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5 Ways to Avoid Conflict of Interest in Affiliate Management

By on April 14, 2016

Affiliate marketing is all about relationships. How do you make sure you don’t have a conflict of interest in your program?

Some affiliate networks go beyond basic services, offering to manage affiliate programs on behalf of their advertisers. For the busy advertiser, this can be enticing, enabling them to reap additional sales for a monthly fee.

 

However, in the network model, the team that manages the affiliate program is there to connect you to the affiliates they do business with — and this may be a potential conflict of interest. The network is a middle man who wants to maintain relationships with both you and the affiliate. This can influence their decisions as their goals are not totally aligned with the advertiser’s. Like you, revenue is their core driver, and certain affiliates bring them more revenue, whether or not they’re the best fit for the advertiser

 

Think about it this way: if Google offered managed services for ads, would you allow them to run your Google Adwords campaigns? Sure, they’re the experts, but they also have a vested interest in placing your ads on their platform. In any industry, there’s an inherent problem when one company represents both the buyer and the seller. In the case of the affiliate network, this can go one step further as they may also work very closely with your competition.

 

There’s an art to knowing which media partners and marketing channels provide value and return on ad spend (ROAS). Your affiliate strategy should combine the specific goals for your program, the science of tracking performance, and the flexibility to ensure every media buy delivers ROI.

 

Here are 5 ways to make sure you’re getting what you need from your affiliate marketing vendor:

 

1.   Separate technology from services.

It is essential for the affiliate marketing industry to separate technology usage from program management services. A separation of these two functions is the only way for advertisers to get truly unbiased conversion data (and consequently, meaningful insight into their programs). This separation also removes any incentive for that data to be shared with anyone outside your organization – if talking with one of your competitors, a network may share information about your program’s success and who your top publishers are.

 

2.   Manage partners directly.

You need the flexibility to include the kind of specialized partnerships that most closely meet your business objectives. In most cases, 90% of an affiliate channel’s volume comes from less than 25 top affiliates. By managing top partners directly, advertisers can dramatically improve their return on ad spend. Marketers can improve overall performance by ensuring their top partners clearly understand their goals and objectives, and a direct relationship allows those goals to be incentivized.

 

3.    Automate administrative tasks.

Technology can streamline the majority of administrative functions, such as reporting, affiliate approvals, creative uploads, returns, missing order inquiries, and so on. Fees should be spent on gaining partnerships that deliver incremental value, not day-to-day tasks that can be automated.

 

4.     Explore a flat fee model.

This is an effective way to both remove bias and reduce costs. The network model (i.e. charging a percentage of ad spend or revenue) is prone to conflicts of interest; the affiliate network has too much incentive to engage with the affiliates from whom they earn the most revenue. A simple way to fix that is to work with a solution provider that offers a flat fee license structure, where the advertiser pays only for using the technology platform to manage its affiliates.

 

5.     Understand your consumer journey.

When advertisers gain full visibility into their conversion paths, they have insight into which affiliates participate in conversions. Was a partner truly involved, adding tangible value, or should the credit have gone to another channel or partner? This insight will help advertisers avoid unnecessary commissions and fees.

Here at Impact Radius, we pride ourselves on staying focused on the technology we provide our clients. We have a monthly flat fee for the use of our SaaS technology, so we don’t take a percent of your revenue. In fact, while we enable advertisers and affiliates to connect directly, we don’t drive those partnerships. Instead, we empower both the advertiser and media partners with the tools they need to grow.

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