Matt Bailey’s affiliate blog

As AOL are such a large company we get a great deal of insight into their figures.

If you dig around in this document you’ll find that AOL acquired buy.at for the princely sum of $125 million.

On page 41 of this document they reveal “On February 26, 2010, we completed the sale of Perfiliate Limited (doing business as buy.at) to Digital Window Limited for approximately $17.0 million in cash (subject to working capital adjustments). We expect to record a pre-tax loss on this sale of approximately $15 to 20 million”

Wish I had the odd $15-20 million dollars to lose like that…

Fascinating news this morning that Digital Window, parent company of Affiliate Window, have bought buy.at from AOL. Clearly buy.at was floundering under AOL and the Americans seemed very keen to get rid of their rumoured £67 million purchase. I never really understood how an affiliate network fitted in to the Platform A proposition and since AOL decided to do away with that, the writing was on the wall for buy.at.

However the purchase by AWin does raise a few questions. Mainly what is in it for AWin?

They already claim to have the best technology, and have been the leading network in terms of innovation for the last 2 or 3 years. I struggle to think that AWin would be taking on the buy.at tracking, and many of the innovations seen have from buy.at that are mentioned in the article above are simply replicas of AWin products.

In terms of staff, the majority of the senior staff who helped buy.at get to where they have are all gone. The likes of Steve Brown, Mal Cowley and Kevin Cornils were the people that established buy.at but AOL let them all leave. Many more of the good employees there have either taken, or are taking the lucrative redundancy package offered by AOL. True, there are still some good account managers there but surely it would be cheaper to prise them away by offering them a few grand more than it is to buy the company.

So if it’s not technology and it’s not people that AWin are acquiring, then what is it? Buy.at have a decent client list but a lot of those clients are dual network with AWin. It would seem, and would be no surprise, that AWin have been aggressively targeting buy.at clients and have managed a fair bit of success. Whereas buy.at used to have a pretty impressive exclusive client list, this isn’t really the case any more.

I’m sure that the guys at AWin and Springer/Publicis have done their maths and I’m also sure that they’ve got a pretty good deal. They must feel that they can make back the money they’ve spent pretty quickly and that acquisition is a cheaper alternative than spending the next 18 months trying to prise more and more buy.at clients away, or that it’s worth spending this money to prevent anyone else getting hold of them.

My second concern is around the impact on the market. By merging, this creates a behemoth of a network within the UK and if you throw Zanox into the mix, across Europe. I hope that having such dominance will not stifle the innovation and improvements to the industry that have been seen so far. Having this amount of power can go one of two ways generally; it can cause complacency or it can lead to the company in question really pushing on. Hopefully in this case the latter will occur.

I sincerely hope that this is a success and I wait with anticipation to see what happens. The one thing that it does show is the tremendous work that has been done at Affiliate Window by Kevin Brown, Mark Walters, Adam Ross, Pete Loveday, Kevin Edwards, Mat Downs and the rest of the guys. When I came down to London and began to work in this industry 4 years ago AWin were, with all due respect, not one of the major players in terms of networks. A proactive management approach, coupled with a sensible yet ambitious strategy and the recruitment of a good team of people has enabled this. It goes to show that concentrating on what you’re good at and working hard can lead to incredible results.

In what is an interesting time in the financial price comparison sector, the big news this week is that the big G are entering the ballpark and lining up for a big hit. The story was featured today in NMA, although since they’ve hidden archived content behind a paywall you may not be able to see it.

This positions Google right up there against the likes of MoneySupermarket and Confused.com, in itself an interesting strategy as you would have thought that these guys spend a lot of money with Google on paid search.

From my point of view, the most interesting element is that Google will be charging from these ads on a cost per lead basis, turning themselves into an affiliate. Strong evidence that there is a growing desire from merchants to make their advertising much more accountable and pay on results more than traffic driven. I presume that Google have done their maths and they may feel that they can make more money on a CPA basis than on cost per click. Whilst this may be the case in the credit card market, I’d be very surprised if that was the case in many more markets.

So will Google roll this out to more markets? Well I think it is dependant on whether they are able to influence the issues that all other affiliates face. The credit card example involves them being paid for a lead being delivered, but moving into other markets will presumably see them being tasked with driving sales rather than leads. Will Google be prepared to rely on merchants converting sales for them? I wouldn’t have thought so.

