Affiliate marketing is booming. In fact, affiliate marketing spend has an annual growth rate of 10%, and 80% of brands now have an affiliate program!
The benefits of having an affiliate program are huge, and it is one of the simplest ways to boost brand awareness, increase trust and credibility, build customer loyalty, and, of course, generate sales.
That said, affiliate management is not simple at all. And it takes excellent affiliate management to run a successful affiliate program!
So, what does affiliate management involve? And what does it take to manage a profitable and scalable affiliate program?
For this guide, we consulted the affiliate management experts at Perform[cb] Agency, an award-winning affiliate marketing agency, to bring you everything you need to know about how to do affiliate management right!
Today, we’re covering what effective affiliate management involves, the benefits, the most common affiliate compensation models, and the best affiliate program KPIs to track.
We also look at a case study to demonstrate the power of good affiliate management, and a detailed comparison of the pros and cons of outsourced vs. in-house affiliate management.
Ready to learn how to leverage affiliate management and boost your revenue?
Affiliate management is the process of managing your affiliate program after it is set up. It involves tasks like recruiting affiliates, affiliate communication, affiliate engagement and retention, tracking program results, and on-going program optimization.
Businesses must use a brand-centric and organized affiliate management strategy to maximize revenue. You can also rely on the best affiliate marketing apps and tools to make it easier for your business.
Managing your affiliate marketing program is an ongoing process. You’ll have to make improvements and changes and adapt your program to your buyer and affiliate trends. You can choose to outsource your affiliate management to a professional affiliate management to agency or affiliate network, or you can handle it all in-house. We’ll discuss how each option works further below!
Summary: What is a Affiliate Management
Affiliate management is the process of managing your affiliate marketing program once it is set up. On-going affiliate management is essential for a successful affiliate program. Tasks include affiliate recruitment, on-going communication, affiliate engagement and retention, and tracking program results for effective program optimization.
Source: Learn with Shopify
Affiliate management involves managing different types of affiliates, either directly, for your own program, or indirectly, for other people’s programs.
There are many different types of affiliates and every program is a little different, depending on what types and combination of affiliates are involved.
Whether they’re direct or indirect, the simplest way to differentiate between the different types of affiliates is how they’re compensated:
According to Perform[cb] Agency, CPA is by far the most common and trusted type of affiliate compensation. In this model, businesses only pay affiliates the agreed commission once buyers have made a purchase from the affiliates marketing efforts. Brands prefer this model because it gives them peace of mind and lowers the risk of wasting money on affiliates that don’t drive results.
The biggest factor to evaluate for CPA affiliate compensation is the cookie duration. The standard cookie duration for affiliate programs is 90 days but it does vary between programs.
If web visitors click on an affiliate link and purchase any time within the next 90 days, your affiliate will still be eligible for their commission.
However, the CPA model might not work for every affiliate program, so let’s explore the other compensation models:
The CPC affiliate management compensation model is best for brands that want to drive awareness and reach. You’d pay affiliates for every click leading to their websites. The biggest drawback of this compensation model is that many affiliates use fraudulent data to earn more cash. Unless you have A-grade fraud prevention tools to analyze the clicks, CPC won’t work. Because of this disadvantage, CPC is the least common affiliate management compensation model.
Brands opt for the CPL affiliate management compensation model if they want to boost lead generation. You’d pay your affiliates a flat amount for every lead generated through their marketing efforts and strategies. Many brands combine CPA and CPL models to suit their programs.
Summary: Affiliate Management Compensation Models
While looking at affiliate management program types, direct vs. indirect affiliate management is another factor to consider.
Direct affiliate management is when businesses choose to build and manage their affiliate programs. As an affiliate manager, you’ll handle affiliate recruitment, program management, payouts, and validating sales. Brands opt for direct affiliate management if they don’t have the excess cash to invest in indirect affiliate management.
Direct affiliate management also works for brands that don’t have very many affiliates and use a simple program, which can be run effectively in-house.
Indirect affiliate management is when the affiliate program is managed by an external an affiliate network or agency. Rather than managing multiple affiliates yourself, you only have to communicate with one entity (an agency or network), and they do everything else.
