In an industry worth billions how much money is being “bunged” around to get people to change links.
If I was a “streetwise” affiliate manager at a merchant, or even an affiliatenetwork, I would make sure I had some spare cash in a black swag bag or something to persuade affiliates to change links. Now I am not saying this goes on, but it’s a thought.
Lets assume I was a company with a large online presence with a large affiliate business. I had deals with the large affiliate networks to run some of my global affiliate business. This online affiliate business was worth hundreds of millions per year in sales and I am paying out 5% in affiliate commission, with a 20% management fee to the network.
So with a US$200 million affiliate business an affiliate network is making 1% on the total sales numbers , or $2 million per year. Over 90% of most affiliate business for any merchant comes from about 10 affiliates, and as a merchant I know who these people are.
One day as a merchant I may be tempted to persuade the affiliate to deal with me direct, hence I call up the affiliate and say:
- Fancy working with us direct?
- I can pay you a signing on bonus
- I can pay you more commission as I will not have to pay the affiliate network
- We can deal direct without those affiliate idiots in our way
Is that legal business or bribery?
Doug poor but trying to be honourable
DIGG This
Loading ...
April 8th, 2008 at 8:37 am
Its business
April 8th, 2008 at 9:08 am
Never said it was not…but is it right?
Or am I just a purist?
Doug
April 8th, 2008 at 9:12 am
It is business, sometimes you have to cut out the middle men to gain more cash. Instead of a football team of middlemen you only have one…
April 8th, 2008 at 9:19 am
>>Or am I just a purist?
You are deluded, you would do it in flash. Be honest with us :-).
The only thing that irks you about it is you don’t yet have a $200M affiliate network :-)
April 8th, 2008 at 9:20 am
Its ok becuase
the networks do not own the affiliates.
April 8th, 2008 at 9:27 am
Joe - agree technically but this is a ethics question
Gimp - had the offers mate, always said no…..a deal is a deal in my eyes
April 8th, 2008 at 9:39 am
I think it’s a personal ethics question. As a merchant I probably would do that instead of going broke… otherwise, I would probably stick around with the original network - unless I had a good excuse for myself :)
April 8th, 2008 at 9:45 am
Get the ethics - but reality for all “middlemen” is that you MUST be adding value otherwise you get cut out of the loop - business is dynamic and margins are under pressue so those who make their money in the middle have to keep one step ahead.
April 8th, 2008 at 9:50 am
if the middle man can no longer justify their cut then they have no business being your middle man.
go for it
April 8th, 2008 at 9:53 am
Doug,
I agree that it’s mostly an ethics question. Those affiliates helped you make those millions. They brought in the customers. You’d have to decide if the affiliates deserved continued compensation or if it was worth more to you overall to risk those relationships to bring in a higher overall profit. Ethically, I couldn’t do it.
The other thing to consider is the ethics of those with whom you are dealing. If you start contacting referrals directly, how many of them are going to mention that to their upline? How many of them are going to write blog posts about how you are trying to steal them away from the affiliates that brought them to you?
Personally, if I was approached directly by a company trying to nab me from an affiliate, I’d try to contact other affiliates to see if the same offer had been made to them. If I could find enough of them, you can be damn sure I’d be writing about the shady tactics on my blog.
I think with the lightning-fast, free-for-all nature of the web, you’d also have to consider the risks to your reputation.
Excellent question!
Sara
April 8th, 2008 at 9:54 am
Is this what Ebay have recently done with CJ….thanks for introducing us to all these people. Well we don’t need you any more.
http://www.asapventures.co.uk/blog/ebay-has-left-comission-junction.html
Thanks for all the fish
Doug
April 8th, 2008 at 9:54 am
It’s competition. If a different affiliate network or direct merchant offers a better rate I’ll consider changing, but that’s only part of the criteria. The networks might provide better stats and payment options. I might open an account with both and see which works best. Merchants seem to be dropping one network in favour of another quite a bit these days.
April 8th, 2008 at 10:13 am
I’ve worked direct with comapnies in the past however I’ve found that the affiliate merchants tend to have better tracking options and easier payment options like self invoice etc
April 8th, 2008 at 10:39 am
Is it any worse than being asked to swap networks? I dislike merchants changing networks as this involves work for me. I like to stick with networks - especially those who give stats on conversions and reverals. Very few independent programs are as open as the better networks.
