Affiliate Marketing Is Dirty
Time to shed some light into your newborn eyes. A lot of the seasoned affiliates know this already, but I bet a lot of you reading don’t.
The reality is although our lives as affiliate marketers are great, if networks/advertisers weren’t dirty as hell, we’d all be a lot more wealthy. Real life example? A few days ago I’m running an offer on Network A. Over the past two weeks EPC has dropped and the campaign was getting crappy. So I find the same offer on Network B, and decide to switch it over. With Network A, I had done $1,900 revenue from midnight until 2pm.
New day starts with Network B, it’s 11:30am and I’ve already done $4,500 revenue, $3,000 of it being profit. Give Network B a full day to run and whoa what a shocker, they “talk” to me about having to decrease volume for a bit, and the mysteriously my revenue seems to automatically drop on it’s own. After having things happen like this so many times, I do my best to limited my pissedoffness. So here are the things that affiliate networks and advertisers do, I’ve experienced them all…
- Networks take around a 20% margin (sometimes more) on their offers. This isn’t dirty, but it’s something a lot of affiliates don’t realize. Say there’s an offer and the payout is $20 on it. The network is getting at least $25 on it, and the number is most likely closer to $30. That means if they were a good network and cut their margins for you, you could get $27 on an offer that you were originally getting $20 for. An extra $7 a lead takes a campaign from losing $1,000/day to making $1,000/day. But most networks still won’t sacrifice their margins for you (at least to the extent in which they should), so instead of making a ton of money, you’re forced to call the offer quits.
- Networks shave leads. As most of you know, Direct Track (the system which a lot of popular networks use, like Copeac, CPA Empire, Clickbooth, etc.) automatically shaves. They won’t report as many leads as you actually drove. So if you send 100 leads on an offer, the network might shave 5 of those leads off for themselves. In addition to that, the advertiser will shave as well. Flycell I think has been reported to shave like 20%, which means if you drive 100 leads, they’ll take 20 of them. I can’t remember where I heard this, but I know I heard that somewhere. It explains why Flycell was able to offer everybody $18 payouts. People promoted it like crazy because they thought the payout was so much better, but they just compensated by shaving a ton of leads off.
- Networks track differently. A lot of affiliate networks use their own tracking systems, some work better than others. I’ll run one offer on a networks, switch to another network on the exact same offer, and my conversion rate will increase. This is because the tracking system is better and/or the network is shaving less.
All of these points may come as no surprise to you guys, especially if you have experienced them. My point in discussing this is that affiliate marketing is not easy. Sure it’s the best job anybody could ask for, you get to work where and whenever you want, but there are certainly things that make it hard as an affiliate marketer to succeed.
How do we overcome this? The first reason is by accepting it. Advertisers will shave and scrub, it’s just what happens. The second way is by using the power of negotiation as much as you can. See that one network converts at 20% and another converts at 12% on the exact same offer? Tell them they need their tech team to fix the tracking issues before you run any more traffic with them. Payout not high enough for you to be making money? Most networks would rather take a smaller margin than no margin, so they can be pretty flexible in what they give you.
Moral of the story, just understand that you’re pretty much on the bottom of the totem pole, and to work your way up you need to be very aggressive in what you do. Either that or start running your own offers or networks, then YOU have the power ;).
I totally agree with what you say here. Lead shaving has happened to me several times and although I’m right, the advertisers would never agree. So, what’s the solution? Ask the advertiser to fire your custom pixel on their landing page when the offer converts so that you can match with your internal tracking system? I use my own reporting system and append unique subids to all clicks. I wish we had access to the source code of the advertiser… Oh well!
Great post.
Keep them coming!
Paul, let me tell you something. The Lead Shaving sh!t has got to stop with these networks, if there is one thing that pisses me of to the HIGH heavens, it’s Lead Shaving. And all of my AM’s wonder why I never go to conferences. Get a clue!
I’ve run into these same issues many many times. I’ve found that to overcome them you need to first prove that you can drive quality traffic. Then it’s all about working closely with your affiliate networks to ensure everything is working well for everyone. If the advertiser is losing money on your traffic, guess what, they are going to start shaving.
Great post.. best yet.
I think another problem is offers that use your landing pages / and go to your ad sources. This is more an advertiser than a network issue, I think, but it is a problem. The ones that cherry pick your sub ids is annoying as well.
There is the quality traffic issue. It’s a problem, for sure. My proposal there is a two phase payout, one payout when the first lead hits, and another payout on further payout hits.
That way we can monitor our sub ids and make sure we’re sending quality traffic. My problem is that I have no idea if my traffic is ‘quality’ or not for a particular program.
Thanks for the heads up. This is just one more reason to closely monitor and track clicks.
Great post, i’m starting to realize this myself.