In markets like telecoms, consumer electronics and retail which all lend themselves readily to price comparison activity, I would imagine that Google are able to make a lot more cash from charging advertisers on a standard cost per click model than they will through this model. Therefore not something I expect them to roll out across too many more markets.

I note with interest today the launch of Compare for Good, a new price comparison site whose stated aim is to “go head-to-head with MoneySupermarket.com, GoCompare.com, ComparetheMarket.com, Confused.com etc”.

However, their USP is that two thirds of everything that they make (profit rather than revenue presumably) will be given to Oxfam. It is a white label of Beat That Quote (who do not appear on the list above!) and is backed by Ivan Massow, who has a very interesting back story. They also feature a quote from Joan Collins on the homepage, slightly more glamorous than Aleksander Orlov.

It’s an interesting strategy and I’m sure that it will attract a lot of publicity at the outset, with it attracting celebrity tweeters such as ex Corrie star Charlie Condou and Julian Clary who have over 10,000 followers between them.

They claim that the site will raise over £700 million a year for Oxfam. I find this claim a little hard to believe. This means that the site would be making over £1 billion worth of profit a year. Given the desperation of Scripps to get rid of uSwitch recently, I can’t see that there’s this kind of money in the price comparison market any more.

Also, how else are they promoting the site? So much of succeeding in this space is about being front of mind at the right time. You renew your car, home, travel insurance on an annual basis and this is why the established players invest so much money on not only PPC, but also press, TV, radio and outdoor advertising to ensure that out of all the comparison sites available, you are the one that is front of mind when you get that renewal letter through the post.

Whilst Compare For Good will undoubtedly attract a great deal of initial publicity, will they be able to keep this up? Clearly undertaking costly offline advertising, or trying to play in the extremely competitive PPC space is going to eat into the profit and reduce the amount given to Oxfam.

It’ll be extremely interesting to see how it goes and whether companies such as Direct Line and Aviva, who have pulled out of this space, will engage with Compare for Good based on the perceived ethical standpoint. I wonder whether it will lead to more of these charity “grey labels” and a move into other spaces such as a cashback or voucher code site backed by a large charity?

I read with interest the post by Keith Bond on 6 Effective Habits of Super Merchants. I have a lot of time for Keith and think he talks a lot of sense. I just wanted to respond/add to a couple of his points on here, in order to give the perspective from a merchant/agency side in response to Keith’s affiliate sided view.

1) Improve Conversion Rates

Of course an absolute no brainer and appropriate to the wider online mix rather than solely affiliate. Doubling the conversion rate will give you twice as many sales for the same number of clicks.

What I would add to Keith’s post however, is that there are two metrics that make up conversion rate and affiliates are able to affect it also. Firstly we have Click Through Rate (CTR). The CTR is the propensity of a customer to click from the affiliate site through to the merchant site. The responsibility for this is shared, because an affiliate can clearly make changes on their site that will affect CTR, but at the same time the copy, content and creative and also the offer that are supplied to the affiliate by the merchant are vital to this.

Secondly the On Site Conversion (OSC), which is the percentage of customers who buy something once landing on the merchant site. Clearly the sales process on the merchant site is key here, but affiliates can maximise the chances by sending their traffic to the most relevant page and ensuring that messaging is constant throughout the journey.

2) Affiliate Friendly Website Updates

In a perfect world, of course yes. However we must appreciate that for a lot of large merchants, affiliate marketing makes up only a small amount of their sales and therefore affiliates are not always at front of mind when these decisions are made. However, even if changes are made then the person who is responsible for the implementation of the affiliate campaign should ensure that disruption to affiliates is at a minimum.

3) Effective Communication

One of the hardest things to get right as a merchant in my opinion. You are constantly looking to balance the requirement to share information with affiliates with the dangers of deluging them with rubbish and clogging up in boxes. Allied to this you have the constant struggle to break through the noise created by the myriad of other campaigns all competing for affiliate attention.

Obviously in an ideal world you would communicate with each affiliate on an individual basis according to their wishes, but on a practical level, for a large campaign with hundreds of affiliates this is very hard. I’d love to get feedback from a wide range of affiliates on how they like being communicated to. (Maybe a separate blog post).