April 8th, 2008 at 10:46 am
Sarah
It goes on a lot more than you think
Doug
April 8th, 2008 at 11:24 am
This is rapidly becomming a corporate game. In the beginning it was just geeks behind screens and direct connections with companies were fine. As time goes by the powers that be will insist on using networks to legitimise the spend. They wont feel comfortable giving away big cheques to geeks. Personally i dont see value in networks unless they know what to do. If they supply XML feeds, good instructions for integration then gr8, but what network does that? Its all a game :)
April 8th, 2008 at 11:37 am
Ive done this many times & contacted the merchant directly
instead of 5-13% commission ( variable depending on volume )
i now get a fixed 25% commission per sale regardless of volume which is great :)
at the end of the day its business and we are all trying to generate as many sales as possible whether a merchant or affiliate
April 8th, 2008 at 11:55 am
Its all about ethics
Businesses are there to make money .. it would make sound sense for merchants to contact the highest earning affiliates directly
Unless there is a clause in their contract with the network that prevents this
April 8th, 2008 at 1:10 pm
20% as a management fee is way high in my experience, especially for the big networks. So, the amount you’re assuming the merchant is giving away isn’t nearly as high as you alluded to in most cases.
Secondly, as a top affiliate, one of my biggest concerns along with money is support. If the affiliate manager has done their job and is supportive by being quick to respond, forthcoming with creatives and links as needed and all around has developed a relationship with me, then the likelihood of me leaving just for “more cash” is a lot lower.
Just like a hairstylist, it is up to a good affiliate manager to build up loyal clientele. That way, if the merchant gets greedy, you keep the best clients and can bring them with you to a new salon.
If you’re nothing more than someone who collects a check while being a shitty affiliate manager, you better believe I’m jumping ship if I get a better offer.
April 8th, 2008 at 1:48 pm
fact: this happens everyday.
Speaking from an affiliate network’s point of view: I know of many circumstances over the years where one of the parties has initiated a direct relationship and, as a transparent affiliate network, we are at risk of this happening even though it’s against our T&C’s. The responsibility is up to us as a network to add value to the relationship. That’s part of our job.
There is two sides to the coin as well. On many occasions our merchants and affiliates bring the direct relationship to us because we can manage it more effectively. e.g. weekly payments/cookie-less tracking/comprehensive reporting/support contacts are always available etc… Cookie-less tracking is a major advantage for Webgains as the affiliate knows they get more 8-10% more sales through our tracking than through the merchants “in-house” tracking or another network. A network also dramatically reduces the cost of overheads for the merchants and adds value to their marketing strategy as a whole so there are a number of other benefits.
summary: We need to continue to add value and progress the industry so the clients continue to use our services
April 8th, 2008 at 1:54 pm
This is indeed an interesting ethics question! Certainly, the “middle man” network should be adding value to the business relationship - but then, the investment of resources that goes into establishing those relationships in the first place has a value, as does the software-run service that maintains the relationship. Someone has made an investment there. Thus, while the main input may be upfront, I think it’s fair to say that the value-added (or some part of it) remains as long as the business relationship continues. It might be one thing for the affiliate site to contact an advertiser/merchant directly, although even that feels a bit shady in the case of a pre-existing relationship that was brokered through a network - but for the merchant to bypass the network, that feels to me like a giant step over the ethics line.
April 8th, 2008 at 3:19 pm
Also interesting is if an affiliate calls up the merchant and says, “fancy working direct so I can get higher commissions?” Affiliates are probably happy to cut out the middleman ASAP too.
I don’t think it’s that much different than if the affiliate contacts the merchant directly without even signing-up through a network in the first place. It’s just “oh, I see they are open to having affiliates, I should contact them to work directly since I can send volume.”
April 8th, 2008 at 3:36 pm
Im tota;ly unimpressed with these affiliate neworks so far. Most of the affiliates have rough, amature sites, run by plebs that bring no decent traffic - and yet I stupidly continue to pump momney into it…. confused:: :/
April 8th, 2008 at 5:59 pm
I would probably cut out the middleman. However, you could lose a LOT of goodwill among the network if the affiliate disagrees with your offer and reports it to the affiliate network.
In the Netherlands it forbidden that you directly contact affiliates, and your agreement says that clear.
April 9th, 2008 at 12:29 am
I think it depends on the agreement the merchant has with the affiliate network. If you’ve agreed that you won’t go direct or that it’s an exclusive deal, they should abide by that, but if they are simply using it as one of their channels, I don’t see any problem with creating a direct relationship. As long as you haven’t signed a contract saying something different, I look at it like hiring a contractor or temp employee and then deciding to hire them full time and put them on the payroll. You can pay them more and actually save money because you cut out the temp agency.
April 9th, 2008 at 10:09 am
Its strange but I work with the same merchant which is available on different networks but has different commission per sale payouts, it would be better giving equal you would think.
April 10th, 2008 at 2:07 am
Ethics or Money. In the end you decide what is worth more. Some people choose ethics because they value the relationships more. Some people choose money because they don’t value the relationship as much as the money.
The other option is to make your own company and market it lol… i.e. buy a fleet of cars and hire them out yourself….and promote it… not many people have millions to invest though….