Is There a Right Approach to Affiliate Technology?
In recent years, there has been a good amount of debate within the affiliate marketing industry over how to choose the right affiliate technology. There are two very different approaches a company can take with affiliate technology; specifically, Software as a Services (SaaS) platforms or affiliate networks.
Is one way truly better than the other? It all depends on the needs, goals, and KPIs a brand is looking for, as well as where they are currently at with their affiliate program. We took a deeper dive into the differences and benefits of each affiliate technology approach.
What Is Affiliate Technology?
Affiliate technology plays a crucial role in connecting affiliates to an affiliate program. Through affiliate technology, it’s possible to track and measure performance of affiliate activity as well as efficient and correctly pay the affiliate partners who are promoting your company.
With $6.4 billion spent in affiliate marketing in the U.S. alone in 2019, the ability to see in-depth insights into the performance and returns from an affiliate program is more important than ever.
Most brands choose either a SaaS platform or an affiliate network for their affiliate technology. While there are clear trends (network vs SaaS) regionally, the variance between regions and even countries can be significant.
For example, in the U.S., over the past few years, we’ve seen a noteworthy shift of brands, especially those who want to expand globally, migrating their affiliate programs from affiliate networks to SaaS platforms. Conversely, across the EMEA region, this mass migration hasn’t happened to the same extent and affiliate networks still dominate the affiliate marketing landscape. However, SaaS platforms are gaining notable traction in EMEA as brands increasingly embrace the idea of separating the technology and management elements of their affiliate programs.
We got a front-row seat to this trending shift in EMEA during the virtual 2020 PI LIVE event that took place at the end of October.
SaaS vs Affiliate Networks
There are many reasons a brand will pick a specific affiliate technology over another. Often it comes down to which network or platform can most efficiently and cost-effectively assist the brand in meeting their goals and KPIs.
Both affiliate networks and SaaS platforms act as an intermediary between affiliates and brands, are set up to handle the tracking and reporting of affiliates’ activities and automatically pay out commissions to affiliates based on the rules set by the brand.
While similarities exist between SaaS platforms and affiliate networks, there are some notable differences between these two affiliate technology options.
From our extensive experience working with industry-leading brands around the globe, as well as from some of the discussions at this years’ PI Live event, here are some of the reasons given for why each of these affiliate technology options are different and why one brand may choose one option over the other:
SaaS platforms function solely as a tracking and measuring solution. The technology and infrastructure of these platforms are designed around data, controls and insights—they focus on the technology rather than on the management aspects of an affiliate program (facilitating and overseeing client and affiliate relationships, etc.).
By laser-focusing on the technology, SaaS platforms are able to offer custom technology options for an affiliate program and manage “direct” affiliate relationships for brands.
A few ways that SaaS platforms are able to offer this direct communication is by enabling brands to enter into affiliate relationships with electronic insertion orders, negotiate their own affiliate contracts, and customize terms and conditions directly with their affiliate partners, to name a few.
Many SaaS platforms offer a variety of fee models for brands to choose from, including fixed, volume or transaction-based, and performance fees. This flexibility allows brands to select the payment model that works best with their individual budget.
Some brands choose a SaaS platform for their affiliate program because they:
- Prefer to separate the technological needs of their affiliate program from the actual management of it.
- Want more brand control (including a white labeled affiliate program) and to be more hands-on with their program.
- Want to incorporate many types of performance partners without paying a performance fee (override) to an affiliate network
- Require access to different pricing models.
- Favor the ability and flexibility to develop more customization within their program.
Affiliate networks can range from offering full-service project management to lower-cost account management services or self-service management options.
Regardless of which type of service a brand decides to go with, affiliate networks primarily charge their clients a performance fee, which is typically a percentage of program revenue (e.g., 1-2%) or commissions paid to affiliates (e.g., 30%).
Some brands choose an affiliate network for their affiliate program because they:
- Need a simplified, one-stop-shop option for both their affiliate technology and program management needs.
- Have more extensive personal experience and a higher comfort level with an affiliate network.
- Want access to a large pool of affiliates who are members of the network. Some brands might even choose affiliate networks because they like certain affiliates that are already part of the network.
While a SaaS platform might be the right fit for one brand, an affiliate network could be a better fit for another.
When it comes down to it, selecting the right technology provider for your affiliate program depends on a variety of factors. These factors range from your brand’s level of market maturity and the specific needs and goals of your program, to the types of partners you want to work with and the level of control and oversight you want for your program.
As you explore your options, it’s essential to do your research and talk to industry experts before deciding. It’s also important to keep in mind that your goals and needs can grow and change over time.
Brands are consistently looking for new affiliate marketing strategies and out-of-the-box partnerships to help grow their affiliate programs. To accommodate these needs, affiliate technology of all varieties will have to consistently evolve if they want to continue to offer the best technology operability.
At Acceleration Partners, we believe that brands need to make independent decisions about affiliate technology and that it’s important for us as an agency to remain impartial when it comes advising our clients on affiliate technology.
Part of our process includes listening to what a client’s goals and needs are—for their company and for their affiliate program—and coaching them on the right questions and factors to consider based on their goals. If and when this is clear, we will, from an educated, objective perspective, provide them with several different technology options that we recommend they pursue. But, ultimately, the choice is theirs to make.