Third Party Funding for Affiliate Campaigns

Media Funding Corporation, a funding source for direct response campaigns in TV, radio, print, voice broadcast, mail and email, is now in the affiliate marketing space.

It’s an interesting prospect for affiliates that typically front a lot of money for a successful campaign, but have a lag in the time they get their commissions, so they are not able to efficiently re-invest.

I checked in with Matt Glick of Media Funding Corporation about about the cost to the affiliate for taking on funding, and he shared a hypothetical profile:

An advertiser is marketing a nutraceutical product online, using only affiliate marketers through a network. The offer is a trial, converting to continuity. The marketer is charging $10 at the trial, $50 at the conversion, and $40 in continuity. 75% of the trials convert, and 50% of those make it to the first continuity. The commission currently offered to affiliates through the network is $42, and the network is pocketing $7 of that commission. The affiliate sees $35 per sale.

Since this is affiliate only, and performance-based, we have several places that we could put loans:

1. Our “traditional” model would loan the advertiser $42 per commission, paying those dollars directly to the network, and recover those funds from the trials, conversion, and continuity payments. We
   will proportion our recoupment schedule to the cash flow, meaning that we would generate invoices to match the projected funds coming in on a percentage basis. This way the advertiser pays as the funds come in, ensuring positive cash flow. We’ve done this in DRTV for over fifteen years, very successfully.

2. Network funding would pay the $35 to the affiliates on behalf of the network, before the advertiser’s bill is due. This allows the network to extend better terms to their advertising clients, and shorter terms to their affiliates. When the advertiser pays, we recover our funds and release the remainder to the network.
3. The direct-to-affiliate funding model would pay the affiliate a significant percentage of their commission (usually 40 to 60%, depending on our track history with the particular affiliate) within a few
   business days of generating the sale, and the remainder when the network pays the bill. For affiliates, this guarantees cash very quickly, using the network’s payable as the source of repayment.

More details on the affiliate side of Media Funding Corporation at www.affiliatefunding.biz.