Indirect affiliate management is best for high-level, complex affiliate programs and programs that involve a large number of affiliates. That said, indirect affiliate management is a great choice for new or small affiliate programs that need to grow and scale quickly.
Summary: Direct vs Indirect Affiliate Management
Direct affiliate management is when businesses build and manage their affiliate programs, Indirect affiliate management is when businesses hire an affiliate agency or network to build and manage their affiliate programs.
Can’t pick between direct and indirect affiliate management for your business?
Don’t worry, we explore the pros and cons of outsourcing your affiliate program vs. managing it in-house a little later in this guide!
But first, let’s take a look at exactly what affiliate management involves:
What does affiliate management involve, and what does an affiliate manager do, exactly?
To some extent, that depends on the affiliate program, it’s goals and the types of affiliates involved but most, if not all, affiliate program management involves:
Before covering the groundwork, set SMART goals for your affiliate marketing program.
S – specific
M – measurable
A – achievable
R – realistic
T – timebound
These goals will help you make strategic decisions for your affiliate marketing program. You’ll know when to consider your program successful and when to make improvements. When developing SMART goals for your affiliate management program, consider the purpose of your program and what the long-term goals and short-term objectives are.
Consistently update and track these goals to ensure you achieve them!
Affiliate marketing tools make it easier to manage and grow your program. Many have automated features for affiliate recruitment and screening, contracts, payments, and feedback. There are various options for startups, mid-level businesses, and enterprises.
Startups should stick with affiliate program tools offering basic features. You won’t have to manage a large volume of affiliates, and this approach can prevent you from paying for functions you don’t need.
Enterprises need more advanced affiliate marketing tools, but be prepared as this can get costly in the long run!
Fortunately for your business, we scoured the web and tested 14 of the top tools, to find the 8 best affiliate management software for maximum growth and revenue.
Once you’ve pinned down your affiliate marketing program’s SMART goals and software, it’s time to create your agreements. These agreements conceptualize and organize all the technical aspects of your program. You can detail your commission and compensation structure, affiliate criteria, and desired KPIs.
Consider all the aspects of your affiliate management program and use this opportunity to get it all on paper. This affiliate management program task makes it easy to stay ahead of your program and ensure you achieve your goals.
It will also be much easier to communicate your requirements to affiliates and give them an accurate idea of what traffic you expect them to drive.
Finding the best affiliates for your program is the most challenging part. However, there are some great ways to find the perfect affiliates, so check out our guide on 8 super easy ways to find affiliates!
You need affiliates likely to drive results and have buyers sharing characteristics with your customer base. Your affiliates must also have website authority and high organic traffic.
While you must filter your affiliate search based on your requirements, budget, and niche, you’ll only know who to work with once you start looking. There are countless affiliate networks to help you find the best affiliates.
Some of the most popular affiliate networks are:
Finding affiliates through these networks is simple. You start by creating an account and adding all the required information about your brand, website, and products. Next, you can browse and connect with affiliates via the listings for each industry.
Are there any other ways to find affiliates?
Yes, there are!
Here are the top ways to find affiliates in 2022:
Keeping your affiliates engaged is crucial for affiliate marketing success! Communication is key and you need to be in contact with your affiliates regularly to keep them engaged and make them feel like a valued part of your business. You can use automatic or manual emails to all your affiliates to keep them engaged over time.
If your affiliate management program is new or small and you’re managing just a few affiliates, send them personalized emails with updates about your affiliate program and brand. For larger programs, with more affiliates to contact, you will more advanced automation to engage a high volume of affiliates. Triggered emails and scheduled emails for different segments of your affiliate program will save you a huge amount of time and energy!
The aim is to always be in regular contact, keeping your program top of mind and making your affiliates feel seen and recognized as an important part of your business.
High-performing affiliates should get a bit of extra, and more personalized, attention. Regular calls or emails to your top affiliates will help you keep them invested in your program and drive loyalty and retention in this valuable segment of your program.
But why is regular affiliate communication imperative?
