Affiliate Marketing: Outsourcing (OPMs) is More Cost Effective Than Hiring In-House

According to Shawn Collin's Affstat Report the average salary for an in-house manager is $50,000 a year and up. Now, factor in health and other benefits, desk space, infrastructure, those costs rise significantly. To support an in-house affiliate manager, a business must plan to spend at least $70,000 - $90,000 in overhead. If the in-house manager decides to leave the company, all of the knowledge and the relationship history usually walks out the door with the manager.

Additionally, it may be difficult to find an experienced affiliate manager within a specific geographical area. Some larger organizations leave the affiliate program in the care of a junior level marketing staffer. This can be a mistake with lasting consequences. A well run affiliate program can be responsible for 10-20% or more of overall company revenue. Likewise, with the advantages of added revenue and reach, there are dangers in not carefully managing an affiliate program. Brand messages may be damaged and revenue from other channels pillaged via malware and parasiteware.

Most OPM firms charge either a flat fee plus revenue share, or at least a monthly minimum revenue share. Generally the monthly minimum of flat fee is between $2000-$5000 a month.

Now also consider the other benefits an OPM brings: experience, relationships, knowledge, and stability. An OPM has established working relationships with many if not all of the top performing affiliates. They've built a history of performance, and generally an affiliate will know the style of any certain OPM such as does the OPM have a stance against parasiteware, or are they accessible?

In relation to the experience benefits, the cost savings strongly favor an advantage to outsourcing an affiliate program. Focus on the business, do what you do best, and leave the success and growth of a well-managed experience program to experts who are focused on growing your business.

  Plug This!

Retailers not paying smaller commissions

A recent article from Internet Retailer, based on the recent 2007 AffStat Report, would have us believe that commissions are going down... to which I'd like to offer a more realistic reason for why the reports shows a drop in merchants that pay high commissions.

When the report first started the merchants that took part in the AffStat Report were more the larger merchants, with larger programs and larger pay outs. Over the past few years more and more merchants have participated in the report leading to a lot of middle sized and smaller merchant programs adding their data. This simply means that the results have tilted from a bias towards large merchant data towards a more balanced spread of affiliate programs from all types and sizes of merchant.

Commissions are not going down, there are just a lot more mid sized affiliate programs around today and they are not paying $5,000 a month to their top partners... not yet anyway!

  Plug This!