Which is better? Hiring an in-house affiliate manager or outsourcing it? One person or an agency? Today, I share the pros and cons of both ways and show you which kind of affiliate manager is best for YOUR business.
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Previous Episodes of The Affiliate Guy
What to Look for in an Affiliate Manager
Don’t Make These Killer Mistakes with Your Affiliate Program (Part 2)
Don’t Make These Killer Mistakes with Your Affiliate Program (Part 1)
The Surprising Thing That Might be Holding Your Business Back
This Affiliate Program Just Made a Fatal Mistake: Here’s What They Should Have Done Instead
What Kind of Affiliate Manager is Best: In-House or Outsourced?
Which is better, hiring an in house affiliate manager or outsourcing it? One person or an agency? Today I share the pros and cons of both ways and show you which kind of affiliate manager is best for your business.
Let’s get started. So is it better to hire an in house affiliate manager or an outsourced one? Now, my recommendation might actually surprise you. Yeah, I’m biased. I’m biased. I run an agency, so I am totally biased toward recommending an agency toward outsourcing it.
But in this episode, what I’m going to do is I’m going to share the pros and cons of both here. And the reality is I don’t always recommend an agency. In fact, for a good chunk of people, I don’t.
And there’s a reason for that. And I’m actually excited to talk about that today because as somebody who runs an agency, the reality is I want the right clients. I want the right clients.
So I don’t want somebody to come to me if they’re not ready for an agency, if they’re not ready for us. And so today I’m going to share the pros and cons of both in this podcast episode. Again, I touched on this very quickly in the last episode, but I really want to dig into it today. So which is best for you? Well, the answer is it depends. It depends.
Let’s look at the pros of going in house. First, what are the advantages of hiring an in house affiliate manager? Well, the first big one is that you have more control. Literally, you have direct oversight of an employee. This is an employee. You can meet with them whenever you want. You can fire them whenever you want. There’s no contract. There might be an employment contract, but you want to treat people right.
But I’m saying if they’re not performing well, you’re not obligated to stick with them for any length of time just based on a contract. If they’re in an office, you can literally walk into their office. When I won my first affiliate manager of the year award back in 2000, I think it was 2009, 2010.
I don’t remember if one of the two I worked for a company. It was one of the only two years post the age of 23, I think. My dad fired me the day after my 23rd birthday.
That was the last time I worked for somebody before this, I worked for a company for about a year and a half, and sometimes the CEO would just walk in my office and we’d chat. And I’ve done that with employees over the years when I had an office. So there’s control that you have, and that’s a big advantage. There’s no doubt about that. As a business owner, I prefer to have control when I can. And we’ll talk about the advantages.
The other side. Now the flip side to that, of course, is that, okay, if you can have control over somebody who’s maybe not as good, but you could give up a little bit of control and get somebody that’s better, okay, that’s worth it. But there’s no doubt that all things being equal, control is better. Having control as a business owner is better. Having control as a CEO, as a CMO, whatever your role is, is better.
All right. The second big thing or big advantage of having an in house affiliate manager is your affiliate manager is spending 100% of their time, well, at least 100% of their work time working only on your program. They spend 100% of their time focused on you. In our agency, for example.
We can’t do that. We just aren’t able to. But that’s a pretty big advantage to having, hey, I got somebody who’s 100% of their time is on my business, on my affiliate program. That’s a huge advantage. Security is another one. Now this isn’t a big one, but it’s something to be addressed.
I mean, if you hire a reputable outsourced agency, they have access to things that might scare you a little bit, and they can do things with this information. That’s the reality now. So can an employee. But there is a little bit more security going in house.
Now we overcome that using things like LastPass and whatnot, and we make our clients feel secure. But the reality is there is an extra level of security when you are in house. If they are using a company computer on your company network, then there’s a certain level of security that you have, and that is an advantage.
And then the last one, the last big advantage is there’s more integration with your team members. When you hire an in house affiliate manager, they might literally be down the hall from the graphic designer. They might work in the same office as the marketing team.
They’re in the marketing team’s meetings. They eat lunch regularly with other team members. They talk in the hall. They have a one on one with the CEO or the CMO or the VP of marketing or whatever. It is. And there’s more integration with the team.
Again, they’re a part of the team now. What we do as an agency is we integrate with our clients. We’re in their slack. 5.00 We use their email accounts, we sign our emails. Jennifer Elliott, affiliate manager for name of client not Jennifer Elliott. Matt McWilliams consulting.
