New Network Flavors
By: Lisa Picarille
The affiliate network menu is expanding to offer many more options than just vanilla, chocolate and strawberry.
Call them what you wish – ad networks, sub networks, CPA networks, CPA ad networks. No matter the name, these aggressive challengers are mounting pressure on the "Big 3" affiliate networks.
CPA ad networks, which use a costper- action payment model, are providing increased competition, which is likely to mean publishers will benefit from more choices, bigger payments, a wider range of potentially lucrative offers and what some observers claim is a more nurturing environment.
Affiliate consultant Shawn Collins refers to ad networks as the "hybrid of affiliate marketing – part merchant and part affiliate."
Like traditional affiliate networks, CPA ad networks rely on publishers willing to promote their advertisers' offers. But unlike their cousins, ad networks act more like direct CPA-deal brokers and generally focus on lead generation, registration-based offers and bounty programs. In addition, CPA ad networks often don't require start-up fees and advertisers to prequalify, thus lowering the barrier to entry. It's estimated that one needs approximately $5,000 to get a CPA network off the ground.
However, many claim the life span for the bulk of these emerging ad networks is limited and this crop will never be able to truly compete on a larger scope with the bigger established networks such as Commission Junction, LinkShare and Performics. "
CJ started in 1999 and the landscape has changed over the last six and a half or seven years," says Kerri Pollard, director of publisher development at Commission Junction. "There's been an increase in competition and new CPA networks.".
Some affiliate managers argue that CPA networks fail to add value because they poach advertisers who are already in merchant affiliate programs. Others insist CPA networks add tremendous value because they attract new and unique advertisers who in turn, deliver new valuable customers.
Regardless, CPA networks are emerging as major players in the online marketing world. These marketing companies have direct access to groups of advertisers who, through a wide array of techniques, have the potential to drive a high volume of clicks, sales and new customers.
 Maybe that's why you can't attend a conference or trade show related to online marketing without seeing the booths of the exhibit hall jam-packed with CPA ad networks looking to woo affiliates and garner some attention."
Who's on First
With so many players in the game, it's difficult to keep tabs on everyone. Some well-known current networks include CPA Empire, DirectLeads, Endai Worldwide, Adteractive, Metarewards, The Vendare Group, XY7.com, YFDirect, eMarketMakers and TheBizOppNetwork. In addition, several new ones are popping up nearly every week.
In 2005, many of the major players gained a bigger foothold by partnering with other companies. Affiliate Fuel, also known as Thermo Media, LLC, was acquired by Experian in April. PrimaryAds was bought by Think Partnership for nearly $10 million. And ValueClick purchased Web Clients for $141 million.
For affiliates, much of the appeal of these ad networks is the size and frequency of payments. Affiliate networks usually pay on a monthly schedule or when a certain revenue level has been achieved, whereas CPA networks typically pay affiliates weekly so they don't need to float the costs of advertising or, in the case of incentive sites, the costs of the incentives themselves. CPA networks often negotiate top-rate commissions for their publishers. In many cases, these deals are much better than what a publisher can negotiate from the merchant's affiliate manager.
A post on the ABestWeb.com forum from an affiliate sums up the appeal of CPA networks:
"As an affiliate, I love them because they often pay considerably higher commissions than the major networks, they often pay quicker, and most don't allow reversals," writes Michael Coley, president of AmazingBargains.com.
While the affiliate appeal is high, some downsides to dealing with ad networks exist, including poor practices, such as cookie stuffing, adware, spyware and spamming. "
The biggest problem I've had is that campaigns will get canceled without any notice sometimes, so I end up having to find another source and switch out my links," Coley continues. "I don't think any of them are 'clean.' Most seem to work largely with email marketers, some of which are notorious for spam."
Merchants claim to be somewhat cautious for a variety of reasons. Although CPA networks reduce the risks for publishers while maintaining the direct-response needs of the merchant, the merchants have no control over how their offer is presented. "
As a merchant, you don't know who is promoting you, and the CPA network is not going to tell you, because you'd cut them out of the deal if they did," according to Collins. "
What I like least about CPA networks is they build loyalty between the network and the affiliate with merchants' money," says Beth Kirsch, group manager of affiliate programs at LowerMyBills.com.
J.T. Stephens, director of auctions marketing and business development at Overstock.com Auctions, offers some tips for advertisers dealing with CPA networks:
- Communicate your business needs;
- Provide networks with an email suppression list of marketing companies/ affiliates on your blacklist and a list of your top affiliates that the network cannot contact;
- Be on the alert for unsavory affiliate activities (adware, spam, spyware); and
- Do not let the networks determine how to market your offer.
Many CPA network advertisers are huge proponents of free iPod offers and promotions. That tactic is likely to bring in customers more interested in the prize or giveaway than the merchant offer. This type of promotion fuels the perception that CPA ad networks only cater to less-savory advertisers.
Still, some figures state that big brand names make up 30 to 45 percent of all CPA advertising. Big-brand sites can also act as affiliates accepting CPA ad buys, such as MSN, when it has remnant inventory. Big-name publishers are selling CPA buys, but often it's directly to the advertiser and not through the network.
Everybody into the CPA Pool
Though networks generally make more money selling on a cost-per-thousand (CPM) basis, some will sell leftover inventory and run CPA offers, according to an executive at one of the major affiliate networks, who asked not to be named for fear that the industry stigma associated with CPA practices would be damaging. In most cases, the networks are "booking these revenues as CPM," the source says.
Another network executive says her network will continue to stay focused on its overall value proposition.
"We want to make CJ remain the preferred place for the new publishers," Pollard says. Continued on Page 2...
Tags:
affiliate networks, Linkshare, Performics, CJ, Commission Junction, CPA, subnetwork, cpm, adnetworks, ppc,
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