In-house, agency or network?

Alistair Nichols

Webgains

Wed, 27-04-2011 15:23

Go it alone, purchase a white label tracking solution and set up your own in-house network? Use your existing agency or hire a specialized affiliate management agency to run your program? Or join an affiliate network, opt for a self-managed or account-managed solution, and utilise the network’s tracking and reporting technology, experience and payment solutions?

Each option offers benefits and disadvantages, and there isn’t a ‘one size fits all’. The right solution for you will depend on many factors, such as:

• Which activities do you want to be personally involved with?
• What sort of business you are in?
• What amount of control do you require over your brand usage?
• What scale benefits you are able to achieve?
• What’s your marketing budget?
• How long you have been established on-line?

Running a program in-house
The main benefit here is clearly the perceived cost saving. You’d be cutting out any override, management fee or set up costs that a network or agency could charge. Having a direct relationship with the affiliates enables you to negotiate the commissions directly and possibly give yourself room to offer more than your nearest competitor, should you choose to pass on the saving to your affiliate partners.

There are however, many pitfalls to running your own in-house program. Unless you’re a very well-known brand you’re going to find recruiting the biggest affiliates difficult, and the labour intensive work involved can’t be underestimated.

Managing an affiliate base, including providing support and payment solutions, takes a lot of time and effort. You have to be sure it doesn’t distract from your core business focus. Affiliates will only join your program if they have 100% trust that sales are tracked and they will be paid promptly and correctly. If they don’t know you or your brand, they may not join your program.

In-house programs have worked well for the likes of Amazon (with their huge in-house resource) and now eBay, but in the latter’s case this was after years of running a very successful program on a network and building up trusted relations with affiliates.

The most successful affiliate campaigns are built on relationships and confidence in technology, tracking, market experience and payment. Going it alone means putting some major hurdles up before you have even entered the race.

Working with an agency
Working with an agency you already have a relationship with has the obvious advantage that they already should know everything about your marketing strategy, brand and how you want to be represented. An agency is more likely to have a view of the fully integrated marketing plan, so integrating the affiliate strategy should be seamless and efficient. It is a question of scale as to whether the cost of instructing an agency outweighs the cost of hiring internally after factoring in salaries, bonuses, benefits, taxes, supplies, etc.

Employing an affiliate management agency has further benefits, as they’re specialists in this field. They’ll have much more experience managing affiliate campaigns, and are better plugged into the affiliate world than most of the larger agencies.

You would be able to leverage long established relationships with hundreds, if not thousands, of established affiliates. One email from a reputable affiliate manager can help you get instant trust and traction that you just can’t get on your own.

Experienced affiliate management companies also know which affiliate networks to join to recruit affiliates based on your product or industry.

Running a program with a network
The most common way to launch an affiliate program is to join an affiliate network. Of course there’s lots of choice, and each network has their own USPs.

The great thing here is that you’re tapping into a network of affiliates built up after many years in the industry. You also have instant access to the knowledge and experience of the network’s account managers, who are usually on-line affiliate managers specialised in specific sectors. Remember, it’s in the interest of the affiliate to be joined to every network so it’s very rare that one network has exclusive deals with the biggest affiliates.

So how do you choose a network?
Look at their record of customer service, both for you and your affiliates, and their record of developing their technology.

Using a network means paying (in most cases) a 30% override premium so you want to know this will be spent wisely. Here are some questions to ask of any network you’re considering.

• How many accounts will your account manager be working on?
• How much of their time will be dedicated to optimising and marketing your program?
• Ask your network for a detailed Service Level Agreement, and compare and contrast the offerings.
• With regards to technology, does your network offer ‘Whistles and Bells’ or are they just tracking your sales and paying your affiliates?
• Can your potential network manage voucher codes effectively?
• How do they police your PPC policy?
• What fraud protection technology is on offer?

Whatever your specific requirements, you will not find better advice than by consulting on-line affiliate forums or by speaking to other people in your situation at events.

Alistair Nichols is Head of Agency Development for Webgains. He is responsible for developing the agency sales strategy, and for managing the agency sales team and their relationships with UK and European agencies.