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Subnetwork Utility Shifts From All-In-One Solution to Strategic Tool, Providing Incremental Revenue

  • Revenue data continues to show subnetworks take up a lesser majority of commerce publisher revenue

  • Smaller publishers should still see the value of working primarily with a subnetwork, as SAAS fees continue to make less sense financially

  • New models of monetization provide a path forward for subnetworks by providing publishers with incrementally higher CPAs to lure them back on-platform

The CAPs, hosted annually by Skimlinks, award content publishers on performance and quality of their content. For Skimlinks, a subnetwork geared primarily towards content publishers, the CAPs are a time to showcase publisher content that features their links. There are over 10 categories that publishers can enter, but the catch is that all of the links in the story must utilize the subnetwork to qualify for an award.

Over the years, it’s been fascinating to see publishers large and small take home awards from content solely featuring Skimlinks links. Last year, award winners included Condé Nast, Hearst, Dotdash and USA Today.

This reality proves that even the largest publishers still work with and rely on subnetworks for meaningful revenue streams. It also bucks the perception that larger publishers do not depend on a subnetwork in any meaningful capacity.

Although large content publishers like Forbes continue to prioritize direct relationships to make their business more strategic, new waves of monetization and traditional subnetwork value propositions still keep even the largest content commerce publishers on subnetworks for a variety of reasons.

Subnetwork value

The value-add of a subnetwork originally came from the logistical and cultural challenges a publisher would face in building a new revenue stream on their own. Right off the bat, the subnetwork takes on the majority of the education around affiliate marketing for prospective publishers by meeting with leadership and stakeholders to champion the revenue stream at your organization. And once a publisher is signed up, subnetworks create an environment that makes it easy for the publisher to make money. This includes an all-in-one relationship agreement and easy-to-use reporting dashboard.

Subnetworks also provided meaningful technology resources for publishers to scale their reporting and operations in their early days of business. Some publishers, who might not get the support internally to build page-level reporting tools or don’t have the budgets necessary to work with other vendors that provide some of these services, would find such resources invaluable.

In the early days, reporting success to stakeholders was a dream. Publishers could operate on an accurate and easy-to-read reporting system without any engineering or third-party development work. They could move fast and focus on what they are good at: writing stories that can be monetized.

But this is not your mom and dad’s affiliate landscape anymore. As the industry matured over the last decade, this subnetwork value proposition became less important as relationships became more strategic. The reality was, relationships were going to go direct, because revenue was getting larger and larger.

Although a subnetwork’s agreements with publishers are proprietary, the average revenue share model is about 25% network and 75%publisher, which can evolve depending on the publisher’s commitment to the relationship in both revenue and traffic. This revshare became trickier as publishers continued to make more money. As revenue grew for the largest publishers, that 25% fee looked less and less appealing to the publisher that was already reinvesting internally.

“As much as possible, we do try to have direct relationships,” according to an executive at a leading content-focused affiliate site. “[We prefer that], because why would we leave revenue on the table?”

According to this executive, the trend kicked into gear about five years ago at their specific publication, but they aren’t alone in this. Today, they consistently lean towards taking relationships off a subnetwork as opposed to pulling them in through one.

According to Trackonomics, an company, most publishers have four or five networks when they originally join Trackonomics and have a sub-affiliate network constituting anywhere from 30 to 70% of their revenue.

As a publisher continues utilizing Trackonomics, they can easily add additional networks. “Over the course of time, most of the partners we work with now have an excess of 10 networks that they work with on average,” said Hanan Maayan, CEO of Trackonomics. The ease to add an additional network allows publishers to move further away from a subnetwork. “The average large publisher works with about 12 different networks, including some direct to consumer stuff, some more niche stuff, and the sub affiliate networks now constitute a minority of their revenue,” Maayan said.