Like we don’t do that like some agencies do. Now that’s not criticizing them, I’m just saying that’s not how we do it. But again, as much as we try to integrate, we’re not going to have casual conversations with the CMO.
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We’re not going to be in the Daily huddle with the marketing team. We’re not that level of integrated. We’re focused on the affiliate side.
So there’s an advantage to in house in that regard. And I said lastly there, but actually I just thought of another one, is the reality is an in house affiliate manager is going to know your industry better. They might not know other industries.
We’ll talk about that in a little bit. They know your industry, again, they’re a part of your team. They are immersed in your team, your culture, your niche, your industry. They eat, sleep and breathe your industry. So there’s a flip side to that. But again, that is an advantage.
I mean again, all things being equal, I would rather have somebody I’ve got more control over who spends 100% of their time focused only on my program that’s more secure, that’s more integrated with my team and knows my industry better. No doubt about it. If you can find the right affiliate manager that is equal to an outsourced one and has all those five, you’ve hit the jackpot.
You’ve absolutely hit the jackpot. Hire that person like right now. Go hire them now. That said, there are pros to outsourcing. We’re going to talk about the pros of both and the negatives of both. The first pro to outsourcing is just experience.
Outsourced affiliate managers are working with tons of different clients. They’re working in tons of different industries. They’re working on tons of different types of affiliate programs.
They’re working on product launches, book launches, evergreen webinar challenges, summits, you name it. And they’re pulling from different areas and they’re learning constantly. And we found this with our stuff over the year that we’re able to pull from.
If all we ever did was launch world, we’d never be able to pull some of the evergreen stuff in and vice versa. I grew up in evergreen World and I got into launch world about 2012, 2013. And I started real, oh, my gosh, we can pull some of these things from launch world into evergreen world.
And then we started doing summits, and I was like, oh, but there’s this. And book launches and there’s this. And we started pulling all these things in from all these different industries.
I started learning things from working in the parenting niche that applied to the Internet marketing niche and from the health and fitness niche that applied to the personal growth niche. And I started seeing all these things. An example of this, if you’re an in house affiliate manager and you have two annual launches, that’s two launches every year.
7.42 Now, the advantage is that you’re able to get ready for just those two. You don’t have anything else keeping you busy. That’s great.
But an agency might run twelve to 24 launches, so there’s more exposure and more learning. Again, learning from different types of promos like book launches and summits and challenges and webinars, and you’re able to pull from those different things and say, okay, we can apply this to other types of programs that aren’t even related. So it’s just more opportunities to learn and to innovate and to apply those to all of your other clients.
That’s the first thing we do when something works with one client. We go, okay, that worked with one client. How quickly can we get this to work for a second client? How quickly can we test this out? With the second client, boom, we test it out as, okay, it worked with that one. All right, one more time.
We need to test this with a third client. If it works with a third client, we’re rolling this out company wide. And it works with the third. And boom. Now, all of our clients have the advantage of that thing. We learned from that one client. It’s pretty cool. Another advantage is lower cost. Usually you’re looking at half to two thirds the cost for the same results.
With an agency, you don’t have to pay health insurance, no 401K, you don’t have to buy the supplies. You don’t have to buy the computers, you don’t have to buy the office space. Our agency, for example, 90% of our revenue comes from a percentage of the sales.
So we only get paid more if you make more as simple as that, you might pay us $200,000 in a year because we’re really good at what we do. And you might pay a full time affiliate manager $85,000 a year, and you go, well, that’s actually $115,000 more. Yeah, you also made four times more money.
So you paid us twice as much, a little bit over, and you made four times more. That’s a good trade off. The other advantage to an agency is you’re working with a team.
When someone’s out, they’re sick, they’re getting married, they need a vacation. It’s not a big deal. We usually have four to six people working on an account.
And for one, that allows for people who can focus on different areas of affiliate management. Because if you think about there’s no such thing as the perfect affiliate manager. I would like to think that I am, but I’m not because I’m not really that great at the analytic side.
I’m great with knowing what to do with the data. I’m great at the relationship and the strategy, but I’m not an analytics guy. I have a hard time seeing when you give me a bunch of data in an affiliate thing going, oh my gosh, those are the opportunities. 10.00 Now if I can have somebody identify the opportunities, then I’m like, okay, Boom, we need to do this, this and this, and we’ll increase sales 25% in a week.