I recently posted a thread about this of WF
http://www.wickedfire.com/shooting-shit/28102-paranoid-about-aff-networks-lead-skimming.html
But the most importantly NAME NAMES. I’m interested in finding out about “network a” so I can avoid them.
As you said, theres nothing new about it, and especially you can’t do nothing about it.
The only thing you can do, is to agree with it, and makey money anyway. Thats how it works…
There is one option you forgot..
For a certain fee ( I forget how much, but it’s not much).. You can actually become a DirectTrack partner and so you will get all the offers on Direct Track PLUS not have to pay a commission to your affiliate network…
All good points, but to be fair there are an awful lot of dirty affiliates out there that do not care about the advertisers and are not interested in driving quality traffic and may resort to fraudulent means to drive leads/sales etc.
The networks and/or the advertisers get burned a lot by these bad apples and it costs real money sometimes hundreds of thousands of dollars for sophisticated scams.
Now you probably will say, “but I drive honest traffic and should not have to subsidize the rats of the industry” – I say you are totally right and the only way to do that is working direct with the advertiser and remove the network from the equation.
I ran into this with one of the affiliates earlier this month. First 3 days of this month, my clicks were getting higher, but my conversion was constant – I mean each of the 3 days, I ended up with the same exact amount! I shot an email to my AM and things changed.
Couldn’t agree more with this. There have now been several times where my payout got upped past what they initially said the total payout by the merchant was. GASP.
guess this happens more often than I realized.
Between the Google PPC black box and the affiliate network black box, I wonder where all that hidden untracked money/conversions end up.
What if affiliates unionized… now that would be something.
One way or the other, the advertisers and networks are going to have their profit margins. What they are doing right now is just a mind game.
The problem I have is they are sending false information. Bad data makes it a lot harder to optimize a paid campaign. That bad data can and will fuck your campaigns up. If you have one keyword/traffic source doing massive volume, its not statistically significant. Take your low traffic and long tail keywords, good look. The next time you optimize you may be throwing out good stuff.
That’s fucked up right there…. Tell them if they don’t fix that shit you’re taking YOUR shit elsewhere and talking down their site publicly!! Would that make them listen??
Very good post, thanks Paul. I must say, Diorex also makes some great points to balance it out though… If you’re a super affiliate and know exactly what you’re doing, no reason not to try and go direct… (not always feasible obviously, but I know one or two guys that have been able to do it for a few offers….granted they’ve all been doing 6 figures/monthly for a while now)…
– Dave
How many of these “offers” are you promoting on torrent sites with the zip file/password method?
I used to send a ton of health insurance leads to an affiliate program. They’d always tell me quality was great ( 5% to “chargebacks”
first time i’d seen retroactive skimming
I would assume some of the advertiser “skimming” may just be leads they decide are not worth paying but rather than going through the hassle of charging them back they just lose them lol.
Dumb question but doesn’t having tracking pixels stop networks from skimming? Or are they finding some kind of workaround?
Although those making a ton might not care as much, it still sucks and I don’t understand those saying that “it’s just the way it’s done” or “it’s how it works”. If that really is the business model of a majority of networks then they are all getting away with ripping publishers off tons of cash. Someone should do some kind of study and start a class action if they find proof lol.
I mean, I’m sure wal-mart factors in a percentage of their loss from shoplifting but I doubt they are ok with just letting it happen because “thats the way it works”. No reason the networkds should get away with shoplifting either lol.
Damn I never thought shaving would be so openly talked about in the “mainstream” affiliate marketing community.
I come from the Adult affiliate marketing side, and any sponsor caught shaving is truly fucked.
Shaving is the cardinal sin of the Adult affiliate industry.
Yeah man said perfectly.
I agree to a point because even I have experienced some bad shit but as a Direct Track owner for my network people have to realize one thing. Direct Track is notorious for a 10% shave but that does not necessarily mean the “network” is shaving. If you have proof that a network is shaving then it needs to be right out here in the public eye. As far as Affiliate Managers go some of these networks literally have a dozen or more managers and most of them probably do not have a clue as to how to properly run Direct Track. This is why we make it a point to cross reference everyone well and only allow certain affiliates in. If it wasn’t for greed, a lot of this shit would just go away.
That’s not going to happen with these larger networks though. As for margins, if you cannot find a network that will straight tell you what their margins are, then you give them the finger. I will bend over backwards and reveal data to affiliates to show them what I am making. Having nothing to hide and developing an honest trust with your affiliates is more than an honest mix of words. You have to go out and publicly show it.
Shit I didnt even mention the Advertiser. That one’s simple. As a network, you go public with them as well. Most networks are affiliates of all the other networks anyway, it’s just a matter of having the balls and addressing other networks that are running the same offers. If they dont acknowledge there are a ton of places to go public. That’s about all we can do, but if enough of us do it, something positive is bound to happen…hopefully.
