Agency Managed Services Are A Smarter Choice

By Greg Shepard | 18 Feb 2015

Let’s think about monopolies for a minute. Basically, a monopoly implements controls which make possible the manipulation of prices.

Now let’s think about monopolies and network managed services.

As a merchant, you want your affiliate channel to be profitable. And you want to reach the widest possible audience, right?  After all, you wouldn’t knowingly limit your marketing exposure or profit opportunities now would you?

So why limit your affiliate program to a single affiliate network and expect them to care about your profitability? If you do, you’re handing your business to a monopoly.

Network Managed Services Are Monopolies

If you live in a capitalistic society then you are likely to believe in the concept of capitalism which allows for choice and healthy competition. You’d also agree that monopolies are bad, devoid of competition, and rely on market position to manipulate costs. Why then as a merchant — or an affiliate — would you opt for a model with severe limitations and zero competition? If you opt to use one network’s managed services, that’s exactly what you are doing.

Network managed services care how much you spend. They always want that number to go up. Never down. This is because Network Managed Services is billed based on spend; not value. Look at your contract, it is tied to the dollars and not the sense.

Does your Network Managed Services account representative suggest adjusting affiliate payouts down to match value? Do they push to have low value affiliates in the program and maybe at the same commission rate as other affiliates?

So maybe this isn’t price fixing. But it certainly isn’t looking out for a merchant’s best interests.

When one network offers a merchant network managed services and promises to handle every element of that merchant’s affiliate program and to perform the best, the merchant is held hostage and is bound to the network’s exclusivity stipulations.

If there isn’t healthy competition — a serious threat from another business entity — what motivation does a network have to better its offerings to a merchant? Other than good will, not much. So single network managed services, for all the simplicity and efficiency they promise, are just monopolies under the guise of efficient customer service.

Conflicts With Compliance and Accountability

Let’s talk about compliance. A network can’t claim they provide independent compliance because, in many cases, proper and vigilant compliance can limit sales. A network survives based on the sales its affiliates generate. Why, then, would a network do something — proper compliance — when it could severely limit sales?  It wouldn’t.

Let’s talk about accountability. With single network managed services, a network is motivated to do everything in its power to keep as much of a merchant’s business in the network as it possibly can. But this approach is severely limiting for a merchant looking for unbiased accountability which includes strategic insight that might include or preclude a certain network, affiliate optimization that may include or preclude working with certain affiliates, creative strategy which may dictate the use of coupon versus content versus other types of sites, aggressive compliance oversight which may limit inclusion of certain affiliates or entire networks in an affiliate channel.

Any one of those elements of accountability could limit or eliminate entirely a merchant from a particular network. And a network simply isn’t going to do that.

Agency Managed Services Versus Network Managed Services

Now as a merchant, you can certainly work with multiple networks and pay them to help manage your affiliate channel but why would you? Uploading banners and offers, ensuring the product catalog is running, and answering simple affiliate questions should be free.

Managing your affiliate channel to profitability should be handled by a un-biased agency or an in-house employee. This includes advice on costs and the value of affiliates.

What you want as a merchant –what any good business wants — is an unbiased, holistic view of the business landscape that isn’t influenced by factors that would alter elements of a program for the benefit of anyone other than the merchant.

So when a network promises you they will perform best for you, ask them, “Based on what?” How can there be a best if the ability to explore, analyse and optimise every option in the affiliate channel is limited because you, the merchant, are only active in one affiliate network? Or because a network’s own business model doesn’t not align costs with value?

The views and opinions expressed here are those of this contributor, and do not reflect those of Power Retail or its staff.

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