Do I need a network solution or a software solution?

When launching your affiliate program, you must choose one of the following:

Unless you have very specific requirements, don't re-invent the wheel, but rather purchase a commercially available solution.  The key questions are whether you pay all fees up front with a software solution, pay the high fees associated with a network solution, or pay monthly with an application service provider.

Here are some of the benefits and drawbacks of each:

In-House Software Solution

Licensing a 3rd-party software solution such as Affiliate Wiz is well suited for those who want the security of maintaining all contacts and affiliate ownership in-house.  The costs are lower than the setup costs of similar networked solutions.  You also avoid the high monthly transaction costs.  This is also well suited for merchants selling niche items or those in niche markets who cannot afford the enormous startup costs associated with a network.  The only real drawback of an in-house solution is the lack of an existing pool of affiliates.  This creates a bit more upfront work for the affiliate manager who must recruit affiliates by obtaining listings in Affiliate Directories.

Affiliate Networks

The benefits of networks go beyond the basic tracking and reporting functions.  They provide some extras that help reduce the time it takes to manage your affiliate program.  They provide an existing pool of affiliates that helps simplify the affiliate recruitment process.

Startup costs vary considerably from one network to the other but are typically on the order of thousands of dollars.  The affiliate networks tend to attract larger merchants who have deep pockets rather than merchants selling niche items.  Monthly transaction costs can also be costly, especially if your site does not meet the minimum monthly requirements of the network.  For example, the networks take a fraction of all commissions and if that amount does not meet their monthly minimum you pay an extra fee.

The networks often handle payment of the affiliates directly which is another plus.  However, expect to pay a hefty fee for the service.

Remember that only the top few percent of any Program's Affiliates generate the bulk of traffic and sales. Your ideal partners will need to be tracked down and introduced to your program personally. Networks can lighten the load in terms of 'management time'. However, that doesn't mean your Program will look after itself.

Application Service Providers

An application service provider will provide all the same features as an in-house software solution.  They only major difference is they host the software for you.  The benefit is you don't need a programmer to look after the software.  The drawback is if your site generates a lot of traffic the monthly fees can get expensive.  Some ASP's also take a percentage of all your commissions so be sure to investigate all associated costs.

Read More >>  Now that I have chosen an affiliate software solution, how do I recruit affiliates?

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