Affiliate Program Management - When to outsource?
Performance Marketing or Affiliate Marketing is an irresistible option for many advertisers. The compensation based on actual sales generated or actual leads delivered is a no-brainer for those who are trying to sell their products online. Affiliates are not employed by the advertisers whose products or services they promote, yet the revenue share or commission received is similar to that of the sales force of a brick and mortal establishment. The cost of maintaining a ‘real’ sales force would cost thousands of dollars in allowances, basic salaries and even health insurance. Yet with affiliate marketing, you get a ‘cyber’ sales force who you would only recompense as they actually produce for you – no basic salary, no allowance and no insurance! Thus it is an understatement that almost all online stores are now developing their own affiliate program.
Yet, developing an affiliate program may entail high cost for those who lack the online distribution channel. Leading networks are charging between $1000 - $3000 just for set up fees. There are other fees to incur as well such as monthly fees which can run up to $500 a month. Inasmuch as an established affiliate program can be a money factory, starting up may make you scratch your head and back away. There is also the concern of having a person manage your affiliate campaigns. There are a lot of tasks to do as you begin to develop your affiliate program. An experience affiliate manager would be indispensable if you want quick ROI.
Here enters the question whether to hire your own fulltime affiliate manager or outsource to a Program Management Consultancy or hire a freelance Affiliate Manager. The premise I subscribed to in this topic is that: a successful affiliate programs require significant work and maintenance. Hence, there is a pressing need to hire an affiliate professional to manage your account. But at what cost ratio can you profitably hire an affiliate marketing professional.
As stated above, the initial cost of set up maybe staggering for small business entities. The first thing you need to do, before you decide which of the options above is fit for you, is to identify how much is the volume of sales that you would be expecting to generate in this marketing stream.
Ideally, those who are expecting to have a volume of sales of less than $10,000 a month would be better off to start with a freelance Affiliate Manager who they would pay a minimal fee for 20 hours a week. Those who expect to generate at least a volume of sales of $20,000 a month may decide to hire an OPM company with fees of $2,000-3,000. If your sales volume is $50,000 a month, having your own affiliate team would be a necessity already.
The sales volume mentioned would further be varied as the fixed cost and variable cost of selling online would tend to be different for each advertisers. This is another long topic so I plan to make another blog on this matter on another time. For now, I hope this input would help you evaluate your need for an affiliate marketing professional at least on its face value.
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