What do people start an affiliate network for? Right — to make money. As a business, an affiliate network is tempting on a whole bunch of counts, but we’ll start with the bad news. Life coaches, forgive me, but in this trade the fly in the ointment is the size of a rat, and there’s no fishing it out…
- To run properly, an affiliate network needs a solid technical backbone. Some people go straight into building their own engine — in 2022 I priced that at 20–50 grand, today it’s thirty to a hundred and fifty. Others take a ready-made solution: AlterCPA Pro on your own server, AlterCPA Cloud on ours, plus our competitors, whose names we shall not take in vain. Who’s got it right? Back in 2022, right here, I promised to “come back to this in future posts”. I did — twice, actually: first I costed out an affiliate network done in style at the prices of the day, then everything got more expensive and I had to redo the math. Here’s the fresh version: your own engine, a payroll, an ad budget, everything the grown-ups have. Read it, and the question of who’s got it right answers itself.
- From day one, the founder of a network is stuck in a vicious circle. To attract affiliates, you need advertisers. To attract advertisers, you need affiliates. There’s a way out, of course, and of course I’ve already explained it. But the problem is real. Storming in on three white horses at once and taking over the market? Sorry, not happening.
- Money. You can save an insane amount on launching an affiliate network, and we’ll get to that too. But you still need a cash reserve. More often than not, you’ll be paying your affiliates before the advertiser pays you for their traffic. So keep a buffer bag of dollars ready, or you’ll land in a cash gap. It’s a truly devilish trap that has buried more than one strong project. Including the one AlterCPA eventually grew out of. So: the advertiser is late with a payment, and you don’t have the money to settle up with your affiliates. Want to hold their payouts until the advertiser pays? Fine — then your affiliates’ turnover drops and they run less traffic. Or they leave for another network altogether and go make your competitors happy. Either way, you and your network go rolling downhill — a long way down, and probably for good.
- In some verticals, direct advertisers are hard to reach. Plenty of networks suffer badly because of it. You won’t. There’s more than one way to deal with it, and they’re all in the same article as the way out of the vicious circle.
- Fire drills, stress, grey hair, hemorrhoids and a heart attack. Our trade has all of that in bulk. Same as everywhere else in affiliate marketing. Same as in any business. Want big money? Then you’ll cope.
Well, have I scared you enough? Boo! Affiliate marketing is a brutal business — no place for pussycats! If you’re faint of heart, better not open a network of your own. Working as a middle manager or investing in the S&P 500 is a whole lot calmer. And for those who didn’t get scared but clenched their fists instead — up next, the advantages of having your own affiliate network.
So, we’ve established who shouldn’t get into this business, and why. But what is it about this trade that draws in grown men — and even grown women?
- Money. Forgive the blatant predictability, but there’s no hiding this fact. An affiliate network can make you really, REALLY big money.
- Straightforward scaling. In plenty of businesses, scaling is a painful question. Here it’s simpler. Plug in new offers, bring in new affiliates. Rinse and repeat until your inner Scrooge is satisfied. And if you get bored, you can always add another vertical.
- Stability. Some of your affiliates run traffic from Facebook, some from Google, some from TikTok, and some from teaser networks or VK Ads (that’s the former MyTarget: new sign on the door, same old traffic). Facebook is throwing a tantrum today? No big deal — Google traffic covers the dip.
- Data. Ohhh, the sheer power of information! You set up a pocket in-house media buying team and feed it everything you learn from your affiliates. The buyers then rake in extra shekels for you. And if your network works with physical goods, you can become your own advertiser. You watch which product converts with a good buyout rate and which teams send the best traffic. You buy the product and take the best traffic for yourself. There’s your extra profit — squeaky-clean legit, and maybe even in cash.
- A network owner finds it very easy to make useful connections. Social capital will come in handy either way: to improve or expand the current business, or to build a new one.
- Cash.
- Dough.
- Money.
- Serious money.
- Dollars.
- Shekels.
- Bags of gold.
- Cash.
- …
- PROFIT!
I could go on for a while — but you get the idea!