CHAPTER 14
What About Agencies? Your Partners in Partnerships
DMi Partners is a full-service performance marketing and growth marketing company based in the United States and the mastermind behind the Rastelli's and Sunbasket partnership I described in Chapter 1. As you may recall, Sunbasket and Rastelli's have enjoyed a fruitful long-term relationship, with Rastelli's providing fresh protein for Sunbasket's D2C prepackaged meals.
Sunbasket is one of several strategic business partnerships that DMi Partners has arranged for Rastelli's. Two years ago the company began talking with Rastelli's about potential strategic partners it might be able to work with in the food industry. The concept was straightforward: develop a D2C business by entering into referral partnerships with companies like Sunbasket that provide high-quality food to consumers. The pitch to potential partners: let us be the butcher for your customers. The idea was well received and Rastelli's and DMi Partners were in the midst of highly productive conversations when the COVID-19 pandemic happened. Overnight those companies saw that their customers needed a high-quality source of meats and seafood delivered directly to their homes now, not in the future, and several extraordinary partnerships were quickly launched.
Facilitating strategic brand partnerships is one of the many services DMi Partners provides for its clients. “We start at the very beginning with branding and ideation, thinking what we want the brand to look like online, all the way through full execution of all digital campaigns,” explains Patrick McKenna, founder and CEO of DMi Partners. “From affiliate and other partnerships, to social media, search engine marketing, and full service ecommerce integration. Occasionally we get to engage with our clients in really in-depth, top-down partnerships—Rastelli's is one of those relationships.”
When it comes to facilitating strategic brand-to-brand partnerships, DMi Partners looks to bring together brands that have similar target customers but aren't competitors. “We want to help both brands leverage each other's audiences to grow both of their businesses,” explains Christina Nolan, vice president of affiliate marketing at DMi Partners. “We are looking to secure unique angles and get ahold of unique audiences to grow our brands.”
DMi Partners also looks for companies that offer high-quality products. “That's what lies at the center of being able to leverage this partnership economy,” McKenna explains. Partners have to be able to see the value that the potential partner brings. “If Rastelli's wasn't producing high-quality products, there is no way we could have gone to Sunbasket and gotten them to agree to have this partnership with us.”
Rastelli's works with a range of partnership types. Ninety-two percent of Rastelli's partnerships revenue is content-based—DMi Partners has secured over 200 placements for Rastelli's, year-to-date, with mass media publishers. The company also works with coupon and deal sites, which it employs to close the conversion funnel. “A consumer may have been educated about Rastelli's from a content partner; however, in doing the research, they realize there are many places to get meat delivered,” Nolan explains. “When they realize they can get cash back through a rewards partner like Ibotta, they end up pulling the trigger on Rastelli's. We leverage these partners in tandem with each other to make sure we have a really tight conversion cycle for the consumer.”
DMi Partners is highly committed to its clients' success. “We try to make sure that our incentives are totally aligned with our clients',” explains McKenna, “because then we're able to really become true partners with our clients, to sit at the same side of the table with them, and be responsible for driving their growth.” Those incentives can take the form of revenue or profit shares, or doing joint ventures or equity partnerships with clients.
Go It Alone or Go with an Agency
Enterprises have three options when it comes to creating, managing, and growing their partnerships portfolios: manage everything in-house, hire an agency, or operate under a hybrid model where some portion of their portfolio is managed internally and some externally. Collaborating with agency partners is common practice. Enterprises of a variety of sizes, business models, and levels of partnerships program maturity work with agency partners.
Why do enterprises choose to work with agencies? Companies look to their agencies for expertise and efficiency. Some enterprises are looking to create a partnerships program from the ground up, while others are looking to expand their existing portfolio in a different region or direction. Others are looking to agencies to handle the tactical and operational aspects of their program or to conduct a one-time audit. And there are many variations that fall in between these two endpoints. The common denominator is the need for resources—capability, capacity, relationships, and/or tech expertise—that enterprises currently don't have, or don't have enough of. A few examples of how enterprises are using agency partners follow.
