The real value of an agency in Affiliate Marketing

Posted on 30. Apr, 2012 by in Digital Marketing

Written by Susan Jamie and Fiona Robertson.

Those involved in the industry have seen a shift recently in the way affiliate marketing is perceived, even moving away from the description of “Affiliate Marketing” towards the all-encompassing name of Performance Marketing. This change has been witnessed in a number of ways, including the annual A4U awards, traditionally recognised as affiliate specific, being renamed the Performance Marketing Awards; A4U Awards 2011with an abundance of newer categories extending to Social Media, Search & Lead Generation. Other recent shifts we have seen in the sector include re-targeting publishers coming into the affiliate mix (historically re-targeting was seen as a display channel), with companies working on a CPA basis to drive sales using the method of remessaging. Interestingly, we are seeing the shift away from flat CPA’s in the affiliate industry with partners looking to work on tenancy and CPC basis, and often hybrid models. These significant shifts within the industry have resulted in a far more complex landscape than ever before, with blurry lines becoming ever blurrier.

In line with the numerous changes we have seen from affiliates themselves, questions continue to be thrown around how networks are evolving to meet these changes and demands, particularly with the increasing presence of agencies within the mix. This week a blog post from Affiliate Window defended their entry into the Agency category at the forthcoming Performance Marketing Awards.

Affiliates4UThis has sparked an interesting debate amongst the industry, as to what defines an agency and can an affiliate network be one? Previously the lines were clearly defined. A network’s main purpose was the provision of a tracking solution and the paying of affiliates; an agency on the other hand dealt with the coordination of the affiliate marketing campaign and strategy, and worked to integrate this into a brand’s overall digital strategy.  However as the Performance Marketing channel has grown and evolved, networks have simply had to get better at servicing clients and agencies alike, investing in monitoring tools, fraud prevention and better reporting interfaces, with Affiliate Window often seen to be leading the way in the network space.

Affiliate Window have stated that they believe their close contact with brands and the fact they are providing them with strategic direction brings them closer to the agency definition – thus claiming themselves to rival the service of agencies. This claim is a strong one to make and brings into question the true value of an agency, if a network can simply evolve into one.  What criteria needs to be met before you are recognised as an agency? This is something we would like to address by looking at how we feel agencies differ from networks, including Affiliate Window, to determine whether or not networks can claim to actually be an agency.

Part of most agencies’ unique selling points are that they are impartial when it comes to recommending networks and tracking solutions. A client should be assured of getting the most suitable network or tracking solution recommended to them, based on experience, value and reputation, not just cost. Can an affiliate network really claim to provide this kind of impartiality?

Often for brands, having their affiliate program on 1 network alone is not enough; as well as reach being extended through a second network, the competition of working with one vs. two ultimately results in higher sales volumes.  Clearly, having one affiliate network as an “agency” would make it extremely difficult to run a program across more than one network.  As an agency, we offer our clients recommendations on a regular basis through careful analysis of the offering of the world’s affiliate networks.  If we feel that a client would benefit from running through more than one, we make that recommendation; there is no vested interest in only remaining on one.

Although there are some very strong networks out there, who have improved their levels of account management significantly over recent years, we believe that this doesn’t replace what an agency can bring to an affiliate program and a brand’s overall digital mix. Progam to account manager ration is normally relatively low, with an affiliate manager spending time on 3 – 4 accounts each.  At a network, account managers have been known to work on over 300 programs at any one time – it’s clear that this ratio will never give a client the same level of service as an agency.

More and more clients are looking to bring their affiliate programs to an agency to manage – one of the key reasons for this is so that they can get an overall view of the affiliate channel in line with other digital channels. Information can be shared and considered, looking at the customer journey to determine the value affiliates contribute compared to other channels – a key consideration for brands these days. It’s also critical for agencies to look at the affiliate channel within the bigger picture – moving around budget for a client based on the best return, value or revenue generation depending on their objectives.  At LBi bigmouthmedia we often work with our PPC, SEO and Social teams to ensure we are all working towards the same goals; not just fighting for the affiliate channel by default because it’s our channel.  Often affiliate network studies look at the affiliate channel in itself, and the value of different types of affiliates – but very rarely do these include insight into how the channel fits with other digital channels to get the full picture. Again this is a fundamental USP of an agency to be able to access the data and show the true value of the affiliate channel compared to all digital channels.

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Very rarely has it been known for an affiliate network to provide this; and if they did it would be surprising if a recommendation was ever made to move budget away from the affiliate channel.

Finally a focus on strategy is key for agencies to create for brand’s for an affiliate program and keeps it on track to tie into the client’s overall digital channel strategy. Although networks do create some strategy plans for clients, unless the account is a key account that generates enough revenue, this is not something that is common place and certainly isn’t provided for every client.  We’ve also been privy to seeing some of these strategies and often they are the same opportunities provided over and over again – the “usual suspects”.

Although there has been significant blurring of the lines around what an agency actually is, it is important for merchants to consider what they want to get from their affiliate program and the type of management that suits them.  Sometimes, network management is more than enough for some brands and fits their needs entirely.  However in our experience, there is no one size fits all approach and this is often why brands come to agencies like us for an agency management. Some networks have improved significantly in terms of their offering to brands; but there are a number of fundamental aspects that a true agency delivers that it is impossible for a network to ever be able to offer, in our opinion. We don’t doubt that for their top brands, the service levels will be fantastic, rightly so given the revenue they’ll generate for that network, but this is not all an agency does.

Lastly, it’s worth considering why Affiliate Window have decided to take this approach and put out a claim so publicly to say they do put themselves up there with agencies.  Is it because some agencies have decided to offer brands their own white label or third party tracking solution, rather than using an affiliate network at all?  Is it because more and more agencies are entering the industry, resulting in more shifts from one network to another, or moving away from an exclusive partnership?  Whatever the reason, as the industry continues to evolve, threats with it will follow, agencies themselves have increased competition from new players to the market, and there might not be a place for everyone.  But here, at LBi bigmouthmedia, we intend on focussing on our clients’ needs, their goals, their objectives, and work together with them to continue to showcase how important and valuable affiliate marketing, performance marketing, whatever you want to call it, can be for their business; that is what will help this amazing industry.  We really value the networks’ role and what they offer our clients; and there is still definitely a place for them.

But it begs the question, if Affiliate Window are indeed an agency, will agencies continue to choose to work with them, sharing their insights, digital strategies and long term goals?

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