Working with an affiliate marketing agency can definitely be a scalable and profitable approach for companies. But that doesn’t mean that every e-commerce company should work with an agency.
Before we delve into what to look for in an agency, let’s first discuss who doesn’t need an affiliate agency?
- Companies with annual online sales of less than $1 million.* It can be difficult for companies with less than $1 million in online sales to break even on affiliate management fees, as those affiliate programs are typically fairly small.
- New companies that don’t yet have brand recognition, clear messaging, an established business model, or a site that is converting. Affiliate marketing is not the right place to work out a company’s value proposition. Affiliates invest time and money in promoting companies and companies need to be respectful of that or they run the risk of losing those partnerships forever.
- Companies that have intentionally decided to run a small, private affiliate marketing program with only a few select partners. An in-house manager can generally manage this type of affiliate program without much difficulty.
- Companies that are not looking to grow their program. An affiliate agency is an investment and if a company is not investing in their program, the spend may not be worthwhile.
- Companies that use an affiliate program as a tracking platform or payment mechanism for business development partnerships (e.g. PR placements, e-mail sends, banner ads, articles, etc.) and has someone internally managing it.
* Smaller companies with annual online sales of less than $1 million, but who have the goal of growing their sales and want to invest in affiliate marketing, could benefit from consulting with an agency to help ensure that their program is set up properly with the sufficient rules, terms and conditions, fraud protections, etc. At this stage, an affiliate program could be managed by someone in-house as long as they have the proper training and the bandwidth to know every single affiliate in the program and what they are doing. Our RAMP™ program provides this level of support for growing online businesses.
So then, who needs an agency?
Companies that have over $1 million in online sales and want significant growth, but do not have internal team members with operational program experience, affiliate industry experience, or relationships with top affiliates.
Companies that fall into the “needs an agency” category (or even small or new companies looking to eventually grow their affiliate marketing program with an agency) should evaluate an agency based on the following criteria:
- Growth tools – Does the agency use recruiting tools, list buys, etc.? Do they provide clients with access to a large number of affiliates? Do they have a dedicated team working on publisher development?
- Robust reporting – Can the agency take the raw data provided by the network and turn it into reporting that’s meaningful and actionable for its clients? Developing reporting, spotting trends, and drawing insights from the data takes time and expertise.
- Fraud monitoring – What is the agency’s process for monitoring fraud? Does it have team members who specialize in fraud and fraud prevention? What type of tools do they use to identify fraud? Do they use a tool to find trademark PPC bidding?
- Size and experience of the team – How many full-time affiliate team members work within the agency? How many years of operational program and affiliate industry experience do they have? How many affiliate programs have they managed? In what industries? Do they have established relationships with top affiliates?
- Network– Does the agency have a database of affiliates? If so, how many affiliates are in the database? How many affiliate networks do they work with?
- State tax nexus knowledge – Is the agency on top of which states have passed sales tax laws that may affect companies with affiliate marketing programs? Will they proactively inform clients of these laws?
- Familiarity with FTC guidelines – What does the agency do to help ensure that affiliates are correctly following FTC guides in their promotions so that the brand isn’t exposed to lawsuits?
- Network rates – What type of cost savings can the agency provide a company in terms of network rates? Can they get free placements and advertising for their clients? Do they get free passes for clients to network conferences?
- Contacts – Do they have a network of publishers, networks, and other key players within the industry?
- Event attendance – What industry events do they attend? How often do they attend? How are they leveraging them for recruiting opportunities?
- Case studies – Ask agencies for their case studies about campaigns they’ve run and results that they’ve driven.
- References – Ask agencies for references and be diligent about checking them. Also, ask agencies to provide you with contact information for clients that have left the agency – or research companies that have left and contact them about why they left.
Even when a company finds an agency that has all of these resources and processes in place, it’s vital for companies to first evaluate themselves in order to ensure a successful, long-lasting, and productive partnership. There are three main areas companies need to be clear about – both internally and with their agency:
- Spend – Companies must be decided on what they intend to spend on their program in order to minimize or eliminate miscommunication and surprises.
- Measuring return – Whether the company uses return on ad spend, cost per acquisition, or both, ensure that a target is set in order to accurately evaluate profitability. Knowing that information in advance allows the agency to be clear about what they need to generate for their client. For example, if $30 CPA is the ceiling, then they can determine the revenue thresholds and commission rates that need to be met to ensure profitability.
- Goals – In line with spend and CPA, companies need to define their goals and communicate them to the agency. For example, is the goal to increase new customers? Sales? Clear goals and return targets will help prevent relationship-building capital from being wasted with partners and help ensure realistic results.
Deciding whether you are ready to work with an affiliate marketing agency can be determined fairly quickly. It’s the process of finding the right agency to work with that can be perplexing. Having your goals clearly outlined will get your conversations with potential agencies off to a productive start. From there, the above-mentioned criteria can serve as a useful guide to finding an agency that will align with your goals, protect your brand, and help you establish a successful affiliate marketing program.