I wrote up this piece a while ago and posted it on another forum. But since there seems to be an increasing interest here towards opening up CPA (or PPD - essentially the same thing) networks and the majority seem to believe that pretty much anyone can do it, I decided to re-write it a bit and post it on BHW.
So here goes ..
If you thought that this thread would actually give you a 4-step system to starting your own CPA network, then I'm afraid you're wrong. What I am going to give you though is 4 very good reasons why most of us shouldn't even CONSIDER opening a new network - be it a traditional CPA network, a PPD network or something else.
1. As with any business, you need a specific (and good) USP to succeed. While there's definitely some people who do have a USP, can differentiate themselves from their competitors and actually offer something new and attractive, the sad truth is that the vast majority of people looking to launch a network are exactly the opposite - and simply want to replicate the other 1000+ networks out there. This does NOT work.
2. Even worse than the point above, many people (especially over here on BHW) tend to come up with the WRONG kind of USPs. I've already heard from at least 5 people how they see the need for a "tolerant" CPA network, i.e. one that would accept most affiliates and would be happy with blackhat traffic - because after all there's a lot of demand and very few network around that cater to this demand. But there's a very good reason why networks don't do it - there's been a ton of "blackhat-friendly" networks around, and almost all of them have died in a matter of months, simply because the fact that the network is happy with this kind of (fraudulent) traffic doesn't mean that the advertisers are - and what happens a few months down the line is that the network simply won't have any offers left, and will get a ton of negative feedback because they can't pay their affiliates (due to their advertisers not paying them). So simply seeing demand for something doesn't automatically make a business idea feasible.
3. Contrary to popular belief, running a CPA network takes A LOT of (upfront) cash. Most wannabie network owners out there think that they can easily start their networks with a few grand of upfront cash by only paying their affiliates once they get paid from their advertisers. This is very far from the reality however. Even if you leave marketing expenses aside (let's say you're a marketing wiz and can get all the publishers you need through word-of-mouth marketing), most CPA networks out there, even the small-ish ones, float HUNDREDS OF THOUSANDS to millions of dollars. This is because, while the small guys are perfectly happy getting paid NET-30, I can guarantee that you won't find a single super-affiliate who would be happy with anything longer than weekly NET-3 payments. And this means that YOU will need to pay them weekly, while your advertisers still pay you monthly (yeah, you can just broker all your offers from another network that pays you out weekly and not run into this issue but then let's turn back to the USP part - you NEED to deal with several networks/advertisers, some of whom won't pay you weekly - or there would be no reason why a publisher would promote offers through your network rather than the one you're getting offers from). By the way - there's another popular myth out there about advertisers favouring networks to publishers and giving them better payout terms. This is entirely wrong as well - networks often get paid even NET-60 (!), literally meaning that they will have to float whatever their affiliates make for 2 months. Do you have this kind of cash lying around?
4. Perhaps one of the most important things is providing your affiliates with offers that they can promote. As I briefly mentioned above, most new networks that start these days (and go tits up in a matter of months of course) tend to broker offers from other networks - and this is another thing that simply doesn't work, unless you're already big or have some other competitive edge. Not only will you not get any serious affiliates (because serious affiliates would go directly to the network you're "borrowing" offers from), but often enough even medium affiliates don't want anything to do with you, simply because they can get better payouts for the same offers than those that you can provide. To clarify - NO network will give you a considerable pay bump based on projections - they want to see traffic first - but in order for you (your affiliates) to generate traffic, you will already have to offer better rates. And needless to say, approaching advertisers directly and getting actual, exclusive offers, takes a whole lot more than a few days of work and a few hundred bucks.
To sum it up, the fact that you can get a Hasoffers network up and running for $500 does not mean that you can get your network started (let alone generating revenue) for this amount. If you're actually interested in starting a CPA network then you will have to understand that it's a business that takes months (or more) of planning and a lot of upfront cash.
Take care,
Bryan
So here goes ..
If you thought that this thread would actually give you a 4-step system to starting your own CPA network, then I'm afraid you're wrong. What I am going to give you though is 4 very good reasons why most of us shouldn't even CONSIDER opening a new network - be it a traditional CPA network, a PPD network or something else.
1. As with any business, you need a specific (and good) USP to succeed. While there's definitely some people who do have a USP, can differentiate themselves from their competitors and actually offer something new and attractive, the sad truth is that the vast majority of people looking to launch a network are exactly the opposite - and simply want to replicate the other 1000+ networks out there. This does NOT work.
2. Even worse than the point above, many people (especially over here on BHW) tend to come up with the WRONG kind of USPs. I've already heard from at least 5 people how they see the need for a "tolerant" CPA network, i.e. one that would accept most affiliates and would be happy with blackhat traffic - because after all there's a lot of demand and very few network around that cater to this demand. But there's a very good reason why networks don't do it - there's been a ton of "blackhat-friendly" networks around, and almost all of them have died in a matter of months, simply because the fact that the network is happy with this kind of (fraudulent) traffic doesn't mean that the advertisers are - and what happens a few months down the line is that the network simply won't have any offers left, and will get a ton of negative feedback because they can't pay their affiliates (due to their advertisers not paying them). So simply seeing demand for something doesn't automatically make a business idea feasible.
3. Contrary to popular belief, running a CPA network takes A LOT of (upfront) cash. Most wannabie network owners out there think that they can easily start their networks with a few grand of upfront cash by only paying their affiliates once they get paid from their advertisers. This is very far from the reality however. Even if you leave marketing expenses aside (let's say you're a marketing wiz and can get all the publishers you need through word-of-mouth marketing), most CPA networks out there, even the small-ish ones, float HUNDREDS OF THOUSANDS to millions of dollars. This is because, while the small guys are perfectly happy getting paid NET-30, I can guarantee that you won't find a single super-affiliate who would be happy with anything longer than weekly NET-3 payments. And this means that YOU will need to pay them weekly, while your advertisers still pay you monthly (yeah, you can just broker all your offers from another network that pays you out weekly and not run into this issue but then let's turn back to the USP part - you NEED to deal with several networks/advertisers, some of whom won't pay you weekly - or there would be no reason why a publisher would promote offers through your network rather than the one you're getting offers from). By the way - there's another popular myth out there about advertisers favouring networks to publishers and giving them better payout terms. This is entirely wrong as well - networks often get paid even NET-60 (!), literally meaning that they will have to float whatever their affiliates make for 2 months. Do you have this kind of cash lying around?
4. Perhaps one of the most important things is providing your affiliates with offers that they can promote. As I briefly mentioned above, most new networks that start these days (and go tits up in a matter of months of course) tend to broker offers from other networks - and this is another thing that simply doesn't work, unless you're already big or have some other competitive edge. Not only will you not get any serious affiliates (because serious affiliates would go directly to the network you're "borrowing" offers from), but often enough even medium affiliates don't want anything to do with you, simply because they can get better payouts for the same offers than those that you can provide. To clarify - NO network will give you a considerable pay bump based on projections - they want to see traffic first - but in order for you (your affiliates) to generate traffic, you will already have to offer better rates. And needless to say, approaching advertisers directly and getting actual, exclusive offers, takes a whole lot more than a few days of work and a few hundred bucks.
To sum it up, the fact that you can get a Hasoffers network up and running for $500 does not mean that you can get your network started (let alone generating revenue) for this amount. If you're actually interested in starting a CPA network then you will have to understand that it's a business that takes months (or more) of planning and a lot of upfront cash.
Take care,
Bryan
