is my first post on the HasOffers Blog, though I’ve been with HasOffers for over two years.  I promise to get more of these out in the future.

So what inspired me to finally write one?  I’ve started to recognize that on almost a daily basis people ask me what it takes to make their affiliate program successful.  Although, HasOffers is a tracking solution and not a business plan, I really like offering advice to our clients to help them be more successful. I’m also going to share some research on competitors’ costs.

With that said, I suggest there are three over arching factors that impact the cost of creating a thriving affiliate program:

1. The Product(s) or Service(s) you are Selling

Questions to ask yourself:  Where did you find it? Is it new? What is the price point? Do you own the rights? What are your margins?

You probably already see that the first and greatest cost you are going to accrue is time.  Deciding on the right products or offers is extremely important and the first step toward creating a successful business model.  You need to find an offer with the right margins, the right market, and that people love.

The products you decide on do not have to be your own, in fact it is often easier to find a brand that has already explored online marketing and found some success. Maybe the product has an online presence but has not yet tried affiliate style marketing.  Maybe they are a mom and pop Ecommerce site and need an effective way to drive traffic to their store.  Either way, once you have found the right product you will need to establish the right relationship with the merchant and make sure that you get the absolute best margin possible.

If you already have your own product or service, then you have just saved yourself a bundle of time, but don’t forget that you still need to come up with the right online offer for that product.

Further questions to answer: How much can you pay affiliates?  Do you have designers that can create optimized banner creatives?  Do you have great landing pages for affiliates and an optimized sales funnel?

2. How to Advertise

Question to ask yourself: What type of person wants this product?  Why do they want it? How do you get this product in front of that person?  Do you need to make creatives? How do you find the right partners to work with?

You must absolutely know your product to market it to others and to help your affiliates advertise it correctly.  Who is the demographic that buys your product or service?  Are they middle-aged mothers, preteens, or 18 year old males?  Are they interested in movies, do they like to exercise, or are they looking for love?  Understanding this will help you target affiliates with the right types of traffic.

Start connecting to publishers by reaching out to blogs, product review sites, and other website owners.  You might be able to create some direct relationships with excellent, untapped traffic sources, in the process, you will also learn a lot about the right types of traffic and who the major players are in your niche.  Building these contacts through email works fine, but don’t hesitate to pick up the phone and establish a real human connection.  Also, don’t be afraid to use social media tools like twitter, linkedin, and facebook to establish these relationships.  You might even spend the money and attend an industry conference or affiliate event.  As you continue to develop these relationships, make sure they stay in line with your brand so that you don’t end up with negative press or misrepresentation.

Another way to get up and running quickly is to reach out to established “affiliate networks” to run your offer. These networks have built in resources to distribute your affiliate marketing campaigns quickly and accurately to affiliates that can generate you the right types of customers.  Make sure you connect with your affiliate manager personally over the phone.  It is their job to help you succeed.  Their margins can be higher than direct relationships, but the volume will almost always make up for it.  Don’t be afraid to give an enticing initial payout to really give your offer some momentum with affiliates.

3. Infrastructure and Overhead

Questions to ask yourself:  How are you tracking?  How will you pay affiliates?  How will you attract the right publishers and affiliates?

You must look at the software cost to run an affiliate program and the bankroll you need to start paying affiliates.  Any software you buy should have fraud detection technology, a brand monitoring report so you can find the final resting place of your ads, and a 2-way API so you can integrate with other software such as a CRM or billing service if needed.
Generally speaking at HasOffers we have around 3 main competitors.  I had a client send over research on the cost to run 1 million clicks per month on each of these other tracking platforms.


***Be advised this could have changed since this was completed earlier this year,  subsequently, I am going to leave off the names of each provider***

Each of our competitors charged a onetime setup fee:
Competitor C – $3,500 –  one-tme
Competitor D – $4,000 – one-time
Competitor F – $6,000 –  one-time
HasOffers – Zero Setup Fee

HasOffers has no setup free for any hosted account. Why do other tracking platforms charge a signup fee?  One theory is they use old technology that makes it more difficult to create an account.  Again this is only a theory and remember, I am biased.

Here are the Monthly fee’s charged for around 1 million clicks /month from our Competitors:
Competitor C – $1,500/month and $0.003 cents per click over that
Competitor D – $1,600/month and $0 .02 per conversion over that
Competitor F – $2,750.00/month and $0.003 cents per click over that
HasOffers – $799.00/month

HasOffers.com $799/month for 2 million clicks and .0004 cents per click thereafter. Plus, we have a Professional Edition below this at $279/month for up to 500 Thousand Clicks. HasOffers.com is obviously the most affordable so what about features or the technology?  Again HasOffers had more features and better documentation than the competitors we looked at. Here’s a quick laundry list of features we provide:

http://www.hasoffers.com/compare-features

Here’s our wiki for documentation:
http://www.hasoffers.com/wiki

Don’t be a fool.  Just because something costs more or is older does not make it better, especially when it comes to technology.  If you don’t agree; I am selling my Motorola pager,  bought in the fall of 1999 for $299. Contact me at [email protected] if interested.

In my biased opinion, running a successful affiliate program, takes time and smart money management. Time and money should always be considered in finding the right product, creating a marketing plan, and of course an effective tracking platform. Let me or another member of our Business Development team know if you want help setting up a network with HasOffers.com.  Or if you have any questions you can always reach out to us at [email protected].

Author
Patrick Hearron

Patrick is currently VP of global sales for HasOffers. He has worked in business development with HasOffers for the past two years. Previously, he worked casting for hit television shows and consulting to small startups, quickly developing a valuable business savvy that helps HasOffers clients grow their profits everyday. He holds an MBA in organization development, and his combined experience plus education give Patrick a keen sense for great ideas and how to turn those ideas into thriving online businesses.