Pros and Cons of Working with Affiliate Management Agencies

Are you starting an affiliate program and looking for someone to manage it? Or perhaps your affiliate program launch occurred months ago and you have, finally, realized that you cannot run it on autopilot, yet you cannot do everything yourself. In both situations, you have two major options: hire an in-house affiliate program manager or work with an outsourced program manager from one of the numerous affiliate management agencies out there.

Some merchants, especially those with a large product inventory and/or a high volume of sales, may find more value in combining the two options. Also, if you decide to run your program on an affiliate network, depending on the network you choose, management services may be available at an additional cost.  In this post, we will focus on outsourcing.

Before we review the pros and cons of outsourcing your program’s management to an agency or having an outsourced program manager (OPM), an important clarification is due. Although outsourced management brings about numerous benefits, your ability to enjoy them will largely depend on the agency you choose to work with.

10 Pros of Working with Affiliate Management Agencies

1. Expertise

As the below-shown FMTC‘s definition suggests, the first and most important thing affiliate management agencies bring to the table is expertise. Their teams are formed of affiliate marketing experts who know all about launching and growing a program like yours. Unlike with in-house managers, where you may need to provide them with further training, outsourced managers have already received all the training they need, and, even if that is not the case, the agency will take care of it.

Moreover, when outsourcing management to an agency, you get more than one expert — you get input from an entire team. When faced with a challenge, lacking certain information, needing advice or insights, an outsourced affiliate program manager will not hesitate to consult with their colleagues. Team members will also share news and discuss threats, opportunities, and best practices.

2. Experience

Experience is important in affiliate program management and can take many forms. It shouldn’t be hard to find an agency with experience in your line of business, managing competing or related programs, and using the affiliate marketing network or affiliate tracking software that you’ve chosen for your program.

The best-reputed affiliate management agencies have proven track records and experience in most niches, often not only in management but also as affiliates. Their experience could make a huge difference in how your program sets off. And, as mentioned above, you’ll benefit from the experience of an entire team, not just of one person.

3. Toolset

Besides expertise and experience, managing an affiliate marketing program requires a comprehensive set of tools, meant to help with:

For a merchant, the costs of running their affiliate program could easily add up. Affiliate management agencies already have their own subscriptions for these tools. The best-reputed ones often gain access to innovative and otherwise very expensive tools for free, to test them and provide feedback.  They gladly use their tools and resources to grow the affiliate programs they manage, police affiliates, and protect their clients’ reputation.

4. Relationships

As teams of experts with experience in everything related to affiliate marketing, agencies also have relationships that they gladly leverage for the benefit of their clients. Whether you need recommendations for a particular product or service, contact details, or an introduction to a third-party, you can count on your affiliate manager to provide them or otherwise facilitate them.

Agencies also have excellent relationships with most affiliate and sub-affiliate networks and dedicated support representatives or contact persons that they can reach out to if something happens. This means that any issues that may appear during the setup or management of your affiliate program will be solved promptly.

5. Discounts, Waivers, and Other Perks

Many affiliate marketing networks and advertising platforms have steep integration fees. Working with the right agency could help you avoid or diminish them. How would you like to have the setup fee waived and/or pay 50% lower commissions to the affiliate network you run your program on? It’s possible, and many other financial benefits are at stake if you choose your OPM carefully.

6. Publisher Database

Having managed other affiliate programs in the same niche, agencies usually have a huge database of publishers (including “super affiliates“), sub-affiliate networks, and content monetization platforms to contact and convert into your affiliates. For example, AM Navigator has a database of more than 25,000 publishers, many of which read our blog and follow us on social media as well.

AM Navigator stats

7. Representation

The pandemic made benefiting from representation a little more difficult this year, with most affiliate marketing conferences being canceled, postponed, or moved online. Leaving these unfortunate circumstances aside, working with a reputed affiliate management agency can get you considerable exposure.

All respectable agencies attend and have representatives speaking at industry conferences, trade shows, and other events. They will not hesitate to bring the programs they manage into the spotlight. Our very own Geno Prussakov is the founder and chair of AM Days and speaks at numerous events not only in the U.S. but also in Europe.

8. Brand & Affiliate Program Protection

Although affiliate marketing can hugely benefit almost any business, it also brings in a certain degree of risk. After all, you are trusting and paying others to market your products and services. Some affiliates will not hesitate to resort to TM infringement, deceitful advertising, parasitism, and other unwanted activities. They will trash your brand name, steal you and your affiliates’ commissions, and cause you to lose sales and money.

A seasoned affiliate manager will know how to prevent, discourage, and take measures against such behaviors. They will reverse fraudulent transactions,  remove and report the affiliates who generated them so as to take away their motivation, make sure that commissions reach their rightful owner, etc.

For that, they will use the above-mentioned tools, carefully review affiliate applications, consult and contribute to affiliate blacklists, monitor affiliate traffic and sales, keep good affiliates close through newsletters, emails, and social media posts, and, especially, resort to transformational leadership.

9. Cross-Promotion Opportunities

We’ve already established that affiliate marketing agencies manage several programs at the same time. It is not uncommon for those programs to be in the same niche or in the same vertical and target the same affiliates. As part of their affiliate recruitment initiatives, agencies could promote one affiliate program to matching affiliates who drive performance in others. Sometimes, they actually challenge affiliates to drive similar results in several programs and reward them accordingly.

They may also facilitate cross-promotion between merchants. Let’s say you sell shoes and your agency also manages the affiliate program of a handbags manufacturer. You could sell bedsheets or bed frames and the other merchant could sell mattresses. As long as you don’t compete with one another directly and there are no quality-related obstacles involved, why not promote one another and skyrocket your sales? This is extremely easy when you have an affiliate program manager in common to mediate the relationship and monitor promotion and results.