Businesses must communicate with affiliates to keep them invested in the program. Affiliate communication also works to retain affiliates and engage new prospects. Without consistent affiliate communication, your affiliates may lose interest in your business or find your product less of a priority.
The trick here is to make affiliate communication quick, easy and accessible, and to respond to all affiliate queries or concerns. Your affiliates must always feel valued, and recognized as bringing real value to your business.
After securing affiliates, consider ways to keep them motivated and boost sales. If you don’t manage your affiliate relationships well, affiliates may lose interest in your brand or not feel motivated to go the extra mile. This is where affiliate marketing challenges are handy.
Affiliate marketing challenges are a fun and interactive way to optimize affiliate relationships and give affiliates incentives for increased sales. Ensure your affiliate marketing challenge is easy to participate in and your reward is worthwhile and accessible.
Promote your affiliate marketing challenge on all your social channels. Doing this opens another opportunity to target and secure top-tier affiliates. When potential affiliates notice your hands-on and interactive approach, they may reach out to you and join your network!
We’ve looked at two affiliate engagement tactics – communication and affiliate challenges. But these practices don’t quite cover how crucial it is to make affiliates feel a part of your business. Give your affiliates a voice, ask them for and consider their feedback, and commend them on meeting profit targets.
Share brand updates, announcements, and achievements with your affiliates too. For example, if your brand is excelling or you’ve achieved a milestone share this news! Doing this creates emotional and personal connections between your brand and affiliates.
In turn, affiliates will better understand your value proposition, and it’s easier for these marketers to promote products and brands they are passionate about.
After recruiting your first group of affiliates, the recruitment process doesn’t stop there. Consistently recruit affiliates and expand your network to reap the full revenue potential of affiliate management programs. As we discussed earlier, you can use various channels and platforms to find the perfect affiliates for your business.
Streamline this process so you don’t fall behind. Affiliate recruitment demands a lot of admin, so document and track your strategy to ensure you connect with all the qualified candidates.
As your affiliate management program progresses, tracking and evaluating becomes a greater demand. This step is essential to develop a successful affiliate marketing program. Markets and consumer needs always change, so track your affiliate management program analytics.
If you notice declines in your program, employ marketing and affiliate recruitment strategies to solve this. Tracking and evaluating your affiliate program provides the data you need to make insightful, customer-centric marketing and sales decisions.
You can improve your affiliate program when required, respond to affiliate and customer trends, and leverage market opportunities.
Remember we spoke about affiliate marketing tools? Most of these tools have built-in tracking and analytics features to evaluate your program’s performance.
Summary: Affiliate Program Management Tasks
It takes skill and expertise to identify valuable program optimization opportunities, which is where great affiliate managers get to really shine.
Now that we have looked at what affiliate management involves, let’s take a look at a case study from Perform[cb] Agency to see how impactful the right adjustments to an affiliate strategy can make:
Drizly is a popular delivery service that delivers a variety of alcoholic beverages, including wine, beer and spirits, from local retailers directly to their customer’s homes.
Drizly engaged Perform[cb] Agency to help them drive incremental new customer acquisition during peak seasonality without exceeding their set incremental customer acquisition cost (iCAC) goal.
To meet Drizly’s objectives, the Perform[cb] Agency team needed to prepare for peak season (Q4) and develop a strategy to recruit the right type of new affiliates to drive incremental customer acquisition while staying within Drizly’s low iCAC goals.
In preparation for peak season, they began building relationships with high-value editorial teams in Q3 to build momentum for Q4.
They assessed the sales funnel and identified that upper-funnel conversions were much more valuable (approximately 5X) to the brand than lower-funnel conversions. Hence, they developed a customized recruitment strategy partner for proven high-quality upper-funnel editorial partners.
They also shifted their payout strategy to focus on higher incremental partnerships and decreased payouts for lower incrementality partners to keep the iCAC down.
This approach, and addressing the challenge from three angles, meant that Perform[cb] Agency could incrementally increase customer acquisition during the peak season while remaining well below Drizly’s iCAC goals.