So I can see those things. When you have different people working on it, they’re able to extra size those different skill sets. Now that said, if one of our affiliate managers needs to be out for a week and the person taking over is just more of the relationship and strategy person, can they still do the analytics? Yes. Are they going to be doing it as well as the person who’s out?
No, but they’re going to be doing it 70%.70 % is greater tahn 0% When I was a full time affiliate manager with that company, when I went on vacation for a week, what people got was an autoresponder and no help whatsoever. And it cost us money. Now that said, I needed to go on vacation, though. So that is an advantage to working with a team. The other thing is big advantage.
You got access to a network of affiliates. More clients equals more affiliates for each of the clients and it becomes a really like, what’s the word I’m looking for? It’s like a flywheel, like the cycle, the snowball just starts picking up.
We have over 10,000 affiliates in our network, for example. We don’t have those. If we don’t have more clients, every client we add, we get another 50 to 100 affiliates. So when you join us, when you work with us, you have immediate access to those affiliates. I mentioned cost. One of the things I forgot, there is just cost savings on things like a network.
If you want to join an affiliate network like Awin or share a sale, there is an advantage to working with an agency because we get better deals. Like I just did this for one client. I to got them a deal they could not get on their own. 11.44 I’m not going to share the details. I’m just going to say that with a particular affiliate network, I saved this client about 40% on their monthly fees, saved them probably $10,000 to $15000 a month. Why?
Because I have access to those people. We work with multiple clients so we get better deals. That right there, I didn’t even think about it. But that money they save every month pretty much pays for us. Just about next one you got quicker startup time. Again, it’s tied back to the access to network of affiliates.
Usually with an agency you can scale the 10,000, 25,000, 50,000 a lot quicker. I haven’t seen much difference in getting to like a million dollars with a really good in house versus a really good agency, they will hit a million probably within a few months of each other. But like those first six to twelve months with an in house affiliate manager can be really slow.
I’ve done it. It can be really, really slow and plotting and oh my gosh, are we ever going to make any money with an agency? It usually happens a lot quicker. Three to six months. Another big advantage is just access to advanced tools and technologies agencies. We’re on top of those things.
We’re getting the technologies and the tools to run affiliate programs, prevent fraud, do all the analytics stuff, and they don’t make sense for a small to mid sized business to invest in because I’ll just do the math. Let’s say the thing costs $300 a month. And gosh, if you’re running a $10,000 a month program and you’re spending $300 $500 on fraud prevention, that’s three to 5% of your entire program every month, versus if we run ten programs doing the same amount of money, we spend the same three to $500.
It’s less than a half percent. So we’re able to use tools with our clients that the clients themselves couldn’t use because it’s just not cost effective for them. Another big advantage with the agency is you get to focus on your core business.
When you outsource anything, it allows you to focus on your core competencies and you let the experts handle all the complexities of affiliate marketing. And the last big advantage is cross promotion with other clients. When we have a client that’s a good fit for another client, it’s an immediate connection and we can run both of them. 14.00 And that’s awesome for both. We did this with two clients recently and both of them grew their email list by about 1000 people, about 800 on one side, about 1000 on the other. That’s awesome.
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They now have bigger lists, they have more sales. Life is good and that doesn’t happen when you’re not with an agency. There’s no cross promotion with clients at least.
So all of these, again, you have to think about these in context. If you could pass up all of those and get the in house, if the in house affiliate manager has kind of like, you can build a team, that’s great. If they come with access to a network of affiliates. Great. If they come with all the skills, maybe they have the analytics and the relationship and the strategy. That’s great.
If they come with those, you don’t need an agency necessarily. So if you can find that person, maybe. My recommendation is that you hire them and not work with us because there are cons to both as well.
So what are the cons to in house? Well, the first one is just as I talked about, above cost, you’re going to pay for health insurance, 401K, office space, maybe even on the front end. You’re going to pay for recruiting and hiring.
The salary can be higher. I’ll give you a broad range. Our quote unquote salary, our monthly fee is roughly half to as low as 40% of that of what you would pay in salary to a full time affiliate manager.
Now, again, where we make our money is on the percentage you win. When we hit home runs, we win, both of us win, we make you $2 million, we’re going to make a lot of money. And so we’re able to do that, unlike an in house affiliate manager who might not be willing to take that risk because that’s their only income. The reality is, every now and again we have a tough time with a client. It doesn’t grow as fast as we want it to. We’re really good at what we do.