Perform[cb] Agency and a Pet Essentials Brand
Perform[cb] Agency is a performance marketing agency specializing in the cost-per-acquisition marketing model. In March 2020, a well-known pet essentials brand came to Perform[cb], looking to scale its partnerships program.1 The program had 15 active partners, eight of which were performing well.
Perform[cb] performed a program audit through which the team identified several opportunities for growth and optimization. This included onboarding new partners based on competitive insights and client KPIs, reengaging dormant partners, and implementing a tiered payout system to better incentivize upper-funnel partners while maintaining an efficient return across the program. Within the first month of launch, this pet essentials brand's partnerships program grew significantly, with a 286 percent increase in revenue. Over a 12-month period, the agency was able to drive a 354 percent increase in order volume overall.
OtterBox, Gen3 Marketing, and Content Publishers
Gen3 Marketing (Gen3) is a full-service marketing agency specializing in all aspects of digital marketing, including affiliate marketing, SEO/search engine marketing (SEM), social media, and digital public relations. OtterBox, which designs protective and stylish phone cases as well as premium coolers and accessories, works with Gen3 to manage and grow its partnerships program.2
In April 2020, Amazon instituted a large decrease in its commission rates for its partnerships program, which dramatically reduced the earnings of many publishers. This created a perfect opportunity for brands like OtterBox to build direct relationships with publishers that had previously only promoted OtterBox through Amazon. Working with Gen3, OtterBox instituted an outreach strategy to strengthen partnerships with a select group of content publishers through customized content, enhanced exposure, and adjusted compensation models. The primary goal was distribution of quality content, ideally focused on top-selling products.
The results were quick and significant. In the first few weeks, revenue from just two of the targeted publishers created notable results. Specifically, OtterBox received excellent exposure from CNN Underscored through posts such as “Shop these brands offering special discounts for workers on the front lines of COVID-19,” which featured OtterBox's 40-percent-off promotion for front-line workers, and the “Guard your new iPhone SE with a new screen protector” article, which showcased OtterBox's three most popular screen protectors for the iPhone SE. This additional exposure increased CNN Underscored–sourced visits to otterbox.com by more than 13,000 percent year-over-year and revenue by more than 16,000 percent.
Assessing Your Internal Capabilities
The starting point in any company's decision about whether to hire an agency is an honest assessment of its in-house team's capabilities. Does it have what it takes to build, manage, and grow the partnerships program that the company needs and wants? Is there a market disruption, such as Amazon decreasing its partnership commissions, that, with the right assistance, can be turned into a market opportunity? Other questions to consider, organized by phases of the partnership process, follow (Table 14.1).3
Types of Agencies That Create and Manage Partnerships
There are three basic types of partnerships agencies: full-service digital marketing agencies, partnerships type–specific agencies (e.g., traditional affiliates, influencers, strategic business development), and a combination of the two (e.g., an agency that manages multiple partnership types, but not all).
Just like partnerships teams have traditionally operated in silos within most companies, so has agency management of various partnership types. While most full-service agencies have focused primarily on the larger search and display advertising budgets, smaller agencies have focused on just one or more partnership types: traditional rewards affiliates, influencers, commerce content publishers, and strategic business development partnerships. Part of the reason for this focus and specialization is the unique approach each type of partner typically requires. However, as the category of partnerships has become more well known in the past few years, more agencies are developing more skills for the different partnership types. And with the rising importance of being present and relevant inside the daily information of modern consumers' lives, along with rising ad prices due to the new limitations placed on marketers regarding targeting, tracking, and measurement of ads, full-service digital marketing agencies have recently gotten into the partnerships business as well.