The final result was a 41% increase in orders (month-over-month), a 53% increase in ROAS, and a 7460% increase in clicks (year-over-year)!
The many benefits of an affiliate program include:
Like customer loyalty programs, affiliate marketing programs don’t cost much to start. You don’t need marketing agencies or advertising experts to help you launch your affiliate program. Your affiliates will create the content they use to promote your products.
This means you don’t have to worry about marketing materials and resources.
Because affiliate programs are commission-based, you won’t pay affiliates unless they achieve sales. You can minimize your operating costs and only pay for affiliates that drive revenue.
Every business wants to reach, engage and convert as many targeted buyers as possible. And affiliate program management makes this possible. Your affiliates’ buyers must share the same or similar qualities and buying trends as yours to ensure your products sell. And if you choose the right affiliates you can widen your reach and boost brand awareness to expand your customer base and online recognition.
With a wider reach, you can boost your web traffic. Around 65% of web traffic comes from affiliate blogs. Of course, this leads to an increased ROI (which we’ll discuss soon!).
By now, most online businesses know how vital their SEO is to drive organic traffic. If you want targeted buyers to find you through organic search, develop a sound on and off-page SEO strategy. Affiliate marketing can make this easier, as having affiliates promote your brand through their blogs will strengthen your online presence and notoriety.
From Google’s perspective, you’re becoming more relevant and making stronger connections between your content, credible websites, and audience segments. In turn, Google will find it easier to promote your content, increasing your organic traffic.
This works hand-in-hand with the previous affiliate marketing program benefits. As online shoppers become familiar with your brand and you optimize your online presence, you can improve your online reputation too. Having social channels like Instagram, Facebook and Twitter add to this, as customers have more platforms to connect with your business.
To leverage this advantage to its fullest, engage with your customers and hone your buyer relationships. Doing this will help you create more social buzz, impacting your online reputation and helping you gain more traction for your brand and affiliates.
Because affiliate marketing management requires little startup and operating costs and marketing resources, you can land a wider profit margin. Established affiliate marketing programs account for 15 to 30% of the average online advertiser’s sales. And about 15% of all digital media’s advertising revenue comes from affiliate marketing.
With such impressive ROI potential, it’s no surprise why affiliate marketing is one of the best growth and sales practices for businesses!
Summary: Affiliate Program Benefits
How you choose to manage your affiliate program, in-house or through an affiliate network or agency, can make or break the success of your program.
The right option depends very much on the types of affiliates you’re working with, the size of your program, what you want to achieve with your program, and the resources and expertise needed to run and grow the program effectively.
Let’s take a look at both options, in more detail, so you can see which one will be best for you:
Affiliate management requires hands-on, consistent effort and relationship building. You can create a dedicated internal team to manage and grow your affiliate program. This team will handle all the day-to-day tasks of running and scaling your affiliate program while finding the best strategies to optimize your performance.
To develop an in-house affiliate management team, determine the ideal size of your team. Enterprises may have teams of six people and more, while startups have one or two professionals managing the affiliate program. You must also determine if your internal team has the skills and resources your program needs.
In-house affiliate management pros:
Inhouse affiliate management cons:
Many businesses choose to outsource their affiliate management to a professional affiliate management agency or network. This method is common for large brands without the expertise or resources for a successful affiliate management program. These companies prefer to invest in professionals and agencies that will guarantee results.
Be picky when choosing your affiliate marketing agency or professional. They must have worked with businesses like yours and have impressive case studies to prove they drive growth. Also, ensure who you outsource to is credible, reputable and has good online recognition.
Outsourced affiliate management pros:
Outsourced affiliate management pros:
Tracking and measuring the performance of your program is a key component of effective affiliate management. Knowing which aspects of the program are driving results, and which ones need to be adjusted to perform better, allows you to focus your attention and resources on doing more of what works, and less of (or fixing) what doesn’t.
The specific Key Performance Indicators (KPIs) you should use may vary based on your business model but the core affiliate programs KPIs that you need to measure are:
Every business defines active affiliates differently. But, in general, active affiliates are affiliates that have generated traffic in the last 30 to 60 days, or sales every three to six months. We can consider affiliates inactive if they don’t drive web traffic within 30 to 60 days or gain new sales every three to six months.
