So you’ve decided to create an affiliate program for your business. Congrats! 38% of marketers view affiliate marketing as one of the best ways to acquire new customers (according to the National Retail Federation) and it even drives as many e-commerce orders as email in the US (according to Business Insider). These are just a couple of examples that show you’ve made a very wise decision (check out our list of affiliate marketing stats for more).
But before we get too carried away, you have some very important decisions to make. In fact, one of the first decisions you’ll need to settle on is whether to run an in-house affiliate program or to use an affiliate network.
To make matters easier for you, we’ve laid out the main differences and the pros and cons of each. Enjoy!
What is an in-house affiliate program?
An in-house affiliate program is exactly what it says on the tin: an affiliate program that’s run… well… in-house!
Basically, it means you’ll need to source or develop your own solutions, tools and processes for running your affiliate program – from finding a way to recruit affiliates to choosing the tools to track and measure results. This might sound a little daunting but don’t worry, it’s a lot easier than it seems.
Firstly, there are tons of ways to find affiliate marketers that are right for your brand, from searching Google to using social media or (in our opinion the quickest and easiest solution) signing up with Breezy. And second, although some big brands like Amazon build their own software, most brands use affiliate link tracking software to run their in-house programs.
There’s a whole range of affiliate tracking software to choose from, but for the most part, they’ll give you all the tools you need to run your affiliate program in-house. This includes generating affiliate links, tracking leads and sales, and paying your affiliates for their activities. It even includes giving your affiliates access to their own dashboards where they can see how their promotions are performing. Easy!
Running your affiliate program in-house will give you the most control over the affiliates you work with, how you work with them and how to reward them. Not only that, but running an in-house affiliate program using affiliate link tracking software tends to be a lot cheaper than the alternative. Which brings us onto...
What is an affiliate network?
Running your program using an affiliate network is the main alternative to running an in-house affiliate program. An affiliate network is a platform that acts as a kind of middle-man between brands and affiliate marketers. Rakuten and Awin are just a couple of examples.
Brands that sign up can create a program on the platform. And affiliates that sign up can browse the network to find brands and products that they’d like to promote.
The whole relationship can be managed from within the network – from tracking results to managing payments – in much the same way that you’d manage a program in-house using affiliate link tracking software. However, they’ll usually take a commission of around 30% of what you pay your affiliates for the pleasure.
So, what’s the benefit of using an affiliate network?
Well, the main benefit is that affiliate marketers who are on the network can easily find and approach you – rather than you having to find and approach them. However, for this to be of any use, there’ll need to be relevant affiliates on the network in the first place.
The majority of the affiliates you’ll find on these networks are Instagram influencers. These kinds of affiliates have their benefits but they also have their downsides, including the fact that their promotions quickly disappear into the platform’s algorithms rather than gaining more traction and traffic over time (as you’d expect from affiliate bloggers using SEO). Read our guide to Instagram paid partnerships to see what we’re talking about.
Not only that, but on popular affiliate networks, you’re likely to face a lot of competition from other brands all vying for the affiliates’ attention. So, even though affiliate networks supposedly deal with discovery for you, you’ll probably still end up doing a fair bit of affiliate discovery and recruiting yourself.
Don’t get us wrong, we’re not saying that affiliate networks can’t be effective. All we’re saying is that the main draw – affiliate discovery – isn’t without its flaws.
In-house affiliate program versus using an affiliate network
As you’ve probably gathered, in-house affiliate programs and affiliate networks both have their positives. But neither is all roses and sunshine. To help you work out which is best for you, here are the pros and cons of each.
In-house affiliate programs
- More control. Running your affiliate program in-house will allow you to tailor it more to your needs. You’ll be able to set your own terms and conditions that affiliates have to abide by, and you’ll be able to manage it in a way that works for you.
- Higher relevancy. By finding and recruiting affiliates in-house, you’ll be able to find highly relevant partners that are a good fit for your brand. Your affiliate marketing activities are likely to perform better as a result.
- Real brand advocates. Brands that run in-house affiliate programs are likely to be approached by affiliates who have made the effort to check whether the brand has an affiliate program. This means they’re likely to find real brand advocates who love the products and actively want to promote them.
- Cost-effective. The cost of using affiliate link tracking software to run your program in-house can cost as little as $29 per month. This is vastly cheaper than affiliate networks that often take 30% of what you pay your affiliates in commissions.
- Multiple partnership types. Affiliate networks are specially designed for affiliate marketing. But by running your affiliate program in-house, you may be able to kill two birds with one stone by developing processes and selecting tracking software that works for other types of strategic partnerships too.
- Build relationships. With an in-house affiliate program, you get to speak to your affiliates directly and you’ll get the opportunity to provide them with an excellent experience. This will allow you to build strong relationships and encourage loyalty.
