There are lots of considerations when it comes to creating a successful partner marketing program. Should you use technology provided by an affiliate network, or invest in a SaaS solution? What KPIs should you benchmark and measure? How should you optimize cross-channel campaigns? TUNE employees have fielded these questions and others throughout our 10-year history in the affiliate industry, but we’ve heard this one more often than all the rest: “Is it best to trust a third party to manage my affiliate partnerships, or should I manage my marketing partners directly?”
In this blog post, we address this question, sharing three reasons why it benefits you, as the advertiser, to manage your marketing partners directly.
1. Managing partner programs in-house can reduce the money at risk to fraud.
It’s no secret that fraud is a massive industry issue, trending each year exponentially toward $400 billion worldwide. Fraudsters take advantage of affiliate programs by using click fraud, install fraud, and compliance fraud to get credit for sales they didn’t drive. Large retailers can be hit particularly hard; in one case, bad actors cost eBay upwards of $20 million in affiliate marketing sales before the company caught on.
Ben Edelman, an expert on the intersection of economics and online marketplaces, tested the vulnerability of some of the largest affiliate networks in 2012. He found that overall, programs managed in-house suffered less fraud than programs managed by networks and programs managed by third-party vendors. As a Forbes article about the study summarizes:
“In general, the in-house approach is more effective at keeping rogue affiliates out of a program. That’s because the internal employee who selects and manages affiliates, and is paid a base salary, has different motivations than an outside company, whose managers may be overseeing 100 affiliate programs at a time and are paid on contract or by percentage spent as a result of the ads.”
This is why managing your marketing partners directly is one of the best ways to catch, reduce, and prevent fraud before it becomes a problem for your company. At the end of the day, third parties are businesses that need to turn a profit — their focus is on their bottom line, not yours. Keeping an eye on your partners benefits everyone involved. (And by the way, when we say partners, we mean any kind of partner — a single publisher, a group of influencers, or an entire affiliate network. With the right partner marketing software, directly managing all of these partners and more is not only possible, it’s profitable.)
“The inherent problem with fraud prevention is that most third-party solutions have been built for single players, and not for the larger ecosystem,” explains Brian Marcus, TUNE’s VP of Global Marketing. “To dial down fraud successfully, it takes a village — and all sides need to truly understand the data, align incentives, and operate with a high level of transparency. Today’s third-party tools that attempt to tackle fraud do so from only one angle, with only half the picture, and often within a black box, which only exacerbates the situation.”
2. Advertisers can be found legally liable for an affiliate’s bad behavior.
While it seems logical that a bad actor should be the one held responsible for his or her fraudulent actions, that’s not always the case. In many highly regulated industries, advertisers are responsible for their partners’ behavior as if it were their own. In other words: It’s your reputation on the line if one of your partners goes rogue.
For advertisers in certain industries such as finance, retail, education, and pharmaceuticals, regulations treat affiliate activities as if they were conducted directly by the advertiser. And federal agencies have been increasingly vigilant in monitoring and policing violations related to partner advertising, most notably those committed by prominent Instagram influencers in recent years. In response to these violations, the Federal Trade Commission has frozen advertiser assets, secured compensation for affected consumers, and even required brands to run corrective advertising to address their partners’ deceptive claims.
Since third-party program management providers aren’t the ones ultimately responsible if things go sideways, it’s up to you as the advertiser to protect your own reputation. For that reason, it’s in an advertiser’s best interest to have total control over educating, monitoring, and potentially banning rogue partners. (Click here to see how TUNE’s Proactive Fraud Prevention gives you total control over protecting your program from bad actors.)
3. More control over programs and policies can enable more effective marketing.
When advertisers manage their partner programs directly, they are able to choose the kinds of partners they want to work with, set the policies they want affiliates to follow, and have the final say over who is or isn’t part of their program. They can communicate with partners in whatever way works best for their business and schedule. They can establish rules and enforce compliance as they see fit. They can pay affiliates on their own terms, choosing how often and how much and in what currency. And the list goes on.
When advertisers use a third-party network or vendor to manage their partnerships, they relinquish control over many of the elements above. That may not be a big deal if you don’t mind sharing your affiliates with your competitors or working only with the options you’re provided. But for advertisers who want to build the partner program of their dreams, only full control over their program and their relationships will make it possible.
4. Direct partner management can save advertisers lots of cash.
Managing partners directly helps advertisers to do more with less — more optimizing with less budget, for example. With a SaaS solution that’s based on software pricing, and no professional services fees or cuts of commission to pay to agencies or networks, advertisers can really start racking up the savings. With more money left in the bank and deeper relationships with their partners, advertisers are free to spend more to drive better quality traffic or reinvest in their program. Either way, your bottom line and your partners will thank you.
Be Your Program’s Best Advocate
In the end, it comes down to this: managing partners directly puts advertisers back in the driver’s seat of their own partner marketing programs. Advertisers then not only get to define the rules their partners play by, but gain greater transparency into how their partners are performing.
By managing their own partners, advertisers can get a greater sense of what normal data patterns look like for their industry, season, and products. Advertisers are then better able to spot outliers, drill deeper into suspicious patterns, and take action to remove fraudsters — without heaps of red tape costing them money and their reputation.
In a sense, direct partner management allows advertisers to be their own best advocate. They can take their program and goals into their own hands, versus putting 100% of their trust in a third party vendor that may not give 100% back. Instead of hoping for the best across disjointed networks and solutions, advertisers can use partner marketing software like TUNE to access all of their affiliates, data, and fraud prevention tools in one dashboard. That simplification enables better advertising, better partners, and better transparency for all.
To learn more about excelling in partner marketing, download the industry’s only step-by-step guide to building a successful cross-channel partner marketing program.
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Becky is the Senior Content Marketing Manager at TUNE. Before TUNE, she led a variety of marketing and communications projects at San Francisco startups. Becky received her bachelor's degree in English from Wake Forest University. You can find her waxing poetic about the South and exploring her new home from her headquarters in Seattle's Belltown neighborhood.