On a personal level, I find most network communication platforms quite clunky and they don’t really allow us to do what we’d like to do.

4) Provide useful content

Again, something that is clearly best practice but I suspect gets done very infrequently on the majority of campaigns. I would be interested to know how many affiliates actually use content that merchants provide them, would they genuinely be able to drive more sales if this content was provided and in what format should it be provided.

This is something we’re looking into quite carefully but clearly it has a resource requirement. Therefore I’m keen to understand the potential impact that providing bespoke content would have.

5) Keep Product Feeds Up To Date

Couldn’t agree more. I think that product feeds and API feeds will continue to drive more and more sales as 3rd party developers like Easy Content Units, Fusepump and PrismaStar continue to develop propositions that increase uptake of CPA amongst the wider online space, by making it easier to promote merchants.

Keeping your feeds up to date has never been more important.

6) Make Your Affiliate Incentives Winnable

Again, I question how worthwhile affiliate incentives are in the present day and age, unless they are big enough to stand out from the masses.  I question whether merchants are seeing them cost in in terms of how much they spend on a promotion versus the return they get in terms of new incremental business.

The volume of large promotions certainly seems to have died down in the last year or so with some merchants who have previously run high profile incentives pulling back on them. Are the days of the super incentive gone?

Two posts in one day for all you lucky readers. Normally I don’t write stuff that people ask me to, but in the case of my favourite country bumpkin Chris Johnson, I’m prepared to make an exception.

Chris has asked me to write about the A4U Awards, nominations for which are now open.

Why are the A4U Awards important? There are many grumblings that the awards are divisive and small affiliates are prevented from attending by cost etc. I can understand this but as anyone who has spoken to me over the last year will tell you, I firmly believe that in order to secure the future of our industry, we all have to start behaving a bit more professionally. For me the A4U Awards are the greatest demonstration of how far we’ve come and why our industry deserves to be taken more seriously. You can’t get further removed from the picture of a grubby affiliate than a bunch of us at a swanky black tie event in Mayfair can you?

So the details… The event this year is being held at the Grosvenor House Hotel on Park Lane on 9th June, and as I mentioned the nomination phase is now open. The community choice awards are typically fiercely fought over and my desire would be to see a great deal more votes being cast and more people being nominated. There are a lot of talented people in this industry and it would be good to see them rewarded instead of it just turning into a popularity contest amongst the same few faces from the forum.

So get voting everyone. Every vote counts…

I guess that now it is up loud and proud on the IAB’s website, I must be able to discuss it without getting told off by Keano…

My year as Chair of the IAB Affiliate Marketing Council is over and I had a splendid time over the year. I think that we did manage to progress the profile and momentum of the council over the year. Whilst most publicity was received for the Voucher Code Guidelines, there are a couple of things that I am more proud of during my tenure.

Firstly the introduction and attendance of some of the larger brands that play in our space. I think that the desire to get involved and help shape the industry shown by companies such as Sky, eBay, Vodafone and RAC is critical to how the industry is viewed.

Secondly, I feel that the Ethical Merchant Charter is a wholly welcome piece of guidance for merchants who are running or looking to run an affiliate campaign. Whilst something like this can never be regulated, I think it is importnat that we have published a benchmark for how merchants should behave. I believe that a lot of the fallout that we see is down to misunderstanding rather than any one party trying to shaft another, so just compiling a framework showing how merchants are expected to behave is a real positive. I hope that both merchants and networks will continue to embrace this.

Moving into 2010, I am delighted that my legacy is being presided over by Kevin Edwards. Not only was Kevin the man who got me my first job in affiliate marketing, but he is also a respected colleague and a trusted friend. I have no doubt that he will steer the Council in the correct manner. He was up against a raft of worthy candidates and kudos goes to Duncan, Bruce and Lee for making a fight of it and demonstrating that there are a lot of passionate, ethical people in our industry.

Hopefully I will still continue to play a full part in the Council’s activity going forward, and I look forward to helping in whatever way I can with a highly successful 2010.

Quick round up of some useful blog posts and articles from the last few weeks.

First up, bit of a shout to an old school mate of mine who is attempting to make it in the big scary world of affiliate marketing and is documenting his efforts. Whilst he may be a miserable, cynical bugger he does write very well and this blog promises to be entertaining and enlightening. Have a read of the blog – http://www.monthly5k.co.uk/ – and follow him on Twitter – @mjs1979.

