Originally Posted by Varius

Supplying content is just one aspect of it and a very small one at that, since you are correct you would normally need that kind of stuff yourself for building in-house traffic network of blogs, mini-sites, etc...

You also need to consider the hassle of dealing with affiliates versus the return.

First, you need staff to support the affiliates. You also need staff to aggressively pursue new affiliates. Often, they are one and the same when they really should be two different departments. You need to either build or spend money on an affiliate program and maintain it. You need to handle payouts.

Second, how much company time and resources are wasted with no return? It's not very uncommon that an affiliate makes a special request and never follows through. For example, Affiliate X contacts program and tells them if they can do "this, this and this" for him, he can send them a ton of traffic. The company takes time to evaluate it, decides to implement it and the affiliate ultimately sends them nothing or his idea was a flop.

Third and perhaps most important, is the profit margins are much lower than doing it yourself. You constantly have to compete and match what the competition does in regards to promotions and payouts or you lose traffic. While there are loyal affiliates, I'd wager the majority want to make the most money possible and jump from promo to promo, always drop old programs in favor of the "hot, new sites", etc...

My recommendation is:

A) Build "cores" or small teams of employees who are given the required resources as well as traffic/sale targets to reach each week. Initially, you may have to spend some time and money figuring out the right formula, but once you do, things are mostly on auto-pilot and you simple scale, scale, scale by hiring more independant "cores".

B) Work out individual deals with specific sites or affiliates, that you believe will bring a quality return. This can include pre-paid deals, just be careful not to get screwed.