Several pieces of research and measurement suggest that the portion of placement in affiliate advertising is steadily increasing. Although the business proposition with affiliates (pay only for your actual sales not traffic) is compelling to most, there are a number of issues with affiliate networks. Here are two of the most important that I have come across.
- For businesses moving part of their spend mix into affiliate advertising there is an initial threshold which people seldom talk about. Often, there is a monthly subscription fee (e.g. with TradeDoubler and Affiliator) and the networks recommend that an affiliate offer is combined with an upfront campaign investment in banner advertising. From a pure ROI perspective this will prove quite expensive and less attractive for the new entrant into affiliate marketing. The fixed costs are in fact so high that traditional vehicle spend will look more attractive.
- While B2C/ consumer market affiliates are established with a steady flow of traffic, B2B and small business affiliates are much less established. Especially in the SoHo space few affiliates have developed their databases to understand what portion of their customers actually respond better to SoHo or B2B style marketing. In the Nordics especially there is a severe shortage of established affiliates for B2B marketing. The biggest networks simply cannot produce an attractive alternative to on-line or offline media buying.
