» Outsourced Program Management (OPM) for Affiliate Programs [Mark Welch's Perspective]

Outsourced Program Management (OPM) for Affiliate Programs

By Mark Welch, November 9, 2007

My usual recommendation is that merchants should hire a full-time in-house affiliate manager to administer the program. However, you should be aware that there are a number of “outsourcing” options for administration of an affiliate program. Each affiliate network offers affiliate management services as an extra-cost option to merchants; several merchants and affiliates have expressed great satisfaction with the services provided by ShareASale staff (especially Carolyn Tang). There are also at least a dozen (probably many more) companies that provide “outsourced program management services” on a contract basis.
Cost: Most of these firms charge a minimum of $3,000 to $5,000 per month for their services. Some charge a minimum fee against a share of gross sales (for example, 5% of gross sales generated by affiliates, with a minimum of $3,500 per month).
Contract: Most firms do not have a clear contract that identifies the specific work which they will do, nor the time allocated, nor the specific staff persons who will do the work.
Results: I’ve spoken with several merchants who were very unhappy with the services they received from OPM agencies. I’ve never had a “candid conversion” with a merchant who praised their OPM agency – but merchants who are happy with their OPM agency don’t call me for advice, and I’m aware of may merchants who’ve continued to use OPM agencies for many years.
When Things Go Sour: When the relationship between an OPM agency and a merchant ends, there are sometimes “sour communications,” in which the OPM or merchant notifies affiliates that the relationship has ended, in a way that implies great dissatisfaction (or non-payment). When an affiliate receives such emails, they worry that “something is wrong” with the merchant or OPM agency, and may decide to avoid both in the future.
My recommendation against using an OPM agency is based mostly on “common sense” – you shouldn’t expect someone outside your business to understand your customers and affiliates better than you.
While an OPM agency can bring industry knowledge and experience, your staff will never gain that knowledge or experience unless they are assigned these duties.
If you do hire an OPM agency, your contract should specify:
- Who will actually perform the work (recruiting, talking with affiliates, etc.); will you be notified and asked for approval when work is reassigned or staff changes?
- What specific work will be performed, including “hours” and “quantities” (number of affiliates identified and solicited, submissions to affiliate directories, participation in discussion forums)
- Who will own the data (list of prospective affiliates, contact information, data about communications)
- How will the OPM’s services be evaluated (number of communications with prospective affiliates, number of affiliates enrolled, number of new customer transactions through affiliates, transaction dollars, number of complaints received)
- When and how can the contract be terminated; on termination, how will data be transferred, and who will notify affiliates and the “affiliate community”?