10. Credibility

Publishers, at least the most desirable ones, choose the affiliate programs they join and the merchants they promote carefully. They will rarely join a program with no sales and statistics, promote a startup, or recommend a product or a service they have never tried and which lacks user feedback. They may take the leap of faith if they receive the invitation to join from an affiliate program manager they know and respect or if they notice that the program is managed by an agency with reputation.

5 Cons of Working with Affiliate Management Agencies

1. Lack of Product & Other Internal Knowledge

Some merchants worry that if the affiliate program manager has not worked for their company, they do not know their products, services, or their target audience. This is not necessarily true, and it is certainly not something that cannot be fixed. On one hand, when taking over your affiliate program, the agency you choose will appoint a manager or a team with experience in your niche. On the other hand, if the manager appointed to your program does not know your products or services, it does not mean that they cannot learn.

You can be sure that they have studied your website and your products and services carefully before accepting to manage your program. They also have some understanding of your target audience. All you have to do is provide them with the missing information (descriptions, best-sellers, sales and traffic data, demographics, etc.), or connect them with the people on your team who can provide it.

As one of our clients put it in their review of AM Navigator for Clutch, if you want performance, you have to equip your affiliate program manager with the information and tools to drive it and work closely with them. Don’t think of the relationship with the affiliate management agency as one between an employer and their employee! It should be a partnership between professionals with a common goal. Including a performance-based component in your payment agreement is key to ensuring that.

Moreover, contrary to what you may be tempted to believe, their apparent lack of knowledge could work in your favor. Your affiliate program manager can provide a fresh, unbiased perspective of your business and affiliate program. They can help you see everything through affiliates and buyers’ eyes, without letting your internal rules and processes or some employment relationship influence their perception.

2. Lack of Control & Perceived Loose Accountability

This obstacle is often raised by merchants who feel the need to control all aspects related to their business. An employee is easier to control than a third-party service provider. If they don’t work their due hours, don’t come to the office, or don’t follow instructions, the former can be penalized and even fired.

You cannot do that with an outsourced program manager. Also, they may not be available for phone calls or meetings without prior notice. All you can and should do is trust that they will work the agreed number of hours, live up to their end of the deal, and comply with your reporting rules. You can have them report to you weekly or monthly, maybe impose a deadline for them to answer emails and review affiliate applications.

But what do you really want: another employee waiting for their next paycheck or a professional who knows how to drive performance and that if they don’t do it they won’t get paid? You should not even try to enforce performance. The key to obtaining it is making it desirable. As mentioned on numerous occasions, you can do that by including a performance-based component in your payment agreement with the agency.

3. Unavailability for Tasks Not Related to the Affiliate Program

Too many merchants hire affiliate program managers but expect them to take over many other responsibilities outside the scope of their work. Common examples include organizing PPC and influencer marketing campaigns, working with the sales and design teams, creating content, managing social media accounts, and/or supervising various other marketing-related activities.

If that is your goal, then, indeed, outsourcing your program’s management may not be the best idea. But you can be sure that a Jack-of-all-trades will never obtain the results an expert allowed to do their job and not distracted with a million other responsibilities will. There are simply not enough hours in a day and, even if there were, one cannot know and do everything flawlessly.

So the real question here is: do you want performance or mediocrity? If you want the former, you are safe working with an affiliate management agency. You can also be sure that your outsourced manager will work closely with your team to align your affiliate program with other marketing campaigns and drive performance. If you want the latter, I can only wish you good luck finding the right person for al those jobs and getting results.

4. Costs

It seems justified to think that working with affiliate management agencies costs more than hiring a single person for the job, doesn’t it? Well, that could be the case if you had the entire agency working exclusively on your affiliate program. However, in 99% of cases, that is not necessary. Moreover, due to their extensive knowledge, experience, skills, and access to various tools, resources, and a vast publisher database, outsourced affiliate program managers can accomplish more with less.

So no, working with an agency won’t cost you more. On the contrary, it should cost you less, as you won’t be paying dental insurance and other benefits. According to Glassdoor, the average affiliate program manager earns around $5,000/month, $60,000/year. Depending on your business and program’s specifics, you may be able to find an affiliate management agency that charges a five times lower retainer fee.

Those will surely negotiate a consistent performance bonus and, indeed, in some cases, the costs may even exceed the above threshold. However, for that to happen, you would have to sell like crazy. High sales are not a guarantee with an in-house manager and they should fully justify the potentially higher costs of working with an affiliate management agency.

5.  Lack of  Loyalty & Commitment to Company Goals

In an ideal world, employees are loyal and fully committed to you and your company’s goals, so you would be right to want an in-house affiliate program manager. In the real world, Gallup reports that 85% of the global workforce is not engaged, so you have only 15% chances of seeing your dream come true. Your new employee will probably care about their paycheck and benefits only.

While affiliate management agencies don’t necessarily adhere to their clients’ company culture and some of their goals, they can be determined to share the same interest. The best agencies and managers earn their money from the performance component of their agreement, not from the retainer fee. That means they will be just as interested as you to grow the affiliate program and drive sales and profits.

Also, since it’s their reputation on the line as well, you can be sure they will work hard to protect and consolidate it, and protect and consolidate yours in the process as well. One they’ve accepted to manage your affiliate program, they’re your partners in everything, no matter if you win or fail. What more could you wish for?

Interested in Finding out More about Working with Affiliate Management Agencies?

At AM Navigator, we fully understand your reluctance to trusting outsiders to manage your affiliate program. That is why we’ve put together this list in the first place. If you’d like to find out more about what having your program managed by an agency like ours means and how much it would cost, get in touch and give us more details about your business and your plans! We will gladly provide the answers you need and schedule a free preliminary consultation to help guide your steps.

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