There are two big players in the affiliate market place. Linkshare.com and Commission Junction. One of the first questions our clients ask, when they are planning to launch this phase of marketing is : Which one is best?
Here is a review. First the price for setup for both are different. Both companies charge a client a setup fee. It can range from 3-8k depending upon the client. We are not sure why the price is so variable. We have noticed that linkshare is now available through the Yahoo store interface. And they still charge 3k to setup/turn it on.
How they work. For the most part both affiliate networks operate using the same method. They have a network of site who have signed to be affiliates. Linkshare and Commission Junction act as a middle man to manage the administrative tasks required for this type of marketing. They both take a percentage of the sale item and share that percentage with the affiliate. They both offer flexible term packages for a client to offer different percentages and payment terms depending upon affiliate performance.
Linkshare setup and integration is not so easy. But have substantial benefits. Linkshare setup requires more time and resources for a client. They offer a number of process for reporting sales back; XML, URL etc. While this setup process can take several weeks which means more expense for a client, it does have some nice long term benefits, mainly in the clients options for getting credits for cancelations, returns or changes.
Additionally because Linkshare must review and certify an integration, the mapping of customer product data to the LInkshare data dictionary is more effective. It took a several days to meet the certification. During this process we were able to tune the daily product feed so that it was most effective.
What are Returns & Cancelations? When a affiliate site refers a customer to your site and it results in a sale the site owner get paid. Usually percentage of the order. Linkshare handles the reporting and payment. If the customer ends up cancelling the order several hours later, you have the option to get a credit for the commission payment. You do not have to request a credit. And there are some very good reasons to forget about getting a credit.
When affiliates evaluate the sites they want to join, they looks at a number of metrics: conversion rates, payment terms etc. They want to make sure that if they affiliate and present your products, that a click through will result in a sale. So the conversion rate tells the affiliate how open they will get paid for click. If you have a high rate of returns which result in credits, your conversion rate can suffer. So some of our clients do not request the credit. They see the cost of these commission payment as part of the cost of the affiliate/marketing costs and as a result can keep their conversion rates high.
Hint: We recommend that you monitor your affiliates closely and think about which are worth having. If a site drives a lot of traffic, the it might be better to forget about returns for them and keep them happy. But for a less valuable affiliate you might decide that the commission on a canceled orders should be handle differently.
We built a returns report and management system the lets our clients micromanage the returns.