Editor’s Note: This is our third article with up-to-the-minute reporting from the AMDays (Affiliate Management Days) event taking place in San Francisco March 8-9, 2012. AMDays is a conference for businesses that sell through affiliate channels. More coverage of #AMDays .
This is a live blogging summary of the session “Exploring the Pros & Cons of In-house & Outsourced Affiliate Program Management.
Karen has a unique perspective on deciding whether to have a dedicated in house manager or placing your affiliate program in the able hands of outsourced program managers (OPM’s). She has spent over five years as an in house program manager for Sherries Berries before deciding to move and open an OPM agency of her own that is now responsible for operating 8 programs and having had her team work on over a hundred.” Below is coverage during the session featuring speaker Karen Garcia (pictured left), CEO of GTO Management , an outsourced affiliate program management company.
EXPERTISE & EXPERIENCE
Choosing the right person is so important because affiliates will often choose a program to work with based on who is managing the program. A recent statistic found by AffStat.com  showed that who manages the program is the third most important reason for joining and working closely with a program. Only brand and payout were a greater influence in that decision.
The first task at hand is finding a manager. In house managers that have experience in the field can be difficult to find and hire. Most dedicated managers really enjoy their positions and environment and aren’t likely to “jump ship” unless highly motivated.
OPM’s can be can be easily found and are ready to expand their client base. An added perk to finding the correct OPM is that if your needs do not fit your business model, they have great relationships with other OPM’s and can direct you to them, lessening the time and resources you have involved in filling the position.
In house managers tend to be less experienced in the tasks required and need to be trained. Before they become proficient they will have a bit of a learning curve, as well as learning your own internal systems. An OPM will have the knowledge of their responsibilities and have the ability to make positive strides move on day one, thus lessening the time to sustained profitability of your program.
The only negative to an OPM is that after operating many programs, they have a routine and a way of doing things that will be very difficult for a merchant to alter. This is where an in house manager has an advantage. The merchant can mold this person into your perfect resource that fits the very specific needs of your niche. In house managers also tend to be passionate about their field, where an OPM needs to learn the specifics of your business to know where to make opportunities.
The experience of starting a program is easily handled by an OPM. They know not only the specifics that a company needs to have in place, but they also understand the competitive market for your business model, and can place your program in a visible location where many affiliates will find it worth promoting. Here is where a “new to the industry” in house manager will have to educate themselves on the specifics.
Fraud is an area where most in house managers have the advantage. Internally a manager can find fraud using reports that may not be shared with an OPM. Legal compliance though is an area where OPM’s are well versed. Compliance issues like the Amazon tax (a quick poll showed less than half the attendee’s of this session understood that law).
In house people can be pulled in many directions and not always able to devote time directly to the program. I myself have had these issues and can directly relate. OPM’s are laser focused on the program and can have multiple people working to accomplish a common goal. In house managers may wait for guidance, where OPM’s are highly self sufficient, and can make gains based on experience without needing to be told what to do.
Organized marketing efforts, however, will be better handled with in house managers. They are closer to the marketing team and can plan better if given the advanced knowledge while working as a team. OPM’s, if communication is poor, may be blindsided by marketing efforts and not have the time needed to relay the message and provide a united marketing front.
Lastly on the list of important factors are the hours that either of these options maintains. In house managers are working normal hours and are not often available for late night or weekend issues. Some OPM’s maintain varied hours, depending on their needs, and can handle respectable off hour requests. But it is important to make these points understood in their contract prior to operating with them.
Depending on your business model and size can you handle a salary, benefits, vacation, sick leave, work stations, training, etc. that are needed to have a dedicated in house manager? Or are you more able to provide a flat rate for an OPM retainer and performance bonuses? Remember OPM’s are 1099 and maintain their own benefits. OPM agencies might have multiple manpower resources available that can help establish a program and leave.
In house managers have limited connections. They are typically new or recruited from another vertical, but OPM’s maintain an extensive list of affiliates from many verticals that will have many specific for your niche.
Overall, I think that these points provide great insight in helping make the decision of hiring an in house manager or an OPM.