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Many times people think going direct to advertisers is where you "arrive" at a new level of the Marketing totem pole. For those who don't know, going direct to an advertiser means that you go directly to the website that you're promoting through an affiliate network and essentially bypass the affiliate network.
I've been there, done it a few times now and here are some of the reasons why I think it's not a good idea and should be done with caution.
First, You can get burned a LOT easier. I am actually owed over $8,000 from a campaign I ran direct back in February, 2009. The company had some issues with their payment processor and because they had the issues... Guess who is having trouble getting paid?! Now almost 5 months later, I am working on everything needed to get paid. Boo. Apparently this same company owes some affiliates over $600,000. I know that if that were my business, I would be extremely crippled from not being paid $600,000 for that much time.
With an affiliate network, they almost always will still pay you because they want to keep you as a publisher. They will pay you and fight for the money from the advertiser very aggressively. Makes sense.
Next, The payouts generally are not much better. These advertisers generally know what the affiliate networks are paying. So unless you're a huge advertiser, chances are, you're not going to get a much better payout that you could get at a network. Every time I have run an offer directly through the advertiser, the payout really has not been different enough that I couldn't ask for an increase from the network or could justify the risk.
Finally, Payout terms are generally a lot harder to negotiate. Advertisers, in my experience, are more about numbers and less about working with you. So payment terms are very strict unless again you're one of their top publishers.
All in all, I don't recommend going direct as an affiliate with an advertiser. It's just not worth the trouble and risk.
Thanks for the perspective Jonathan. I appreciate it. I hadn’t really thought of the downsides to going direct. I’ll take your advice and procrastinate going direct unless it seems unavoidable.
Very nice and informative post. Very useful for those who are looking for these kind of info.
I guess it all depends on your current relationship. In some cases it might work out better but you have to weigh up if the extra work is worth it.
Yup! But for rebill offers for example, I still wouldn’t go direct, even if it was my own grandma.
From an advertiser’s point of view, I’d like to add another perspective…
Before you work with any advertiser direct, ask around the industry to see what kind of track record an advertiser has:
- Is this the first offer they’ve ever run (inexperience with merchant accounts, affiliate management etc can be signs you might want to stay away)
- Have they been around long enough to go through several billing cycles (assuming they’re on a continuity model)
- Do they consistently pay on time?
- Have they been around long enough to have a good reputation?
There are very few networks who can absorb $600,000 from an advertiser without passing it down to publishers. I’d say you could probably count them on one hand. Let’s say for arguments sake that networks take a 20% margin. In order to make that $600K back and pay publishers, they’re going to have to generate over $3Million in sales. Most networks out there don’t do these kinds of numbers in two months let alone one.
As far as payouts are concerned, that’s only one part of a more important equation. What really matters is performance and the EPC you’ll get out of a campaign. Generally, if you run an offer direct vs through a network, you’ll usually earn about 7-10% more $ because of pixel misfires and a more direct tracking system. Advertisers can also help you increase your EPC’s by making landing page changes faster and more efficiently than playing the telephone game with a network.
Payment terms are definitely one area where networks can beat Advertisers direct. Networks are usually a lot more diverse with the campaigns they’re running, so they can float better terms to publishers. With the continuity model anyway, Advertisers tend to get money 15-21 days down the road, so money may not be flowing for a while.
My advice is to do your homework. There are lots of shady advertisers, just like there are lots of shady networks. There’s risk wherever you go, but if you do a little due diligence, you’ll be in good shape.
I know of a guy who did $800,000 in one day on rebill offers. It’s one of the industry records.
Anywho…
I really appreciate the comments from the advertiser side and they are all really good and valid points. Something that even might get me to think twice about it!
Thanks for your input luke!
My biggest issue has just risen with trying to work with an advertiser who has recently been temporarily deactivated on the affiliate network I’m on. I’ve consistently tried shooting some emails to the affiliate manager of the campaign and have yet to hear anything so I’m a bit concerned.
The moral of my small story, make sure ANY advertiser is legit, whether its directly or on an affiliate network.
The bad part is, advertisers expect affiliate not to rip them off, yet some don’t treat their best affiliates with a bit more urgency I guess.
Great post.I’ll be coming back to your site shortly
Hey jon,
this is just great advice.
Don’t try to cut out the affiliate network. Show some loyalty.
Thanks.
Yea I like to give those networks some cash 
I never even thought of skipping the middle man but I definitely won’t do it.
And of course the MAIN reason to avoid them: they will give you more money.
Yea who wants more money?
I enjoy reading your blog, Jonathan, but I have to say I think you’re completely wrong here.
No offense, as I don’t mean to imply you didn’t do this already – but it’s just infinitely more important to handle this like a real business when you go direct to an advertiser. There should be contracts to ensure you get paid. And if you don’t get paid still, your attorney sends a letter. If they don’t respond, you file a complaint.
If you’re sitting there thinking, “who wants to go through all of that??”, then you’re not making enough *extra* money going direct to make it worthwhile.
Hope that simple formula helps someone.
tl;dr = If you’re not going to make enough extra money this way to spend money suing to recover it, then stick with the public networks.
I think you are right jonathan. I agree it will create some risk if you go direct to an advertiser.
Telling someone not to form direct relationships is like telling them to never mature into an adult.
Saying that the payouts are typically not much higher when running direct is a relfection of your inexperience.
The power of multiple direct relationships is what makes creating your own offer possible.
Look at the most successful sites in almost any niche, and the odds are they have not one, but multiple direct relationships that make it all possible.
Use the networks to fill in the missing pieces. If you simply use the network offers… there is nothing stopping someone from coming in and duplicating you.
Like Luke said above, you must be sure about the advertiser before prompting directly with them. Recently I had to deal with one advertiser who refused to pay Hydra for the leads I generated. Hydra claimed to have called the advertiser numerous times but the advertiser never picks up the phone. Finally, I got so sick of not getting paid and demanded I should be paid regardless if the advertiser is not paying. Hydra came through and payed me finally.
Imagine if I had to deal with this advertiser directly.
Hmm……….I never realized that the pay out would be bad. I thought since it was better you and the advertiser, it would be high since there is no middle man (affiliate networks)
I always discuss with my friends about your blog. I’m a regular visitor of your blog and it help me always. Once again you really publish a great post.
It is still ok for me to use direct advertising because my sites are still very small and I basically take whatever i can get
Nice portion of tips. I can’t actually imagine being owned 600.000! It’s just like a bad dream. Also 8 k is a big problem… Especially if You are not huge international enterprise
[...] with advertisers can be good and bad. I know my buddy Jonathan Volk had a post stating why it is hard working with advertisers. I agree to a lot to what he got to say but sometimes advertisers want just your traffic and will [...]
I agree being an advertiser is hard. But I’m sure it’ll be okay in the long run.
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