TABLE 14.1 Assessing Your Internal Partnership Capabilities
| Phase of partnership life cycle | Questions to consider | Why consider this question |
|---|---|---|
| Planning | Are you able to develop go-to-market strategies, track your customer and shopping journeys, create customer coverage maps, and perform partner gap analysis? | Creating, informing, and delivering a go-to-market strategy is the most important capability for high-maturity partnerships programs. |
| Discovery and recruitment | Are you able to define your ideal partner profile, define standards for partner acceptance, and find and recruit the types and quality of partners you want? | To recruit high-quality partners, you have to be able to articulate what you want and don't want, utilize lookalike and propensity models to find potential partners, and bring them into your emerging partnerships ecosystem. |
| Tracking | Are you able to effectively track relevant micro conversions and macro conversions? Are you able to future-proof your tracking solutions? | Partners need to have full confidence in your ability to assess impact. Your tracking ability needs to create a clear link between desired customer behaviors, partner activity, and micro conversions and macro conversions moments. Privacy is a key consideration, and you need to be able to ensure that your tracking solution meets current and future privacy initiatives across every platform. |
| Engagement | Are you able to effectively onboard, train, and provide partners with a steady stream of content, promotions, and campaigns in order for them to reach their full potential? | Ongoing partnership engagement is critical to the success of every partnership. |
| Protect and monitor | Are you able to effectively manage fraud and other overpayments? Can you ensure regulatory and branding compliance? | Fraud is expensive—and so is noncompliance with local laws and branding guidelines, such as bidding on trademarked words. |
| Optimization | Do you know which combination of partners, incentives, content, campaigns, and products brings out the best in each of your partners? Do you know how each partner impacts your customer and shopping journeys? Can you build partner KPI scorecards and a partner program dashboard to learn how you are performing at any moment and time, and what can be done to further enhance results? | Being able to measure and assess current and future performance for individual partnerships and for your portfolio as a whole is critical to any partnerships program's success. It builds organizational commitment, enables more effective allocation of resources, and determines future partnerships program strategy. |
Source: Adapted from “A Buyer's Guide to Partnership Success: Evaluating Services and Technology,” Forrester, November 2020.
As partnerships and partnerships programs have increased in complexity, sophistication, and value to enterprises, companies' expectations for their agency partners have changed. In addition to ensuring that their partnerships programs run smoothly, many enterprises are looking to their agencies for strategic thinking, innovation, and partnership matchmaking. They want their agencies to have a solid understanding of their company's business objectives, their partner value propositions, and the partner landscape so they can co-create customized, innovative, and data-informed strategies to help companies generate incremental growth. And they want their agencies to help them proactively identify and mitigate risk to ensure that their programs are working within the bounds of their brand guidelines and the law. Rather than outsourcing their partnerships programs, these enterprises are effectively calling in resources, hiring agencies to work as part of their partnerships team (even if the team is only one person). This is a significant shift—much more than semantics. It's about truly partnering with agencies to address enterprises' most critical business objectives.
The rise of influencers has created influencer talent agencies that work with influencers to help them find the best enterprise partners and negotiate the best deals for themselves and their audiences. Most influencers with sizable followings work with talent agencies. Among them are Gen Z's media heroes and more traditional celebrities in film, television, music, and sports.
When Hiring an Agency
Today, companies can avail themselves of agency expertise in marketing strategy and program design, search engine optimization, paid social, programmatic, social media monitoring, compliance testing, fraud mitigation, and more. They can work with agencies that approach enterprises' business holistically, weaving partnerships into an overall customer engagement strategy. They just need to find and hire the agency that best fits their needs and then work well with them.
If you are considering hiring an agency for your program, impact.com recommends that you interview several agencies to learn about their partnerships philosophy, experience, expertise, and the quality of their results, and to explore what it might be like to work together. Take your time and get your questions answered. Read reviews, case studies, and testimonials, and speak with existing and former clients. Attend industry conferences and events, and ask around about various firms. Address any issues these conversations surface with any potential agencies that make the final cut. Commit when you are convinced that a potential agency partner has what you need, that it is able to deliver, and that you want to work with that partner. Most agency contracts run a minimum of 6–12 months and that is too much time to waste.
Be Clear About Your Objectives
When exploring working with an agency, be prepared. The clearer you can be about who you are, what you are hoping to achieve, and what you bring to the table, the better off everyone will be. In a recent blog post, Acceleration Partners, a global partnerships agency, warned that this “is not the right place to work out a company's value proposition. Affiliates invest time and money in promoting companies and companies need to be respectful of that or they run the risk of losing those partnerships forever.”4
Be able to articulate your strategic business goals, how you envision your partnerships program addressing them, and your time frame for results. And if you are planning to expand your partnerships program globally, you'll want to make sure that any agency that you choose has the expertise and contacts to help you move forward.
