How Affiliate Networks Can Build World-Class Reach and Reputation
On April 16, 2013, the affiliate marketing space had a major shakeup. The Google Affiliate Network (GAN) announced they would shut down, leaving advertisers and network members to pick up the pieces of what had become a $500M micro-economy.
Some surmised Google dropped GAN because it felt commission based selling required too much negotiation and didn’t have the digital governance required for programmatic and algorithmic-based performance ad networks. In other words, affiliate networks didn’t fit Google’s low-touch reputation.
The perception of affiliate networks, even among brands, has struggled with this stigma. While, on one hand, affiliate marketers drive real revenue by helping introduce and close sales, they’re unjustly perceived at times as only looking for first or last click credit. Similar to other industries, there are always a few bad apples that game the system and make the entire basket look bad.
The reality is that the traffic and leads generated by affiliate networks consistently are reported by marketers as some of their best revenue contributing sources.
We know in working with many global affiliate networks that one of the most important factors to their success and longevity is maintaining a strong reputation. Keep in mind that an affiliate marketer who is going to perform well also risks their own reputation when joining a network.
When a network has a negative reputation, one of the problems may stem from operational inefficiencies of that network. Our most recent research indicated nearly 41% of affiliates have stopped working with a network because of a payment operations issue. Of those who did not already end a relationship with an affiliate network, 65% say they would stop working with a network because of payment problems.
To surf the tides, there are important operational pillars every affiliate network should address beyond offering an attractive bounty (which gets them noticed, but isn’t always sustainable).
- Streamline marketer onboarding and validation – Affiliates are a mix of dynamic marketers always adapting to stay competitive and new ones popping up all the time, eager to maximize their audience. This constant change can lead to serious payment issues for networks if they’re not onboarding affiliates with the right information. It can also introduce fraud and payment errors later. Getting the correct data in the system and validated early are critical to saving headaches later.
- Provide the element of choice, communication and partner service – Partners want very simple things, but many networks confoundedly don’t address them. Updates about payment status or payment issues can take a lot of time if you’re trying to do them manually, so many networks don’t communicate anything. Even if they do, it’s often not timely nor particularly informative. Allowing a partner to view their payment history online? If you’re doing this, good for you, but you’re in the minority. And offering payment methods beyond PayPal and ACH (especially to overseas partners), choice of currency, and threshold selection goes a long way to “show you care.”
- Pay accurately and on time – Commissions are the only reason for an affiliate to work with a network so consistent accurate payments execution is required for hard-earned performance. Payments should be seamless which means removing any friction between performance tracking and sending out money. In our research, a majority of both US (52%) and non-US (41.3%) affiliates have experienced late payments. Affiliates don’t invoice, so an accounts payable or community manager has to be ready to make multi-method payments.
- Expand intelligently into global markets – According to Forrester Research and Shop.org, 40% of online retailers say affiliate programs are the most effective channel for customer acquisition. Revenue-based campaigns clearly are an important part of the marketing mix when generating overseas traffic. That represents a major growth area for both marketers and affiliates networks. The key to expanding programs internationally is to do so efficiently so that it doesn’t take away from core operations or increase risk.
- Get your taxation processes in order – The sad reality is that most affiliate tax form collection processes are manual and only kick off late in the year, requiring a staff member to track down each affiliate and request proper tax documentation. The complex nature of tax rules regarding non-US affiliates is even more involved including the need to perform withholding calculations. If affiliate networks wait until the end of the year to collect tax IDs to prepare 1099 and 1042-S filings, they can have trouble chasing this information down, plaguing the tax effort with inconsistencies. Worse yet, this also increases risk that your network has paid out to an entity that is not legit.
For smaller, emerging, or growing affiliate networks, you can’t just hire more people to deal with these challenges. It’s simply not a smart use of limited resources that could otherwise be invested in growing and scaling your company. And if you want to go quickly from one country to another, you don’t need to take flying lessons and build a plane. You buy a ticket on a proven airline.
Find an affiliate onboarding solution for inbounding requests. Employ a global payment solution to streamline affiliate payments and that provides your affiliates a range of payment method and currency choices. Leverage a tax data collection portal that understands domestic and international requirements for tax forms. Set yourself up to go global and build a network with a world-class reputation.