I was looking to white label/ go direct on some offers that have been healthy for me over the past few months because X network can't afford to help me a dime more per conversion..... Not going to throw names, but their prestigious pay bumps put me up by only ~10%, after which my AM said he can't give me more or else they would be at a loss.
Do all networks really run this slim? I assume a couple million dollar disparity between rev rate and network margins if that's the case.... Besides having a direct liability to the advertiser and not being able to A/B test consolidated offers in a vertical, why the fuck do people not make that direct relationship? Could some network head clarify here....
You'll read some responses here with networks one-upping themselves on how low their margins are, like this is some kind of reverse "my e-penis is bigger than yours" game. Really, none of it means anything because your question doesn't have an easy one-line answer.
Spread across all affiliates, spread across all campaigns, networks will take an average of 10-20% margin. Sure, networks will take very low margin on some campaigns for some affiliates, but that is basically the exception for high-volume affiliates and not the rule. Anyone who says any differently is BSing and trying to look good on this thread.
With the exception of networks that are one or two man shops and run out of someone's home office, no network can survive on overall margins of less than 10%. When you add up salaries, office space rental, utilities, server/bandwidth costs, banking fees, advertising/promotions, conferences, legal costs, deadbeat merchant write-offs, etc, it can EASILY eat up 10% of revenues.
So when network X tells you they can't bump your rate higher, unless you are driving a shit-ton of traffic, they're probably being honest with you.
Affiliates certainly have the option of trying to go direct with merchants, but there are a few things that affiliate should know beforehand when making their decisions:
- Merchants rarely pay net15, and many merchant require friendly reminders to even get theirs bills paid on a net30 basis.
- When a merchant defaults completely, you are the one out of pocket.
- Not all merchants run with a "same rate for everyone" mentality. Often times merchants will hold-back a few % and it's up to you to find out and call them on it, and then hope they'll match.
- Merchant contractual terms are often stronger than network terms and it is harder for an affiliate who bends (not breaks) the rules to hide.
- Merchants are not always as responsive to requests as networks.
- Many merchants are difficult to find and won't even bother speaking with you unless you are driving good volume.
This doesn't obviously apply across the board. Some merchants are great to work with, some not so great. You have to decide if the higher rate is worth the hassle you will undoubtedly run into with some merchants.
I've read in many threads how some affiliates think that the only job a network really does is float cash. That's actually only part of the truth. Our biggest job is managing relationships, and you'd be amazed at how much work that entails. But we typically do it well, and that's why affiliates can get the impression all we do is float cash, because they're hidden from a lot of the BS.
I could probably go on further, but I've already written a book-length response, so I'll end it here.