- More effective segmentation. Segmenting your affiliates allows you to onboard different groups of affiliates in different ways, or to provide them with their own incentives. Segmentation is easier with in-house affiliate programs because you’re not limited by the information provided to you by a network.
- Visibility. By managing your affiliates and program in-house, you’ll gain a better understanding of what’s working and what isn’t, enabling you to make decisions that will improve your program and generate better results.
- No discovery. If you run an in-house affiliate program, you’ll have to handle affiliate discovery and recruitment yourself (however, we’d say that’s no bad thing as Breezy is here to help with that!).
- Self-managed. You (or a partnership manager) will be responsible for managing your affiliates and rewarding them for their efforts. This will take up more time and resources.
- More decisions. Although you’ll have more freedom to tailor your program to your needs, this can be daunting for someone who has no experience in affiliate marketing and doesn’t know what will work best for their brand.
- Takes longer to set up. Setting up an in-house affiliate program will take longer. It may involve integrating your tracking software with other existing systems, and you’ll also need to start your search for affiliates from scratch.
- Recruitment is included. If you create your affiliate program using an affiliate network, you’ll get access to the affiliates who’ve signed up with the network and may even be approached by them. This can save you time on discovery and recruitment.
- Quick to set up. Setting up your program on an affiliate network is quick and easy. You can start your affiliate marketing activities almost instantly.
- One-stop-shop. With an affiliate network, everything can be accessed from one central location, making the whole process of finding, managing, measuring and paying for your partnerships stress-free.
- Hands off. An affiliate network will automate a lot of the processes so that you can conduct affiliate marketing activities without spending much time or resources on it.
- Managed. Many affiliate networks (like Awin) provide account management and consultation. By enabling your affiliate program to be optimised by a professional, you can focus your attentions elsewhere.
- Expensive. Affiliate networks take a percentage of the sales that affiliates make – often up to 30%. There may also be monthly charges and service fees. In total, they tend to be a lot more expensive than running your program in-house.
- Lack of relevancy. You’ll be restricted to the affiliates that have signed up to the network. They’re unlikely to be the most relevant and probably won’t be familiar with your brand.
- Lack of variety. The majority of the affiliates you’ll find on affiliate networks will usually be Instagram influencers. This means they’re often better-suited to helping you reach short-term as opposed to long-term goals.
- Lack of control. On an affiliate network, you won’t be able to control what information you collect from potential affiliates. This means you’ll have to decide whether or not to approve an affiliate, and how to segment them, based on the information the network gives you.
- Hard to encourage loyalty. You won’t usually be able to speak directly to the affiliates you work with on an affiliate network, which means it can be hard to build a good relationship and encourage loyalty.
- Lack of visibility. If you run your program via an affiliate network, you won’t get as much visibility over what’s working and what isn’t, especially if your program is managed. This means it can be harder to ensure your affiliate marketing activities are contributing to wider company goals.
So, which is better? An in-house affiliate program or an affiliate network?
Ultimately, there’s no one right answer. Every brand is different so it all depends on where your priorities lie.
If you’re looking for a quick and easy way to dabble in affiliate marketing, an affiliate network may well be for you. It’s a hands-off option that will avoid you from having to invest any real time or resources into setting up your affiliate marketing activities.
The same goes if you’ve never really had any experience in affiliate marketing before. Because an affiliate network has everything in one place, the platform will guide you through the whole process of setting your program up, finding affiliates to promote your products and, ultimately, rewarding them based on their performance.
There won’t be as much flexibility to tailor your program to your needs as there would be if you were running it in-house. But if you’re someone who’s daunted by the idea of making decisions about every little thing, that might be exactly what you want.
However, if you’re looking to give affiliate marketing a real go, running an in-house affiliate program is (much) cheaper, more flexible and gives you more control.
Not only will you be able to set your program up in the way that works best for you and your brand, but you’ll also be able to carefully choose who you work with. While an affiliate network will restrict you to the affiliates that are on their platform (with a disproportionate focus on Instagrammers), an in-house program will allow you to find hyper-relevant partners that operate across a range of channels. Some of them may even already be genuine advocates for your brand!
Running an in-house affiliate program does require a bit more investment in terms of time and resources. But with a range of affiliate link tracking software available, you can still manage your affiliates, measure their performance and process payments in one easy-to-use place – in much the same way as you could using an affiliate network.
Ultimately, the biggest difference between an affiliate network and running an in-house program using affiliate link tracking software is that networks deal with discovery for you. However, with no guarantee that the affiliates on your network will be suitable for your brand, you’re likely to have to conduct some of your own affiliate discovery either way.
So, is it really worth paying those high commissions to run your program on an affiliate network? We’ll let you decide.
Either way, don’t forget to sign up with Breezy to find hundreds of truly relevant affiliate marketers who’d be perfect for your brand. You’re welcome!