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Test #2: Who’s Running the Show? (Network vs. In-House)

Some programs are run independently, in-house so to speak, by their owners. This simply means they’re in charge of and responsible for everything: providing you with support/services; tracking your transactions; paying you, etc. There’s no shortage of examples of these independent in-house programs.

Many others join and rely on an affiliate network — a service they pay to manage all that good stuff — while the merchants themselves focus on, well, running their businesses (presumably what they know how to do instead of futzing around in unfamiliar territory). Three well known networks are Commission Junction, LinkShare and Shareasale.

Dealing with the in-house operation is, at face value, a bit riskier.

Practically-speaking, the aff networks add a layer of warm fuzzy reassurances that minimize (not eliminate) the risk. A few that come to mind are:

• The network “cuts your check,” not the merchant. So there is an increased likelihood you will get paid… and on time.

• Since the network does the paying, they usually require the merchants have a minimum amoount of money deposited into their accounts (the network wants to make sure there are funds there to pay you with!). So again, a better chance of you actually getting paid.

• It usually costs the merchant upfront to be part of a network. So you have an indication that the aff program you’re thinking of joining is most probably capitalized minimally and more than just a solo operation with little more in the backroom than a guy/gal in pajamas with a bright idea. Nothing wrong with the latter — not hard to find successes that started this way — but the risks to the aff sure are different.

This doesn’t mean that if a merchant is on an affiliate network, it’s safe to deal with. The network’s sales and commission data on transactions involving physical goods typically has to be provided by the merchant after the fact (now you can see the reason behind the reporting delay on these transactions), so merchants can screw this — and affiliates — up. Accidentally or otherwise. (But at least we can complain to the networks if there’s anything amiss… assuming we can detect it.)

This also doesn’t mean that solo affiliate program operations aren’t worth dealing with. They’re just upfront riskier, and this is just a factor that comes into play when you try to take in and analyze the bigger picture, deciding whether to join and work an affiliate program or not.

NEXT: Part 3 of 5 – How Many Other Affiliates are There?

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