Maayan argues that SAAS tools such as Trackonomics make more sense if you’re looking to scale a business and make a meaningful amount of revenue, rather than for a large-scale publisher or media company. “If you’re a publisher the size of Forbes or you’re making $1M in revenue, giving 25% of that becomes exorbitantly expensive and I think that, for a lot of publishers, that was a big deal,” said Maayan. “Even if an affiliate network cuts down their commission from 25 to 5%, 5% of $1M for a month is still crazy money – that’s over $83k per month.”

Trackonomics insists that this trend has nothing to do with them. “Trackonomics is a conduit,” Maayan said. “What I think has happened is that many of the publishers realized, especially the big ones, the ones that have their own brand name like Forbes, BuzzFeed, etc. that actually, we can leverage solutions like Trackonomics as an example, to make our lives easier to work with the networks in a more convenient kind of way. By having a direct relationship, we can extract a lot more money out of the brands and networks and I think once there was that realization, that’s when things started shifting very quickly.”

No one size fits all

Maayan’s experience comes from the publishers that Trackonomics does work with, but it’s important to note that Trackonomics doesn’t work with all major publishers. Although most content publishers have moved away from subnetworks as an all-in-one solution, publishers continue to utilize subnetwork services in a strategic manner. There are also outliers that depend, partially or entirely, on a subnetwork, and this comes from the utility and happiness with that subnetwork’s services. This does not mean commerce publishers have stopped utilizing subnetworks. It just means their relationships with them have changed on a fundamental level.

The long tail has proven to be a place where subnetworks will always remain a dominant player—even if a publisher does take strategic relationships direct, additional coverage is always good to have.

“As a publisher, for you to get rewarded for whatever may happen, a meta-network is your best bet,” says Anté Letica, Chief Operating Officer at Digidip. Digidip considers itself to be a “meta-network,” rather than a subnetwork, because the former is a more updated term.. “At some point, you don’t want to keep track of a merchant that’s making you $100 a month, so I would say meta-networks are really great for being a long-tail solution for publishers,” Letica said.

Another opportunity for subnetworks, specifically with the long tail, comes in the unpredictability of performance for new or emerging products. “Another thing a lot of the time you’ll see is products going viral overnight,” Letica said. “For a lot of publishers, it’s quite a headache to try and cover all of that and I think that’s where meta-networks come into play, because we pull in programs everyday from hundreds of networks, because obviously the one thing with affiliate is that editors are going to do what they want.”

Publishers find this long-tail service to be an essential part in their team’s strategic partnerships strategy. “Not everything that we recommend is going to be in one of our evergreen stories that drive a significant volume,” said an executive at a leading content-focused affiliate site.

Digidip has been quick to realize this reality and is leaning into this strategy. “What we try to tell publishers is that we are an extension of them and we can help them negotiate the long-tail advertisers and help them to make the best money they can,” Letica says. “Long term, I believe the business for meta-networks will evolve like that, because the other thing is it’s important to recognize that publishers do have their own partnerships teams, so you need to position your value as an extension of that team, instead of competing for their jobs.”

Publishers are also not quick to jump ship on subnetwork relationships that were nearly impossible for them to broker on their own. When a subnetwork goes out of their way to broker a higher rate or a whitelist relationship, publishers try to keep these relationships within the subnetwork.

“There have been some times in the past where we worked with a rep with some closed programs that were difficult to get into and they really went out of their way to advocate for us and get us in,” said the same executive at a leading content-focused affiliate site. “In respect for the relationship and the fact that they were able to get us the rates that we were looking for, we would keep the relationships there.”

Working with a subnetwork also brings the advantage of knowing where you fall in the landscape of other publishers. Although it’s difficult to know how much a subnetwork’s data represents the full picture considering publishers are ever-evolving and bringing relationships direct, “working with a sub-affiliate who works with every major publisher in the space, we can really tell you how you’re indexed against your competitors around where you are winning, where you’re losing, where you have market share and where you don’t,” said Lauren Newman, SVP of US Revenue at Skimlinks. “The more publishers work autonomously, the more autonomous their insights and their competitive advantage becomes, and we’re really able to illuminate that for publishers in a way they’ll never be able to do by working direct.”