This KPI is vital to track as it gives you an insight into which affiliates are actively contributing to your program.
With this information, you can optimize your affiliate marketing and communication tactics by investing more resources in new affiliate recruitment, re-engaging inactive active or focusing solely on the active affiliates in the program.
Unfortunately, not all the affiliates you recruit will impact your program. Measure your number of active affiliates / your total affiliates to determine your program’s success. Knowing what proportion of your affiliates are active gives you valuable insight into your overall program and where it needs attention.
If you notice most of your affiliates are inactive, it’s time to refine your affiliate recruitment and management approach. Get feedback from your affiliates to pinpoint the problem. Perhaps you’re not compensating or engaging with affiliates enough, or perhaps you’re targeting the wrong ones? Find out so you don’t waste resources on a program of inactive affiliates.
Some affiliates may not drive high volumes of web traffic or individual sales but their sales are much higher in value per purchase. These affiliates can be just as valuable as the ones that drive huge volumes of small value purchases.
Use this formula to calculate your AoV: Revenue / Number of Orders = AoV.
Measure AoV for the program as a whole, and for individual affiliates to see which ones are driving a higher AoV.
If you notice specific affiliates are pushing high AoV figures, you know you’ve picked the right ones. And you know which ones to take extra good care of!
To see how many clicks are resulting in actual sales, you can measure your affiliate conversion rate with this formula: Clicks / Sales = CR.
Determine how many clicks you generate vs. your sales. Loads of clicks and low sales mean users interact with your product but don’t actually purchase them. Focus on your post-click marketing tactics to improve your sales.
But if your conversions are fantastic and clicks are low, you need to focus on attracting more traffic and clicks, so that you can increase overall sales.
Compare your affiliate conversion rates to your other marketing channels. If your affiliate marketing program doesn’t match up to other channels or make a significant impact, go back to the drawing board!
Although you can’t expect your affiliate marketing conversion to be the same or way more than other marketing mediums, it must boast competitive conversion rates.
Identifying the affiliate conversion rate on an individual affiliate basis also allows you to identify your top performers in terms of the quality of traffic they drive.
Is your affiliate management program generating new sales? And is it significantly impacting your overall revenue?
Compare your affiliate sales vs. your overall marketing sales. Knowing how many sales and much of your total revenue comes from your affiliate program is very useful. For more in-depth insights, compare your affiliate sales vs. sales from other marketing channels. This information reveals how well your program compared to your other marketing strategies and whether your efforts are worthwhile.
Your EPC rate measures how much you earn per click from each affiliate, and how much commission the affiliate makes per click. EPC rates allow you to see your top-performing affiliates, and allows affiliates to see exactly what they’re earning. You want this data to engage your best affiliates, and encourage them to become integral components of your affiliate marketing program. Businesses can also incentivize top performers to motivate them to achieve more conversions.
Summary: Affiliate Management KPIs
Affiliate management is crucial if you want to drive program growth and increased revenue. Brands must set SMART goals, measure their program’s performance, recruit and screen the best affiliates and create agreements. You can choose to outsource these efforts or handle them in-house. Whichever approach you opt for, use the best affiliate management strategies to scale your program in no time!
Affiliate management is the process of managing and scaling your affiliate program. Affiliate management covers tasks like affiliate recruitment, affiliate agreements and payouts and promoting your affiliate program. Read the full guide for more on affiliate management, affiliate marketing benefits and the best KPIs to track.
The best benefits of affiliate marketing include wider reach to convert targeted buyers, low start-up and operating costs, online reputation boost and improved SEO performance. Read this article for the benefits of affiliate management, the top affiliate compensation models and how to manage your affiliate program and increase revenue.
To manage an affiliate marketing program, businesses must set SMART goals, track and evaluate their programs, recruit top-tier affiliates, create affiliate agreements and create affiliate marketing challenges to keep affiliates engaged. This guide covers the top affiliate management tasks, types of affiliates, and the best KPIs to track.
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