The best way to think about an affiliate network is that it acts like a Tindr for the world of affiliate marketing. Although each network has its own niche or variation on the business model, all of them are in the business of pairing vendors with affiliates so that more affiliate sales get made.
So here’s the standard model for how it works:
- A vendor pays the network to be added to their database and to list products that the vendor chooses, along with commission rates for each product and any marketing tools that the affiliates might use (like ad banners). The vendor can pay the network a flat monthly rate, although there are many other types of payment structures.
- Affiliates join the network for free, although they are often vetted for other things, such as how much volume they’ve sold recently, or how much traffic one of their websites has. By the way, networks often refer to affiliates as “publishers,” because it has become so common for bloggers and other online publications to use affiliate ads to generate revenue.
- Any affiliate can request to advertise any vendor’s products; the vendor is entitled to say yes or no. Similarly, the vendor can contact specific affiliates and ask them to advertise the vendor’s products: again, the affiliates can say yes or no.
- When a vendor and affiliate have mutually agreed to market a product, the network automatically generates a link to identify the affiliate, vendor, and product (all encoded, of course). Whenever a potential customer clicks on that link and later purchases the product, the network records the sale and transfers the commission from the vendor to the affiliate.
And now here’s why it works:
- The vendor wins because the cost of belonging to a network is less than the cost of developing and maintaining the vendor’s own affiliate program. And of course, both are less expensive than the vendor paying directly for ads in order to bring in more clients.
- The affiliate wins because the network is a convenient one-stop shop to find vendors who want to work with them. Also, a good network has vetted its vendors, so there is less risk of the affiliate not being paid the agreed commission.
- The network wins because it’s the type of business that can scale extremely well. There’s no limit to the number of paying vendors it can sign on, and no significant increase in overhead when more vendors join.
Should you join a network?
That depends on whether the kind of vendors they feature would be a good fit for your own goals. In any case, it doesn’t do any harm to belong to a network. You certainly don’t have to be exclusive to them.