Affiliate networks have been a part of online marketing since the inception of the web, and are often touted as a win-win situation for the client and the affiliate; the client only pays for the sales the affiliate generates. But while other mediums have evolved over time, affiliates seem to be stuck in a bad business model that I would argue can limit a brand’s potential, or even cause brand damage.

Is this the fault of the affiliate, the affiliate networks, or the client that hires them? My vote would be to distribute responsibility amongst all three, with the bulk of the accountability on the shoulders of the client, for failing to incentivize a new model that would benefit both themselves and the affiliates.

Generally, the setup is as follows: Affiliate networks house many affiliates, who buy media on behalf of clients. Clients pay the affiliate networks a fixed amount for each sale that an affiliate instigates. The network then disperses this payment to the applicable affiliate, taking a percentage (usually a single digit figure) of the profit.

The problem with this payment structure is that it incentivizes the affiliate to purchase the cheapest media to accomplish the sale—generally brand or late-phase Customer Journey phraseology in Paid Search. Taking the easy way can create brand confusion, unnecessary competition, and potential conflict in messaging. Furthermore, the client can end up paying more for the sale than they would have by purchasing media directly. Loss of efficiency and brand equity: hardly the win-win situation that affiliates are purported to be.

To compound this problem, the current incentives established in many contracts are hardly worthwhile, for the affiliate. I recently reviewed a contract offering ‘prizes’ to the top affiliate, including things a 20 year-old guy might want, but nothing a business would seek. This is inefficient for all parties and does nothing to grow sales.

The network itself can also be a hindrance to progress; instead of allowing the client to select a limited set of motivated partners, they supply affiliates based on their own self-interest. Thus, the potential real value is further diminished. The networks have been responsible for some questionable use of technology, in terms of tracking and sales attribution that I have noticed in European models in particular. These issues do further harm to the perceived value of the network.

I advocate the client-affiliate relationship only so far as a mutual benefit can be achieved. First, the clients should restrict affiliate-generated sales to an appropriate  % of total sales, in order to preserve brand integrity, and maximize profit volume or market share. They should incentivize the use of early phase media by paying a higher percentage of profit for those long-tail sales. To prevent brand degradation, they need to set up clear rules on affiliate media purchasing and messaging. Lastly, tracking and technology issues should be addressed through the client contract, not the affiliate network, to prevent any of the aforementioned problems.

If this new model is created, we may begin to see healthy affiliate programs, where Brand equity is preserved with increased sales and customer reach, and affiliates are profiting at higher percentages than previously. That seems like a real win-win situation.