In order to understand what an affiliate marketing agency is and how it works, it is important to understand the concept of affiliate marketing. You might have never heard of this name, but the concept is not a new one. In fact, businesses have been using affiliate marketing for decades even though the concept keeps on evolving due to e-commerce businesses and the way they operate.
How does Affiliate Marketing work and what are some of its benefits?
Consider the Internet as a virtual marketplace. You are on the selling side and along with you there are other players; some exist on the selling side like you, and some on the buying side like your customers. Then there are others in the middle, “intermediaries”; who benefit from the ‘sale’ of products. They are not necessarily your employees, but other companies or individuals who bring sellers and buyers together. Intermediaries split in two: promoters and logistics intermediaries. Promoters are those players who promote your products at a cost, and who use content marketing combined with all sorts of web tools to increase your sales. Logistics intermediaries are companies who ensure the actual transfer of the funds or products. Both of these intermediaries are considered your affiliates, but only those promoting your products are your marketing affiliate(s). Marketing Affiliates will help you secure more sales and will benefit from the sales generated through their channels or referrals. They will utilize all sorts of web tools such as SEO content writing, promotional emails, social media, websites and blogs for marketing your product. Whether you want to introduce a new brand or product to the market, to enhance the sales of your current product, or even transform your venture into an online business, affiliate marketing can be a decisive tool for you. You will definitely get something out of it, as it will impact on leveraging your brand recognition, loyalty and performance.
What is Affiliate Marketing and when should you look for an agency to help you manage your Affiliate Marketing Channels?
Maybe you have a product or brand that you want to promote, but you’re not really sure where to begin. Who should you affiliate with to make sure your product is promoted correctly and profitably? How will you manage logistics information such as payments and product delivery? What is the cost of developing an affiliate division in your company and do you have enough people? If you are having trouble answering any of these questions, then an affiliate manager or affiliate marketing company might be right for you.
Here's what an Affiliate Marketing Company/Agency can do for your business:
- Recruit the right affiliates for your business.
- Evaluate performance of all affiliates through KPIs (Key Performance Indicators), rewards/recognition system, and incentives.
- Execute sales reporting on your behalf.
- Carry out payments to affiliates for their services.
What types of businesses should use Affiliate Marketing?
Many e-commerce and business experts would tell you that hiring an affiliate marketing agency is only suitable for people or businesses that have a lot of resources or that are large in size with considerable assets, etc. However, this is not true. You can be a fresh start-up with a new product or a well-established one with an entire credit portfolio, looking for ways to increase your sales.
The first and most important thing is for you to identify your own needs, as to whether you really need an affiliate marketing agency. Other factors that need to be taken into account are your cost analysis, whether your product has enough profit margin to pay for the agency and whether it would be better to hire an agency or employ an affiliate manager.
If you have the budget or already have a well-established affiliated program which just requires the right direction, then hiring an affiliate manager will be the better choice. Some businesses are so large that they do both, outsource the affiliate program to an agency and hire a manager as well. This ensures that your own staff is monitoring the performance of the agency which in turn is managing your entire affiliate program.
Benefits of Hiring an Affiliate Marketing Agency:
- A good affiliate marketing agency will instantly provide you with the entire system described above. If you choose to do it on your own, you would be able to develop it after years of experience through trial and error.
- They are more trained than your own team. You get more experts than just one, looking at ways to increase your sales. Their level of expertise is also much higher.
- This measure will save a lot of your resources as well as time which you can divert elsewhere.
- It is much more convenient for them to find partners than it is for you because they have worked with both sides of the network.
- They already have well established relationships.
- You can benefit from reduction in the fee of marketing agencies.
- They know the best affiliates for you depending on your product.
- They are more flexible; their response time is much quicker than yours.
- You are not the only account they are managing; they have to have more clients to be profitable. This means they have a more dedicated and focussed team.
Issues with Affiliate Marketing Agencies
Remember, they are not a part of your organization; they are agents who work for commission/profit.
They have a lower ability to do customization, unlike the seller/manufacturer who has more knowledge about his products. A high level of experience is required from them to do their job well. Afterall you hired them in the first place due to lack of experience.
Usually, the cost of hiring affiliated marketing agencies is high. Some agencies may resort to using spyware, spam, false advertising, adware, etc to gather and spread information that may prove beneficial to them.
Another issue is that you would have no control on the information of your business.
What are the responsibilities of an Affiliate Marketing Agency
It is very important to know in detail what an affiliate marketing agency is supposed to do for you. They should perform the following duties:
Recruiting:
The agency will be responsible for recruiting all affiliates required for your program. They should study your business model and your product before identifying the prospective affiliates that match your model the best.
Monitoring:
The agency must monitor all recruited affiliates on an on-going basis to identify star performers and those who may require more guidance or those who need to be replaced. You don’t want any free riders in your affiliate program. For this purpose, the agency should have key performance indicators in place such as activity index, traffic, sales volume, etc.
Compliance:
The agency should ensure that every affiliate is complying with your rules as well as external regulations. The agency should be very active and serious about this.
Optimization:
It is the agency’s responsibility to optimize the entire affiliate program. This implies that the agency will be constantly upgrading or modifying the system to avoid leaks, offer permanent landing pages, perform competitive intelligence, analyse demographic data, promote co-branding, provide information and constantly motivate affiliates to perform their responsibilities.
Effective Communication:
The agency must promote effective communication at all levels of the affiliate program. Lack of communication or ineffective communication will end up hurting the program seriously. Therefore, the agency as well as the seller must ensure that all necessary tools are employed to promote effective communication.
What are the benefits that an affiliate marketing agency brings to your business?
Experience:
The very first reason why you would hire an affiliate marketing agency is experience. An agency that has been around for several years is a much better choice than a new one. Look for names that are famous in the industry and have worked with businesses like yours. If your product belongs to a specific industry, an agency that has substantial experience in that industry will be key for your affiliate program to bloom.
Cost Reduction:
Even though you need to pay an affiliate marketing agency for their services, an experienced agency will reduce your costs as you won't be spending any money on training your employees on subjects that are not core to your business.
Make sure that you hire an agency that is well established, this can assure you get extra discounts with affiliates thanks to the agency’s recognition in the industry. The agency you choose should also give you access to the necessary communication, technology and tools required for your affiliate program.
Team Vs Individuals:
Depending on the size of your business, you may want to hire an agency that offers you a team of experts instead of an individual. If what you are offering is a single product then you don’t necessarily need a team. You can keep your costs low by settling for an experienced individual. However, if you have a product portfolio, a dedicated team can be the best solution for your brand.
Number of Clients:
Faced with a choice between an experienced agency and a newbie, you may want to consider if the experienced one has too many clients already. If they have a large clientele then probably they won't be able to offer the time your business requires. It is very important to discuss with the agency regarding the attention they are going to give your product.
Privacy Protection:
Make sure that you have a written understanding with your agency where your business data will not be shared with your competitors or with anyone else. Do not strike deals with names that have a reputation of sharing information with others, otherwise this will not just be a blow to your affiliate program but also to the future of your business.
Pricing Structure:
Agencies that charge according to performance alone are not a good choice. Instead select an agency which promotes growth at all levels of the affiliate program. Also make sure that you do comparative analysis before hiring any agency, so that you select the one that is best according to your cost analysis.
For more information on how Affiliate Marketing can help you to promote
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