Understand the Scope of Your Potential Engagement
What is inside and outside a scope of work? Robert Glazer, founder and CEO of Acceleration Partners, recommends that you clearly articulate the responsibilities that enterprises and agencies assume when working together. Generally speaking, in his experience, enterprises are responsible for their internal business knowledge, overall program goal and strategy, branding guidelines and creative, and origination of campaigns and promotions. In terms of creative, this includes any assets you want (or don't want) to be used, details about requirements, your marketing and promotional calendars, and information about new product features and launches. Enterprises also need to attend regular meetings, provide approvals, and pay the bills. Agencies are generally responsible for customer strategy, program operations, new ideas and best practices, partner recruitment and engagement, fraud monitoring and compliance, and measurement and optimization.5
The success of partnerships as a customer engagement tool means that its remit is expanding into areas that have been previously managed by other functions and agencies. An example of this is mass media partners, whose editors can often have relationships with both an enterprise's PR and partnerships teams. Lacie Thompson, founder and CEO of the marketing and consulting firm LT Partners, recommends that enterprise partnerships teams work closely with their internal and external PR firms to coordinate their efforts with publishers or take on similar efforts if a PR firm or team is not a part of the equation. In Thompson's experience, this intentional effort reduces confusion and maximizes impact. As an example, Thompson shares her firm's experience in building out a partnerships program with the jewelry company Made by Mary. When the partnerships team began pitching commerce content managers at digital publications, similar to how a PR team pitches to editors, the impact was significant. It was able to secure 16 press mentions for the jewelry company within three weeks, resulting in an increase of 465 percent in month-over-month (MOM) clicks and 174 percent in MOM revenue.6
Know What You Bring to the Table
The best agencies have their pick of enterprises with which they can work, so it's helpful to know what you bring to the table when exploring taking on an agency partner. Why should this agency work with you over other potential enterprises? Most agencies like to see a strong organizational commitment to partnerships as a growth strategy when choosing to work with companies. Agencies do their best work when they have context for the work they are doing, an understanding of the larger needs of the organization, and confidence in the organization's commitment to partnerships as a growth strategy. Do you have the support of your CMO, chief strategy officer, or chief partnerships officer or investors? What's important to them? What hurdles do they need your program to meet?
What Is Your Market Position?
Are you an established brand with a strong reputation and highly marketable products? Or are you a well-funded start-up that is committed to employing partnerships as part of your customer acquisition strategy? As a rule of thumb, Acceleration Partners suggests that if your company has annual sales of less than $8 million, it will be difficult for you to break even after you pay agency management fees.7
What Is the State of Your Portfolio?
Have you been paying your partners based on who had the last click and is in need of a commission reset? Do you have a strong partnerships program and are you looking to enhance your revenue by diversifying partner types, potentially collaborating with content partners and/or other brands?
What Is Your Mindset?
Consider how holistic and innovative a program you want to have and what your organizational structure and leadership will realistically allow. Are you looking to grow your portfolio via well-proven strategies, or are you eager to explore new territory together, testing novel approaches with different partners?
How Big a Budget Do You Have?
Companies must also be clear on what they intend to spend on their partnerships program and how they will measure performance. Knowing this information enables agencies to understand the type of results they will need to generate for you and at what level of compensation. Upfront clarity eliminates miscommunication and sets a strong foundation for the relationship.
What Are You Like to Work With?
How you partner matters. Are you a “set it and forget it” client or do you see a potential agency partner as an extension of your team? Do you treat your agency partners professionally and respectfully or as vendors or expendable resources?
When Assessing Potential Agencies
What is important to consider when it comes to interviewing and selecting an agency partner?
Do They Have What You Need?