Moving on, the naivety of some businesses when it comes to online still astounds me. Either do it properly or don’t do it at all. Something expounded here by George Marshall’s post on Derek Rose pyjamas.

Next a couple of posts from Rob Barham. First one on which merchants he’s seen improvement on in 2009 and then a follow up on how 2010 is shaping up well so far.

A couple of entries from the excellent team at Easy Content Units. Firstly a post about their 1st birthday and a review of the first year. Secondly an interview from the CJ blog with one of the Directors and all round nice guy Jason Brockman.

There have been a few posts about the launch of Impact Radius, which I think is a really exciting addition to the affiliate landscape. My favourite post on it is this one from Fraser.

A couple of posts from Kirsty have piqued my attention again this month, both around a similar theme. Firstly on how her traffic sources are moving from PPC towards SEO, and secondly on how to mine the long tail and why it’s important.

On the network side, AWin continue to innovate and market their innovations very well. At the IAB Affiliate Council we’ve spoken for a long time about how we can facilitate allowing affiliates to market themselves better to networks and merchants. AWin have announced their affiliate index, which looks like a good tool for merchants to use.

As someone who messes around in a very amateurish way with Wordpress for my blog, I find posts like this one from Marketing Elf really helpful to demonstrate to me the potential.

More news from the US, and an interesting summary of a few posts on the changes that Google is making over there and how it’s affecting affiliates.

Another post from the ever excellent Magnus Nilsson on improving your search strategy.

Finally, great to see some of the networks embracing the appeal following the terrible tragedy in Haiti earlier this month. The banners on this page are from DGM and I’d appeal to any affiliate to spare a bit of space on their page to push this important message.

Following on from my previous piece about selecting an affiliate network and in particular the comment from buy.at’s Ginger Finance Ninja Paul Newton, I thought i’d write a follow up post.

What is most important to affiliates when working with a network? When a campaign is dual network, what factors will influence the decision over which network to work with? Clearly personal relationships are a large factor, as is the familiarity you have with the interface. I’m sure that confidence in tracking technology comes into play, alongside the availability of any tools that will make it easier for you to promote the merchant.

However, I think the biggest factor in this decision should be the payment terms that networks operate. This is the key element in the relationship between network and affiliate in my opinion, and an area where networks can offer a key differentiator against their competitors.

However there doesn’t seem to be a great deal of information out there which will allow affiliates to make up their mind on this. Therefore I decided to conduct an independent survey of all networks to discover what they do. I asked each network the following three questions:

• How often do you pay affiliates?
• Does the payment require you to have received the money from the merchant before you pay affiliates?
• What protection do you offer affiliates should one of your merchants go bust?

Webgains -

Affiliate payments are run weekly on Wednesday including all transactions that have cleared for payment up until Tuesday the week before. Affiliates can be paid weekly if they’ve selected to be paid by bacs or paypal, provided the minimum threshold (£20) has been met. We also run monthly payment runs on the first Wednesday of every month for those affiliates who’ve chosen to be paid monthly or by cheque.

For programs on prepayment, affiliates are paid normally as merchants have already provided the funds. For programs on account, merchants first need to pay the relevant invoice before we release payments. 80% of Webgains UK programs are on prepayment. The programs on account, the majority we invoice biweekly or they settle the monthly invoice within 10 days, so the affiliates don’t wait for long for their commissions to be released

We have alerts that notify us should the merchant credit score fails, which allows us to take action immediately to protect affiliates. For program on prepayment, we normally cover their outstanding balances. For programs on account, we try to secure outstanding payments as soon as possible, based on the legalities of each case.

Affilinet

Monthly. 15^th of each month.

No we do not wait to be paid by our advertisers before paying affiliates. We prepay commissions so any confirmed sales in say Dec are paid on 15^th Jan regardless of payment to us.

We prepay so not applicable. Affiliates would always receive commissions because of our prepayment.

Buy.at

1) We pay affiliates once per month, with funds hitting accounts on 29th of each month (or the prior work day if that falls on a weekend or public holiday).  I watch the forums very closely and, from my slightly biased view, I would say that we are second to cone in terms of getting payments right, on time and without fuss.  Our international payment offerings and prepaid debit cards also means that we can deal with international affiliates for the growing global network just as easily.

