If you are looking to launch an affiliate program, then it is important to know all the cost implications to your business.
Traditional affiliate networks charge a monthly fee called an override. What is an override? It is a percentage of commissions paid each month. Typically for SME’s this can be anything from 20-30% of all
Let’s break this down into an example:
You sell an item for £100 and the publisher who delivered the last click receives 10% commission of the sales value. From that £10 paid to the publisher, networks charge a percentage. Taking 25% as a guide, then you pay the network £2.50. Doesn’t sound much, but it can soon get out of hand as your program grows. To put in perspective one of my clients approved over 1,500 orders last month.
The override total for the previous calendar month is invoiced normally on the 01st of the new month.
To be clear that you will only ever be charged an override on orders you have approved that month. So, if an order is cancelled or returned you will subsequently cancel the transaction in your network, and won’t be charged.
Any override percentage should be a clear indication of the service level you are receiving, A higher override, should reflect a more detailed account management. Often though this is not the case. Networks use higher override as a way to offset potential lower amounts of orders tracked through the network. Less orders means less override.
The way I manage my clients ROI is to remove costly network overrides. How? By taking my clients onto private affiliate networks. Because I manage the affiliate accounts there is less reliance on any account management from the traditional affiliate network. The networks serve as tracking platforms with publisher recruitment tools. Everything else needed to create fantastically successful affiliate programs is driven by myself.
It is important to know exactly how much your affiliate network will be charging in network override. This should be clearly communicated in opening negotiations and stated in your contract.
If you would like to discuss how I can grow your program whilst delivering strong ROI, then please get in touch.
