I am advising a StartUp on their business model and wanted some insight into Affiliate Marketing to see if what they are planning is feasible. Currently I am aware that typically there is a merchant with a shopping cart - let's say for example this is Amazon. Amazon includes a pixel in their shopping cart and sets up an affiliate system, where people can sign up to get a commission of any lead they pass onto Amazon that results in a sale. Now, what is different is that this StartUp is looking to convince MULTIPLE merchants to include pixels in their shopping carts, and then they will operate, effectively, as their sole affiliate, with the possibility of recruiting more affiliates underneath them at a later stage. So as an example, if "Widget StartUp" wants to promote widgets, I believe it would need to approach Widget Shop A, B, C and D and get them to incorporate tracking pixels in their carts, and it would aim to promote all these widgets, without any of them having an existing affiliate program. It would need to convince them to include tracking pixels in their shopping carts and then promote them to try get a cut of the final sale. Later, but not necessarily strictly part of the initial market validation process, it plans to possibly have widget bloggers, specialists, reviewers etc. also promoting some of their widget merchants to get a cut of their cut. Does anyone have any experience attempting this strategy? If so: a) What is the industry terminology for the 'Widget StartUp'? If its not a merchant, and not one of thousands of affiliates is it a 'Super Affiliate' or is it an Agency, or something else? b) What software did you use out of the existing ones or is capable of such a strategy e.g. HasOffers, Post Affiliate Pro etc.? or did you create something yourself? c) And how difficult was it to convince merchants to start an affiliate program? Was there considerable friction in this approach? Any advice or experience appreciated. Thanks in advance.
So this model has been attempted before in various formats. As a direct comparison, 3-4 years back there was a company called WidgetBox. They were a startup. Successful in getting funding. Raised at least $8 million. Their changed up their model a few times but their most successful one was nearly identical to what you described. They went directly to various advertisers on a CPA basis and then guaranteed publishers a set CPM based on the agreed CPA with the merchants. Got as high as doing 500 million impressions a month. But they didn't appropriately account for fraud, had to back out on payouts, ended up nearly folding. They were able to pivot and be absorbed into Flite.
A less direct comparison of your scenario is very common. Many affiliates these days operate what is considered a sub-network (against the rules of most larger affiliate networks) or a super-affiliate program. Examples are the dozens of loyalty affiliates out there like Upromise who also have their own affiliates (as well as members tracked on sub-ids) underneath them.
Being the advertiser's "sole" affiliate is partially where I don't see the model you describe work. Unless your advertisers are completely unfamiliar with the digital space they are unlikely to only work with one company as their sole affiliates. Advertisers like to scale. It's why they work with networks.
What ever you decide, Post Affiliate Pro does not have a robust enough of a platform for you to launch with. Beyond that the software's ability to help detect fraud is suspect. HasOffers (know called Tune) is a way better choice. Also recommend looking at Performance Horizon Group.
Either way, highly recommend rethinking the "exclusivity" or "sole" component of your model and asking yourself why an advertiser would just go with you?
Answered 10 years ago
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