Today we would like to talk about the main pros and cons of affiliate programs of medium-sized hosting providers. This is relevant, because more and more companies are abandoning their own monolithic infrastructure somewhere in the basement of the office and prefer to pay the hoster, instead of fiddling with the hardware themselves and keeping a whole staff of specialists for this business. And the main problem of hosting market affiliate programs is that there is no single standard here: everyone survives as best they can and sets their own rules, restrictions and rewards. Well, we would also like to know the opinion of potential participants in these programs.
Three Types of Modern Affiliate Programs
To a person who is not familiar with the concept of βhosting provider affiliate programβ, it may seem that we are talking about some kind of preferences for customers or promotions and discounts, but in fact, an βaffiliate programβ is just a model for selling hoster services through third parties. If we discard the high wording, then all affiliate programs come down to one simple thesis: bring a client to us and get your gesheft from his check.
We remember that each hoster has its own rules and cockroaches, so we can conditionally distinguish three main types of affiliate programs:
- banner-referral;
- direct referral;
- white label.
All affiliate programs come down to the βbring a clientβ thesis, but each case has its own nuances and features that you should keep in mind if you plan to get involved in this story.
Banner referral system
Its very name speaks about the mechanism of this type of affiliate programs. The advertising-referral model is focused mainly on webmasters and offers the latter to post information about the hoster on their sites with a referral link, which will be credited in the future.
The advantages of this system are that it does not require any special gestures from webmasters and allows you to passively look for additional sources of income using administered sites. I placed a banner or a clickable link in the footer of the page and sit like a fisherman, wait for someone to go to the hoster using this link or banner and buy its capacity.
However, this system has more pitfalls than benefits. First, it may be more profitable for a webmaster to attach a Google or Yandex banner instead of advertising such a highly specialized service as hosting. Secondly, in the banner model, there is always the problem of delayed sales, when the client found information from one device, but made a purchase through a direct link or from another workstation. Modern analytics tools, userID assignments, and a session pooling mechanism, of course, can reduce the percentage of "losses", but these solutions are far from ideal. Thus, the webmaster runs the risk of doing charity instead of getting at least some penny from a regular advertising banner on his site. In addition, many hosters require you to be their clients to work on this model, which is not always suitable for our webmaster.
And of course, it is worth remembering the meager reward for such activities. Usually this is 5-10% of the net check of the attracted client, although there are exceptional offers with a rate of up to 40%, but they are rare. Plus, the hoster can set withdrawal limits for the referral program, as, for example, Selectel does, and set a cap of 10 RUB. That is, in order to get the first money, the webmaster needs to bring client companies for 000 RUB, excluding discounts, promotional codes and promotions. This means that the amount of the required check can be safely increased by 100-000%. This translates into the prospect of never seeing money for attracted customers.
In general, there are enough potential problems. Technically, anyone can take part in this affiliate program: after all, a referral link can be distributed on social networks or advertised on channels, communities or media platforms. But in fact, such a system is fully suitable only for administrators of highly specialized resources, where the percentage of potential buyers of the hosting provider's capacities simply rolls over and provided that the withdrawal cap is either absent or purely symbolic.
Direct referral system
It's still easier than in the banner model. A direct referral system for partners implies a model in which a partner literally βby the handβ brings a client to a hoster, that is, he takes an extremely active position in this process. In fact, the direct referral program is the performance of the function of the sales department by the partner. The hoster only needs to sign the contract and provide the client with the capacity.
In this model, the remuneration is higher and reaches 40-50% of the check amount for some hosting providers and data centers (provided that the partner has brought many clients, someone very large or a buyer for a certain tariff), or even a one-time payment of 100% of the monthly cost of the tariff. The average remuneration fluctuates around 10-20% from the check.
The main target audience of such referral programs is outsourcing companies that maintain infrastructure. Such a system is viable, as it can be beneficial to the end client. For example, no one excludes the option of an agreement between organizations on partial or full offsetting of referral remuneration on account of the services of a company supplying outsourcing services.
But here again there are pitfalls. For example, some hosters pay only a one-time fee, or limit the payment period if the total bill for the referred client or clients is too low. Thus, hosting providers are trying to "stimulate" the activity of partners, and in fact - reduce their own costs. Here you can also write down numerous restrictions on the type of services provided, for which referral bonuses are awarded, the agreed restrictions on the volume of purchases, payment terms (usually at least a month, and sometimes three), and so on.
White Label Programs
Behind the beautiful phrase "White Label" lies a resale system that is quite familiar to us. This type of affiliate program offers to completely independently sell other people's hosting capacities under the guise of their own. It comes to the point that the hoster guarantees that the client will in no way intersect either with billing or with the brand of the final capacity provider itself.
Such a program can be called somewhat adventurous, but having the right to life. True, in this model of attracting referrals, you get all the problems of a hosting provider in terms of billing, communication with a client, legal support, and so on, without direct access to the product you are selling, that is, without access to equipment.
Such a model looks really viable for aggregators - quite large players who have partner status in the "White Label" category at once with a number of popular hosters of different price categories. Such organizations can provide a fairly large pool of services to their customers, have established relationships with the technical support of each of the hosts. We must not forget about the powerful sales department, which ensures the profitability of the entire enterprise.
By the way, many hosting providers work on a similar hybrid model: without having their own data center in a particular region (or not having it at all), they rent racks for their equipment from some major player or data center, and already on This is how they build their business. Often, such partners additionally resell the capacity of the hosting partner if their own racks are not enough for some reason.
And in the end?
At first glance, it turns out to be an interesting situation: participation in the referral program is necessary for everyone, except for the end buyers of computing power. It seems that this whole story is based on principles similar to those of Herbalife network marketing. But on the other hand, everything is not so clear.
In the first two models (referral-banner and direct referral) the system of recommendations works. That is, the partner of the hosting provider, as it were, says βthis hosting is worth using because ...β and gives some arguments in the form of price, support, or physical location of the data center of the capacity provider. In today's competitive environment, taking care of your own reputation is a top priority. No one in their right mind would advertise a frankly bad hoster to their own clients. The only question is whether the referral fees are worth it to engage in such advertising of someone else's business.
In the case of a White Label program, everything is much more complicated. Here a lot depends on how the partner will work, what level of service he can provide in terms of support, billing and just tariffs. As practice shows, some cope, while others cast a shadow on the entire domestic market of hosting services.
This is important to us, because we have our own data center, equipment and experience, but we are actively developing an affiliate program right now. So what do you think should be the ideal referral program for an affiliate or end client? Have your say in the comments or .
Source: habr.com