Wow… Diorex on the affiliates side for once.
Oh men! this was good. As a not so newbie, i needed that.
Very interesting, I had no idea before I read this that this was how things worked. Thanks for the run down on the whole thing.
Paul, about shaving leads. I guess it probably also helps if you are a super affiliate, if you’re not that important to them they probably won’t bother even responding to your emails.
p.s – also could you please have the comment form formatted better, the font’s too small.
Hi Diorex,
it is a shame that you are not blogging anymore for the public…
I was told that with those networks (COPEAC, Azoogle, CX etc..) you gotta fight for every dime but I just wonder what about the bigger networks like CJ, Linkshare etc.. ?
Do you think they are shaving as well.?
Given that all networks are dirty to some extent (nothing surprises me any more) do you have any information regarding which are the least dirty (lowest shave, smallest margins etc)?
@Yarden CJ “fine” under performers for not earning enough and so free up small amounts of allocated funds. I was $5 from my first ever payout with CJ when they implemented this. I quit and refuse to work with them now. I was ecstatic when ebay quit CJ to run their own program.
Great post, paul your blog is my favorite!
Understandable problem, but not the right solution. Under-handed dishonesty does not stop underhanded dishonesty.
Doesn’t pepper-jam display what they actually get per lead and then pay out? I saw it on flycell, but maybe its not on all offers? Haven’t done anything with their network except for looked at the interface much
Keep posting crap, asshole
I’m not even with PepperJam but if they do then they are doing an awesome thing there! Transparency in my opinion is a critical component in retaining loyal affiliates. Unfortunately most of these networks are Privately Owned Companies and would rather keep everything a mystery. In a way I cant blame them but it’s incredibly frustrating if you’re getting jerked around.
You just have to pay frickin attention to what you are promoting and use common sense. If you are going to promote shady offers then expect shaving. If they don’t mind ripping off the consumer then they sure as hell aren’t going to mind ripping off affiliates. Same thing w/ the networks. If the network has shady offers, well then the network is going to be doing shady shit themselves. You’re right – affiliate are at the bottom of the totem pole. We are the same thing as the guy selling tv’s for a commission in Sears. We just do it with search instead of in person.
CJ (it’s rumored) doesn’t audit their merchants sites nearly enough. Wayyyy too large. So it’s relatively simple for the merchant themselves to shave.
Awesome post bro. Keep it up
Agree with you that lead shaving is frustrating as hell (especially when the network basically admits that they shave and then keeps doing it), but what’s the connection between lead shaving and conferences?
This is pretty much what you get dealing with this stuff. You get the reward, you take the risk. Shaving should be accounted for in your business model, I guess.
I don’t deal with this cheap lead stuff. I only do high end sales that I know are tracked properly. But I also lose the reward of dealing with the low-end fast-money stuff.
You also have the situation where a “network” leverages what it can to allow affiliates to make more than they would if they go direct. If you are big-time then go direct and get what you are worth. Otherwise the volume and relationship with some networks allows for making much moe even after margin and skimming.
Keep in mind I coming from more of the perspective of a sales sub-agent more than an affiliate in the ppc lead stuff.
True true, I was doing some volume for one advertiser, and I had to communicate through the network to get to them and vice versa. the whole time I’m thinking what is this, just let me talk direct even if I still use your network talking through you the network is a lose-lose situation for the advertiser/publisher, and in some respects maybe hurts the network. because I can’t communicate. and if I can’t communicate exactly what you said frustrating, yeah I agree.
Open transparency and knowing what networks get per lead is a great way to “get started”. Revenue Loop runs their network sort of this way claiming to be a transparent network aimed at only charging a service fee. That’s not bad but the day a network shows up with the ability to have affiliates communicate directly with the advertiser will be a forever changing day. Not likely to happen with privately owned networks though. Hell, I am doing everything I can with our network to make this possible but it’s just not going to happen on a large scale as everyone wants it too.
BTW – Prosper202 looking pretty gnarly Wes. Good stuff on listening to the peeps although as affiliate marketers I figured you were going to go that route sooner or later :)
Hi Paul! Great post.
Excuse me for the “newbie” quesiton:
What do you mean when you say “the same offer”? Doesn’t each network work with different vendors/publishers?
Oh so true. Always try to go to the advertiser direct if you have volume. That takes one of the variables out of the equation.
I agree that shaving does occur within this space but I certainly do not agree with the statement that DirectTrack automatically shaves leads. Some extremely large affiliates have licensed DirectTrack to track their own internal campaigns they are running direct with advertisers. If DirectTrack ‘automatically’ shaved leads, they would be shaving from themselves.
Simply NOT true.
Shaving is a bit extreme unless your dealing with dirty networks or advertisers. For DT though shaving is not an issue, unreported leads is a better term I think.