affiliate management in house vs agency

Affiliate marketing or, as it is being referred to more and more, performance marketing continues to blossom as an online marketing strategy, supporting a wide range of sectors by driving new revenue streams. In 2016, AMNavigator reported that developed affiliate programs generate 15% to 30% of all advertiser’s online sales. Yet, 78% of CMOs admit affiliate marketing to be their least mastered area of digital marketing.

This means, if you are a financial institution looking to increase the sale of your products and services or a marketer looking for new ways to get quality leads, it is vital to consider an affiliate management program.

Affiliate management consists of the following:

  • Proper tracking and report technology to monitor campaign performance
  • Recruiting and screening new affiliates to diversify exposure
  • Activating existing affiliates on new offers and promotions
  • Providing fresh creatives and content to create engagement
  • Monitoring and reporting on program growth and delivery
  • Optimizing affiliate performance to drive results

Choosing Between In-House and a Specialized Agency

When it comes to planning your affiliate management approach, you have two main options, and each has its pros and cons. The first option is to keep the management in-house. The second option is to leverage the expertise of an outsourced organization and partner with a company that specializes in affiliate marketing.

Read on to find out which solution is right for your business:

In-House

For an affiliate program to be successful it requires someone to manage it.  Managing an affiliate program is dependent on building quality relationships and taking a partnership approach with your affiliates. Therefore, it is important when establishing an in-house affiliate manager or team to dedicate resources to manage both the strategy and day-to-day operational activities.

Here are some of the pros of in-house affiliate management:

  • The team has direct access to key decision-makers and planning to provide affiliates with timely content.
  • Affiliate marketing can be fully integrated into the marketing team.
  • The team can learn from the affiliate strategy and apply these lessons to other channels.

And the cons:

  • It often detracts from being able to focus on other areas of the business, as managing an affiliate program takes time and resources, especially in the growth phase.
  • Building relationships with affiliates and creating a diversified, scalable approach can be challenging without an established network and understanding of the market.
  • It can take longer to achieve desired results, as affiliates require attention and need to establish trust in your tracking and reporting capabilities.
  • Affiliate networks normally have a finance team that oversees invoicing and commission payments. When running an in-house program, you will be ultimately responsible for affiliates being paid.

Affiliate Marketing Agency

Working with an external party means leveraging a team with expertise in a niche channel. You’ll have a dedicated affiliate manager working with you to ensure they are meeting expectations and growth targets. They handle the day-to-day work and provide regular reports to optimize performance.

Here are some of the pros:

  • Outsourcing can be resource efficient, as the key team members are already trained in affiliate marketing and have established relationships with affiliates.
  • They have bespoke affiliate technology and an established affiliate network, which ensures that you have the tools needed to quickly grow and scale across partners, payments, commission calculations and campaigns.
  • You have a partner who focuses on your industry and has relationships with affiliates in your niche, industry context and an understanding of key metrics that drive business growth.

Cons

  • When affiliate management agencies are not included in the overall business strategy, they can be less integrated in your overall marketing approach, which may be detrimental to program growth.
  • Outsourced partners require support from an internal resource to provide creatives, direction, and approvals when needed.
  • Depending on the business approach, resource costing internally, and prioritization logic, outsourcing can be seen as an unnecessary expense.

What about cost?

As it pertains to cost, since affiliate marketing is based on a performance model, the bulk of the cost will correlate directly with the results delivered by affiliates. These acquisitions ultimately contribute directly to the business’s revenue.

Managing a program in-house means an additional salary and overhead expenses, as well as a longer training and time to get up to speed. A salary can range from around $40k to $80k per year, which for some companies makes sense. With an outsourced agency, you’ll likely spend less than a full-time employee.

Ultimately, when considering what approach is most suitable to your business, key considerations should include your goal and future plans for the affiliate channel.

Still have questions on what approach to take? Please don’t hesitate to reach out! We’ll be happy to help.

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