Perhaps the most fundamental criterion is the agency's expertise and the scope of its offering. Does it have the expertise and experience that you need and are willing to pay for? Take the time to talk with the agency about its business, clients, and its experience in your vertical. Does it have a solid grasp of your company, business goals, products and services, target customers, and the regions in the world in which you operate? Does it understand the nuances and language of your industry? Be sure to inquire about the results the agency has achieved for clients with similar business objectives as yours. And if it works with your competitors, carefully explore potential conflicts of interest and how they might be handled.
Get personal. How does a potential agency partner envision driving results for your partnerships program? “Every business is different,” explains Thompson. “You can't take a playbook from one customer and apply it like peanut butter to another, even if they are in the same industry.” You want to find agencies that will custom design a partnerships program to match your business goals and your situation in the marketplace. What does your potential agency envision as top priorities for your program and what is its rationale? What types of partners is it recommending for you and why? Are these partners likely to generate incremental value for you? How deep is the agency's bench of relevant partner connections? What tools does it use to recruit potential partners?
What Can You Expect?
What is the process that the potential agency will take you through to determine ongoing strategy and optimize your results? Each agency has its own signature strategic process and they are not all the same. Have the agency walk you through the process and explain what is involved in each stage. How does it define success? What is its timeline for success? Figure 14.1 shows JEB Commerce's strategic roadmap as an example. As you can see, its process includes an audit of the enterprise's current state and a vision for a future state; a strategy for selecting potential partners, launching, and optimizing individual partnerships and the portfolio as a whole; and strategies for building a mature partnerships portfolio and long-term growth.
What Type of Insights Do You Want?
How robust is a potential partner's reporting? Consider the partnership management platform that potential agency partners prefer, as it ultimately determines what is possible with partnerships programs, and there is considerable variation among various platforms. If you have already made an investment in a partnership management platform yourself, make sure that the potential agency is well trained, certified, and proficient on the platform. If you have not already made a tech investment, or if you are looking to make a change, evaluate the platforms it uses and recommends. How good and comprehensive are the data, insights, and predictive capabilities of its platforms? What will the technology it recommends to you enable and what will it preclude? Drill down a bit to see what capabilities are already available in the technology and what's in development. Is it able to offer multitouch attribution? If not, you won't have the insights into partner activity across your customer journeys, which is necessary to understand the value your partners provide and compensate them accurately. Inquire about the upfront and ongoing fees associated with a given platform.
FIGURE 14.1 JEB Commerce's roadmap to partnership success.
How Good Is the Agency's Compliance and Fraud Monitoring?
Compliance is important for every brand, and especially for companies operating in highly regulated industries. How familiar is the agency with key regulations in the regions in which your business operates? How will it monitor for brand, trademark, and Federal Trade Commission compliance?
What are the tools the agency will use to monitor fraud in your program? What type of tools does it use to identify fraud? Does it have people on staff who specialize in fraud prevention?
What Will This Relationship Cost You?
There are three general compensation models for agencies—flat fee, a variable amount that is entirely performance-based, or a combination of a retainer and performance. Most agencies work on a combination of retainer plus performance model. The compensation structure that is ultimately negotiated should reflect the type of work that agencies are doing for you. If agencies are able to impact your performance, not just execute on your behalf, they are more likely to agree to some or all of their compensation being performance based. Whatever compensation structure is put in place, it's important to be very clear that your desired outcomes are the specific customer behaviors—micro conversions and major conversions—that are necessary to generate those outcomes. Build your metrics around those behaviors.
Is This the One?
Consider the level of transparency and integrity with which a potential partner operates. Your agency partner is meant to be exactly that, your partner. It should have your best interests in mind, protect your brand, be transparent, and be performance-oriented. With today's partnership management platforms, partner performance is trackable, making transparency possible and desirable. If a potential agency claims to be an expert in the field and wants you to turn the keys over, be wary. Robert Glazer warns, “If agencies were more transparent about the outcomes they're producing, you probably would have fired many of them years ago.”8 Insist on transparency into your program's performance and into how the agency's time and budget are spent.