There’s a reason why we’ve won all kinds of awards, but sometimes it doesn’t go perfect. And when that happens, we don’t make nearly as much money. We sometimes lose money and we’re able to do that because we have lots of clients versus if that was our only client, that would really suck.
So cost is a con to an in house affiliate manager limited network, as we talked about earlier. I need to go into that, but they usually don’t come with a huge network because they only work with one client at a time. Basically scalability.
Again, you got one person. Usually that person is scaled in one area. They are really heavy on relationships, really heavy on data. One of the two data analysis. They’re really heavy on strategy, but not on all. Is that always true? No. Occasionally you will find a unicorn that is really skilled at all three.
Hire that person. If I haven’t already. The other disadvantage that I see, one of the big cons is what I call strategic myopia. They are so tunnel visioned, so isolated that they miss out on trends and best practices. I found that this happened to me when I ran my first affiliate program. The company that I started called Hometown Quotes.
And I was so focused on our industry and our program that I missed out on lots of trends and knowledge. And I started that program in 2005 and I was ahead of the curve in 2005, 2006, we grew it from nothing to over a million dollars a month in about 18 months. In 2008, I started winning awards, I started being recognized.
It’s like a really good affiliate manager.2009 I was in high demand 17.25 But about that time, late 2008, early 2009, I realized, oh my gosh, I’m like a year behind the curve now. I went from being a year ahead like this expert, this go to guy that people wanted to be coached by, and they wanted consulting from me and wanted me to help them do what I had done for our program.
To all of a sudden in late 2008, early 2009, I’m like, I’m now a year behind. I’ve missed out on all these trends and I had to go educate myself. And I spent about four months where I had to spend 2 hours every single day.
I read every book, even the lame ones that came out. I read every book, I listened to every podcast, I read every site, I spent 2 hours every single day focused. And by the middle of 2009 I was up to speed.
I’m now caught up to the point where now I could be ahead of the game again. But that strategic myopia is a big disadvantage to an in house affiliate. Then burnout.18.24
They’re doing so many different tasks, they burn out easily. And when they do, then the disadvantage is you have to constantly hire a new affiliate manager. Most affiliate managers don’t last more than three years at a single firm.
That’s just the reality. And then again, I mentioned if they’re sicker on vacation, things shut down even three weeks a year, three weeks of complete shutdown. Basically, that’s a big disadvantage.
Now, what are the cons of an agency of outsourcing? Well, the first one is that loss of direct control, like I mentioned earlier, less oversight. Kind of the opposite of the pro to in house, right?
Big one here, potentially conflicting priorities. This is huge. Now, I would never say conflict of interest, meaning we would never work with a client that competes with another client, nor would any agency that I know of, even the kind of shady ones, they don’t do this.
But when you’re managing multiple clients, and if you’re an affiliate manager running three programs, you’re working 8 hours. Let’s just go 9 hours for a round number here you have 3 hours a day. How are you prioritizing your time and resources?
Whose brand are we building? Again, I’d mentioned earlier, we don’t build our brand. Our email signatures don’t mention our company at all. We represent the client, but some people don’t do that. That’s a disadvantage. They’re building their brand.
Good for them, but at what expense? There are times where we have a client where they’re doing a big launch, and I tell our affiliate managers, like today, you’re going to work 6 hours on client A and an hour and a half on client B and C. That’s what today looks like. Now that will look different next week. Next week you’re working 4 hours on B and 1 hour on A and three on C.
And your days kind of vary. But again, in a given day that can be a conflicting priority because all three of the clients want you to work a million hours on just theirs. Another big disadvantage to an agency is just communication challenges. Most of our clients are not in the same time zone as us. Most of them have different communication preferences than we have. We integrate with them.
So there’s a reason why I have telegram on my phone, because we have a telegram group with a client. I only have WhatsApp for one client. They have a WhatsApp group and I’m in there. But I don’t prefer that. So it’s a challenge. I have another one where we’re in slack, another one where we communicate via email, another one where it’s mostly text.
It’s all over the place. So there are communication challenges versus just in house where it’s like, no, this is the way we do it and you don’t have a choice. Another big disadvantage is just brand understanding.
I will never understand your brand as well as somebody who works on your team, who’s working on it 8 hours, 9 hours a day. Will I do my best to understand it as well as I need to? Absolutely.
