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Ask HN: Anyone Use Affiliate Networks to Acquire Customers?

18 points by mstefff 283 days ago | 6 comments

Hey,

At the very early stages of a commercial webapp in development. I've been very interested in leveraging affiliate networks like CJ to acquire customers easily. Being that the app will be subscription-based, I wouldn't mind paying 1.5-2 months generated revenue based on their leads.

Has anyone used such networks to acquire customers, and if so, what do you think about it? Was it successful? Paying for guaranteed paying clients seems like it could lead to any business being profitable - as long as you have a product that people will pay for.

Thanks..

3 points by il 283 days ago | link

I can comment on this from the perspective of an affiliate promoting products on networks like CJ. Affiliate programs can be a very profitable way to gain customers, but there are lots of issues that come up. In particular:

-Before your product is listed on an affiliate network, you need to put down a significant investment- mid to high $XX,XXX as a prepayment to the network

-Especially for a webapp, there could be issues of rampant fraud-affilites using VCCs to sign up and so on- this is something you will need to be proactive about filtering out

-Products that do well on affiliate networks have a large target market- if your webapp is niche affiliates won't bother to take the time to set up campaigns to promote your product

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2 points by alex_c 283 days ago | link

>-Before your product is listed on an affiliate network, you need to put down a significant investment- mid to high $XX,XXX as a prepayment to the network

There is an entire pecking order of affiliate networks. You might convince the smallest ones to take you on without any prepayment. Next step up require around a $5000 prepayment, but might waive that if you can show proof of sizable traffic or revenue. Mid to high $XX,XXX is only to play with the big boys (and even there, my impression was that it's possible to get that waived if you already have enough sales from other sources - but I might be wrong on this).

I agree with your other two points.

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1 point by spooneybarger 283 days ago | link

fraud has become a seriously large issue on many affiliate networks over the last few months. something a client of mine has seen: people are signing up as affiliates and using stolen credit cards to sign up and get paid hopefully before anyone notice and the chargeback rate goes through the roof. they were hit so hard by this that their chargeback rate went up 400% in less than 3 weeks in january. be very careful to protect yourself from fraud if you are running on an affiliate network. it used to be that they just had issues with having some sleazy people joining, now, there are issues with straight out criminal behaviour.

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1 point by mstefff 283 days ago | link

Regards to the prepayment, you sure there aren't networks that just bill when fees are due?

Regards to fraud, that's definitely a real issue.

Regards to niche, from what I've learned from doing some affiliate work and research, niche is extremely important and much desired by affiliates - even though my product isn't narrowly targeted - just saying..

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2 points by sanswork 283 days ago | link

Most networks won't do this because it opens them up to risk or a merchant not paying and still having to pay their affiliates. Also because different affiliates get paid at different times so a big affiliate might be net 10 or even net 5 most will be net 30 or 45.

Make sure you design a good landing page and test test test. No one will run your campaign for more than a few days if it doesn't convert reasonable well.

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2 points by gotrythis 283 days ago | link

CJ is a high-end network. There are much cheaper options, like clickbank, which is often used for webapps. Depends on your market to an extent.

One of the potentially false appeals of an affiliate network is easy access to affiliates. You still need to get their attention somehow, prove your sales conversions, and demonstrate that you actually have a good product worth promoting.

I have been very successful in selling my web app by simply setting up a self-hosted affiliate solution (we wrote our own, but idevaffiliate is good) and going to conferences to befriend the people who already have access to my market, well in advance, and then organizing a launch with them getting good commissions.

The "if you put it on cj, they will come" marketing model isn't going to get you near the same kind of loyalty and promotions that you will get from connecting with real live people and getting them excited about what you've done.

John.

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