Jake Fuller, director of acquisition at JEB Commerce, recommends that you explore a potential partner's level of commitment to you. How interested is it in working with you? What types of resources will it commit to your partnerships program? Who will be working with you? What is its team structure? How skilled and experienced are the people who will be dedicated to your program? How does it determine its program caseload for account managers or teams? Are they dedicating and managing their time to your program each week in relation to your main and supporting objectives? Fuller says that it's quite common to see managers in the industry responsible for 25–35 accounts, which allows for a “putting out fires” strategy at best. He recommends asking about the partner turnover experienced on a team level and the institutional knowledge that goes with it. You don't want your partnerships portfolio to be managed by individuals who are continually getting up to speed on your account.
Finally, in the end it's important to ask yourself if you are comfortable taking on this agency as a partner. Even if it meets your qualifications, you still want to work with the people who will be managing your program. Do they feel like a good fit? Do you feel as if you can trust them? Why or why not? If you don't, pay attention. What else do you need to know to get comfortable? And if you find yourself talking yourself into working with a potential agency, keep looking.
The Quick Summary
- Enterprises have at least three options when it comes to creating, managing, and growing their partnerships portfolios: manage everything in-house, hire an agency, or operate under a hybrid model. Collaborating with agency partners is common practice among companies of all sizes, business models, and levels of partnerships program maturity.
- Partner agencies come in two basic varieties: partnerships type–focused agencies and full-service digital marketing agencies. Outsourced program management (OPM) agencies are designed to help enterprises with the day-to-day management of their affiliate partnerships programs. In addition to ensuring that their partnerships programs run smoothly, enterprises look to full-service digital marketing agencies for strategic thinking, innovation, and partner discovery and recruitment.
- The starting point of any enterprise's decisions about hiring an agency is an honest assessment of its in-house team's capabilities. Do you have what it takes to build, manage, and grow the partnerships program that your company needs and wants?
- When hiring an agency, enterprises should be clear about their objectives. Why do you want to work with an agency? What is the scope of a potential engagement? What would success look like for you? Understand what you bring to the table and why an agency may be excited to work with you.
- When assessing a potential partner agency, consider its expertise, experience, and partner relationships. Does its vision for your program and its recommendations for types of partners make sense for you? What resources will it commit to your partnerships effort?
- What can you expect when working with an agency? What is the process it will take you through? What is its timeline for success? What type of performance reporting will you have access to and how often? How much transparency will you have into how your team's time and budget are spent? Does it have any potential conflicts of interest?
- Consider the underlying compensation model for your collaboration. Does this seem fair and motivating?
- In the end, enterprises and their agency partners need to be able to work well together and want to do so. Can you imagine them being an integral part of your partnerships team day in and day out? Do you trust them? Do they want to work with you?
What's Up Next?
In the next part, “Unleash Your Partnership Potential,” we'll turn our attention to how enterprises can further unleash their leadership potential, with discussions of various partnerships program maturation strategies.
Notes
- 1 “In-House vs. Agency Affiliate Program,” Perform[cb], case study, accessed May 28, 2021, https://www.performcb.com/case-studies/in-house-vs-affiliate-agency-case-study/.
- 2 “Recruiting Meaningful Content Publishers in a Mature Program,” Gen3 Marketing, case study, May 28, 2021, https://gen3marketing.com/case-studies/recruiting-meaningful-content-publishers-in-a-mature-program/.
- 3 Adapted from an impact.com-commissioned study conducted by Forrester Consulting, “A Buyer's Guide to Partnership Success: Evaluating Services and Technology,” Forrester, November 2020.
- 4 “Is an Affiliate Management Agency Right for You?,” Acceleration Partners, accessed May 14, 2021, http://bit.ly/accelerationpartners-am-agency.
- 5 “The Ultimate Guide to Affiliate Marketing Partnerships,” Acceleration Partners, online course, accessed May 14, 2021, http://bit.ly/acceleration-partners-partnerships.
- 6 Lacie Thompson, Founder and CEO of LT Partners, interviewed by Lisa Leslie Henderson for impact.com, November 17, 2020, audio, 59:58.
- 7 “Is an Affiliate Management Agency Right for You?,” Acceleration Partners.
- 8 “The Ultimate Guide to Affiliate Marketing Partnerships,” Acceleration Partners.