Valentine’s Day means different things to different people. For some, it’s all about love and romance. But for others that just might not be the case.
Have you ever been in a relationship where you put up with your partner but knew in your gut that you just weren’t happy? You knew you deserved better but it was easier to do nothing than take action? This predicament doesn’t just happen in romantic relationships. It also happens in affiliate management relationships, specifically those between a retailer and the network managing their program.
One of the most common things we hear from retailers who’ve made the decision to leave their network-managed relationship is that, while they were unhappy, they couldn’t exactly put their finger on why. They might have liked the team they worked with but just didn’t feel that they were getting the attention that they deserved.
And they were right.
A growing number of retailers have begun to understand that partnering with a network to manage their affiliate program is not a best practice. If you too have started to recognize that you’ve lost that loving feeling with your network management, these three reasons may be the cause:
1. No Time for TLC
It’s well-known that in an affiliate network management model, one person often works across 10-20 accounts. With so many different programs to oversee, it’s near impossible for a program manager to give each retailer the time and attention they deserve. When an affiliate network manager’s attention is spread between so many different retailers, their efforts tend to be:
- Reactive instead of proactive, especially in terms of strategy and affiliate recruitment.
- Limited (or non-existent) in relation to new ideas for program growth and development.
- Lacking in consistent creativity, oversight and management.
2. Speculative Spend
Ask any relationship therapist what one of the main sources of relational discord is and they’ll all tell you the same thing: money.
When a network manages a retailer’s affiliate program, they often charge a single performance fee for both managed services and technology (tracking payments, etc.). Even though technology and services are very different, there really isn’t a clear understanding of the breakdown of these costs and the value of each.
As an example, if you spent $500,000 with a network for managing your affiliate program, wouldn’t you want to know what percentage is going to technology and what percentage is going to services? Of course you would! That way you’d be better able to evaluate whether or not you’re getting good value in each area – especially since technology and services are very different. But in a network-managed partnership, that doesn’t happen.
What if I told you that you could get high-quality tracking and payment for $120,000 a year? Would you still be willing to pay a $32,000 monthly “services” bill from the network for value-added services? Since the network doesn’t bill you separately for services, you don’t really get a chance to hold them accountable. What if they did nothing that month?
3. Conflict of Interest
At a digital marketing conference that I presented at last year, I asked the audience two questions:
- If they had a PPC Google campaign (hundreds of hands went up).
- If they would feel comfortable having Google as their paid search agency (every hand went down).
This conflict of interest is quite clear in search, yet for some reason it’s been far less obvious in affiliate management, even though the dynamics are the same. Based on their economic models, Google always wants you to have more clicks and an affiliate network always wants you to have more sales, irrespective of the quality. This doesn’t mean that they are unscrupulous, it’s just important to understand how they make their money.
We actually have long-standing, mutually beneficial relationships with many affiliate networks and we think they deliver great technology platforms to their advertiser clients and affiliate members. Where we respectfully disagree is on the subject of management.
Here’s why there’s an inherent conflict of interest between a retailer and their network management.
In a healthy, supportive relationship between a retailer and their affiliate management team, there are a few fundamental responsibilities of an affiliate program manager:
- Focus on the bottom line of the program
- Remove channel overlap
- Carefully monitor a program for fraudulent and low-quality affiliates. Low-quality affiliates may include:
- sites that make-up offers or force clicks
- affiliates pretending to be the merchant in pay-per-click ads
- e-mail spammers
- toolbar sites that steal affiliate credit and numerous other violators.
For in-house or third-party managers, there is a clear, conflict-free path for dealing with these issues and that path often involves working with networks to remove affiliates from the program, lower their commissions, void sales, etc.
In a network-managed affiliate program, however, things get murky. Taking such actions threatens the network’s income and tends to run counter to their company and individual performance goals. Even though the retailer is the client, it’s actually the affiliates and the network whose incentives are aligned whereas the merchant doesn’t have anyone financially incentivized to look out for their bottom line. The more exclusive and restrictive the program, the less money the network will make.
Don’t Settle for Less in your Affiliate Program
If you are a retailer currently engaged in a network-managed affiliate program, it’s in your best interest to re-evaluate that relationship. Would terminating the management aspect of your relationship result in a few broken hearts and perhaps even some bitter feelings? Sure. Breaking up is always hard to do. But the reality is that you’ll be better off finding independent representation for your program who will truly advocate for your affiliate program’s interest without conflict.
For support on how to make better affiliate management relationship decisions, reach out to our affiliate team. We can also provide a free review of your affiliate program that can reveal hidden sources of cost and outline opportunities for more cost-effective growth.