I mean, we make an effort to understand your brand, but there are nuances in company specific knowledge that take longer to grasp compared to an in house team. Your in house team eats, sleeps, and breathes, and lives the brand daily. Now this is one of the reasons why when we bring on a new client, we do a ridiculously long onboarding meeting.
It takes about two to 3 hours. And most of that, the first hour or so, is just us letting the client talk so we can hear what they’re saying and we record it and we go back and watch it. And I just want to hear what are the words they’re using?
How are they referring to their customers? What’s their mission? Right. That’s important. Even then I’m still not going to understand it as well as I am if I’m on the team. So I’m just admitting that.
And then last one is just confidentiality and security. The reality is reputable agencies, I have strict confidentiality rules, I have strict security measures. But there’s always the risk. There’s always the risk. We talked about that earlier. That was one of the advantages of in house.
So which is best? As you listen to the pros and cons, you probably started developing some thoughts, right? If you prioritize control and access to your affiliate manager, 100% go in house.
If you prioritize lower costs access to a larger network of affiliates, then an agency usually makes sense. If you want someone who is 100% focused on your business, who knows your business inside and out, then in house makes the most sense. If you want a team, though, of people who are skilled in different areas, who work across different niches and program types and can bring in some of that knowledge and inject some new blood into your program, like, hey, oh, we’re going to do a challenge, right?
And none of our team knows how to do a challenge. Well, we do. Oh, we’re going to do this. We’ve already done that. We’ve done that with four of their clients. Here are some suggestions.
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Here are some best practices. Let’s rock then. An agency makes sense if that’s what you want. So it depends. There’s no perfect answer universally, but there is a perfect answer for you. For you.
And you probably know what it is now based on these pros and cons. Now, regardless of which is best, I’m going to give you a quick checklist. Just three things of what to look for. I did an entire episode on it last week on how to hire someone, but here’s a super quick overview. Number one, their track record. Don’t hire a newbie affiliate manager.
Probably not. Don’t have your brother in law do it. Do we have some great courses and training on how to help them? Absolutely. But I don’t recommend it if you need to because it’s free, basically. That’s different.
We can train them. Reach out to me, shoot me a text. I can train them to do what we do. But look at their track record. Have they built an affiliate program? Have they run one successfully?
Number two, access in the network. Here’s a quick one. Hey, before I hire you, I want you to go get ten affiliates for me. Once you go get ten Rockstar affiliates for me, I’ll pay you. Make them a second tier affiliate for them. So if you don’t hire them, they still make money.
But go give me ten. You have two weeks. Go give me ten Rockstar affiliates. Boom. Go. If they can do that, hire them. If they can’t, probably not. What if they get eight? If they get eight and they have a good track record and they fit.
Number three, which is culture fit, do you get along with them then maybe you still hire them. But do you get along with the person? You’re going to be working with this person, whether it’s an agency or an in house affiliate manager, are you going to get along with this person?
If you have a sense of humor and you make jokes and they look at you like you’ve lost your mind, don’t hire them. The same is true if they make inappropriate jokes and you’re like, oh my gosh, so you’re not funny. Don’t hire them.
So track record. Their network, their access and their culture fit. If you are sure you want to work with an agency or you’re just not sure what’s right for you, let’s talk. I mentioned it a moment ago. Text me 260-217-4619 let’s set up a call. Let’s set up a call and just say I’ll point you in the right direction.
I will tell you just like I did in this episode, do not hire us. Hire in house. Go find an affiliate manager. That is what you need. But if you’re like no, I know I want an agency, I already know. I’ve heard the pros and cons.
I want the agency, then absolutely. Let’s talk 260-217-4619 is where you can text me anytime. So that said, I’m excited to share some other news with you coming up soon about some software that we’re developing in a new, really fit like talks. Oh, I’m just so excited. Already said too much though. Just kidding.
But we are creating an affiliate network and some new software and I’m excited to talk about that. It’s going to be a while, but I’m excited to talk about that and then make sure that you hit subscribe so that you don’t miss any of the upcoming episodes. I’ve got a great one coming up next week.
How to get your affiliates fired up before promotion this is a big one. It’s a big one. How do you get your affiliates excited to be promoting? You got to know that. So make sure you hit subscribe so you don’t miss any of the upcoming episodes, including that one. I’ll see you then.
Questions?
Text me anytime at (260) 217-4619.
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