For some smaller publishers, subnetworks may make more sense to work with than a direct relationship, especially if they cannot justify SAAS costs like those for Trackonomics. “If you’re a small publisher and you don’t want to pay for SAAS tools and you make $5k in commissions per month, potentially, it would make sense for you to forego $1k for you to go through a sub-affiliate network,” said Maayan. Even as growth happens, these smaller publishers still do not feel the need to take relationships directly in the same way that a larger publisher would.

ShopHer Media, a smaller subnetwork focused on influencers and bloggers like mommy blogs and Facebook groups, is a subnetwork dedicated to this micro influencer audience, which may be more inclined to consistently utilize a subnetwork as a part of their long-term partnerships strategy. “We’re working with retail leaders who will hold category exclusivity, access to 2,000 best in class publishers, and appreciate a white glove concierge service with program optimization,” said Laura Press, Director of Partnerships at ShopHer.

ShopHer is able to broker deals with brands that their publishers are interested in working with and broker deals they may not be able to get otherwise, similar to other subnetworks. ShopHer is seeing 25% growth year over year, attributed to both an increase in influencers utilizing their services, and existing partnerships growing, according to Press.

But a publisher does not need to be a micro influencer to utilize subnetworks strategically. Some large content commerce publishers still depend on subnetworks for most of their revenue, or at least for their most strategic relationships. For one publisher at the largest newspaper in the country, they prefer to run their fashion and beauty relationships through Skimlinks. This publisher also said that utilizing a subnetwork is the key to managing a partnerships team strapped for resources, even if it is a larger title.

Lauren Newman at Skimlinks agrees that a subnetwork should be viewed as a tool, rather than a threat, to partnerships managers at publishers. Newman cited instances where publishers have run their partnerships teams ragged, just to put strategic relationships back on a subnetwork. Those are prime examples of why content commerce publishers should not be afraid to share the work with a subnetwork, she said.

“In-house commerce publishers think that their glory will come from doing it themselves and building things internally to be able to show management ‘oh, look at the things I’ve done,’” Newman said.

Subnetworks will evolve with client demands

Even if a publisher is utilizing a direct relationship with an advertiser, it may make more sense to strategically take a relationship back onto a subnetwork for revenue reasons. Narrativ has been a massively beneficial subnetwork for large publishers to receive rates far above standard in highly competitive categories like tech.

Many publishers (including Forbes) have utilized Narrativ for strategic relationships and have leaned in, especially motivated with uncharacteristically high CPAs from historically low CPA verticals like consumer electronics and beauty. This strategy goes against the sentiment that strategic relationships are better to be taken direct, partially because the information and access publishers have been able to receive through Narrativ still allows publishers to maintain the direct relationships, and utilize Narrativ more as an affiliate network as opposed to a subnetwork.

How is Narrativ able to offer such high rates as a subnetwork? The incrementally higher CPAs are partially fueled by subnetwork and advertiser marketers tapping into different budgets and markets outside of affiliate. Many believe that this added value is the future for subnetworks, but there are still some kinks to be worked out. Although these rates may be attractive, many publishers have experienced vendor-funded campaigns getting turned off quickly with no notice, including during peak sale periods like Cyber Week.

Thanks to Connexity’s budgets, Skimlinks has also worked in CPA increases through CPC campaigns, helping publishers to tap into what is more beneficial for them. For one publisher at the largest newspaper in the country, the future of working with subnetworks will likely include these new revenue types including CPC, bespoke campaigns, licensing and display ads.

Subnetworks are, and will always be, a meaningful player in a content commerce publisher’s revenue. Even the most established and well-respected publishers agree: “I don’t think that the value of sub affiliate networks is ever really going to go away,” said an executive at a leading content-focused affiliate site. Instead, their value-add has shifted as publishers and the revenue space as a whole has matured.

Once a one-stop-shop solution for publishers, subnetworks are now viewed as a network where you can leverage higher rates to a publisher’s advantage. The exciting aspect for publishers is that current and future subnetwork value propositions will continue to shift with their publishers, just as they have over the last five years.

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