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Are Affiliate And CPA Networks Shooting Themselves In The Foot When It Comes To Affiliate Recruitment?

One of the issues that has been bothering me since I started out as an affiliate has been “why do affiliate and CPA networks pay out such miserable recurring payouts for sub-affiliates”?

If you’ve checked into an affiliate or CPA network control panel, you’ll typically see a “Super Affiliate” or “sub-affiliate recruitment” link with payouts ranging from about 1% to 2% of commissions generated and if you’re lucky, you’ll sometimes see 5% or 10%.

At those levels, is there any real incentive to go out and recruit affiliates/publishers for your network, aside from wanting to build goodwill and possibly a couple of bucks for a nice Friday night dinner?

I understand that margins can be pretty thin, especially since a number of CPA networks are the ultimate traffic arbitragers – they “buy” traffic from you at $1-$1.50 per zip/email submit lead, and attempt to upsell them into an affiliate offer or merchant-direct offer on the backend.

Granted, I haven’t seen the financials of one of these networks yet, but I’m wondering that if you are already relying on affiliates to generate your sales…why not go the extra mile and incentivize them to go out and recruit more affiliates for you? Especially with a decent payout. (we’re not even considering networks which pay you $3 or $5 to recruit an affiliate…).

By my estimations, one out of every 100 affiliates is a top performer (hence the term “top performer”), in this league, you’ll see guys like: Amit Mehta, Ralph “Ruck” Ruckman, Zac Johnson, Bobby “bluebobbo”, Jeremy Palmer, James Martell , Paul “Uber Affiliate” Bourque among others.

But I think the game of getting top affiliates is like going out on a fishing boat. You cast your nets and get a whole bunch of prospective affiliates, but you won’t know who’ll be a top performer until you haul in your catch and sort everyone out.

On that basis, the less-skilled affiliates will weed themselves out and a higher payout won’t matter anyway. On the other hand, a better performing affiliate will be motivated to go out and get results.

I think the bottomline is that in building a network with a long-term business focus, it’s inevitable that you’ll want to have your stakeholders – affiliates who are consciously producing for you, to go out there and evangelize for you too. And it’s going to take more than 1%, 2% or 3% to get them excited…

Oh and another thing, if sub-affiliate recruitment is a focus for any network, why aren’t sub-affiliate recruitment links included at the bottom of each mailing or offer update?

It’d seem like something easy to implement and would bump your recruitment efforts by an easy 5-10% with no additional marketing effort…

6 comments on Are Affiliate And CPA Networks Shooting Themselves In The Foot When It Comes To Affiliate Recruitment?

  1. Ruck
    March 21, 2008 at 12:42 am (4575 days ago)

    Andrew,

    This is an excellent post and one that describes issues that I have also openly spoke with many network AM’s and CEO’s about. There (IMO) is a serious flaw in the recruitment of affiliates on the networks part going on and has been for a long time. I hate to plug but when C2M launches (our CPA Network) there are going to be some differences that I hope sets us apart and one of them soon to come will address this issue directly.

    I think most of the networks are just striving for simplicity. While there are some great networks out there and I have driven thousands of sub affiiliates to them myself, other than getting paid that small percentage the only benefit I get in actively promoting them is knowing that the networks are respectable in terms of payments, AM help and offer diversification.

    Very good post. One that makes me have to sit on a bit more before responding again.

    Thanks Andrew,
    Ruck

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