2) No, the way we view things is that the job of debt collection is ours and if we don’t do it properly then the affiliates should not suffer.

3) We have an excellent track record of paying out to affiliates even when merchants have been declared insolvent. MFI being the most recent example.

Paid on Results

Paid On Results is the fastest paying Affiliate Network in the World. As far as we aware no other Network offers Affiliates the ability to be paid on request. This means at any time, and as many times in a month, that the Affiliate has an available balance (validated sales) over £25 they can submit a request from their Affiliate Control Panel in minutes, for payment via BACS which is paid within days.  As soon as a sale is validated by the Merchant it is ready to pay out. For example during November and December one of our top performing Affiliates requested payment 7 times. Independent source (Kirsty McCubbin) states in Twitter Message http://twitter.com/AffiliateStuff/status/4166552388 “I really, really, really love the POR payment on demand system. Why can’t more networks do that?”.

Yes and 98% of our Merchants are “in funds”. This means that they pay a deposit float in advance and maintain this float as an ongoing positive balance. Consequently there are always funds immediately available to take advantage of our quick turn around in payment that allows Affiliates to quickly invest money back into their promotions. This is especially critical during the busy Christmas period as our Affiliates don’t need to worry about maxing their credit cards and having to wait until weeks/months after to be paid.

Of the Merchants going out of business to date we have covered all debts, however our greatest protection is that we operate an in funds policy for the majority (98%) of our Merchants. As such, our Affiliates have been very well protected and none have suffered any loss of income to a Merchant going bust.

DGM

1. Once a month on 60 days after invoice date

2. Our standard procedure is to pay after 60 days even if we are waiting on funds. However we do reserve the right to withhold payment in exceptional circumstances.

3. In the majority of cases where a merchant has gone bankrupt we have managed to cover the affiliate commission a lot of times at our own expense. This has been done as a goodwill gesture to our affiliates as we aren’t obliged to cover merchants debts.

Affiliate Future

1)     We pay affiliates once per month

2)     No – we pay all the validation commission for the previous month in our payment run, regardless on whether we have been paid by the merchant

3)     There is no set protection for this, however there are a couple of points to make:

1. When this has happened previously, we’ve always paid the Affiliate
2. We have a pretty good credit team and most merchants are pre-paid or have little owing to us.

OMG

Twice a month – on or around the 6^th and the 20^th

Yes – although wherever possible we work on ‘pre-payment’ terms with the merchant to ensure that funds are in hand as soon as validations are confirmed.

In the case of an advertiser going bust, we review any such incident on a case by case basis and typically OMG fund the cost of any losses for affiliates.

Affiliate Window

Affiliate Window pays affiliates twice a month, generally on the 4^th and 18^th of each month.  This facilitates the quickest possible turn around for affiliate payments whilst still allowing merchants the piece of mind to verify sales as we do not operate a ‘claw back’ process.  What’s validated is paid to affiliates.

Affiliate Window introduced a ‘traffic light’ system in 2009 that flags to affiliates the different payment terms in place for every merchant. If a merchant has a green status AWin will pay commission out before the merchant pays us. Currently about two thirds of AWin merchants have this green status and this ultimately means we can pay affiliates more quickly for commissions generated from these merchants. AWin will pay commission generated for merchants with an amber status when that merchant pays AWin. There can be a number of reasons why a merchant has an amber status but it certainly doesn’t mean the affiliate need be concerned in any way, just that they may have to wait longer for their commissions. We like to think that having this traffic light system in place encourages all merchants to want to achieve a green status as well as giving clarity to affiliates about anticipated payment turnaround times. It’s important for networks to recognise there is an element of risk when an affiliate starts promoting a merchant so in conjunction with the additional information we supply on the average validation periods when a sale is generated, we feel affiliates are armed with enough information to decide which merchants to promote.

Subject to the traffic light system, AWin covers the first 3K of any validated loss and this covers the vast majority of niche SME clients, outside of that we have no obligation although our track record has seen us cover the validated affiliate payments for Woolworths, Empire Direct, Blooming Marvelous and CDiscount when they went into administration.  Unable to pay their affiliates AWin covered the loss (an amount totaling more than 150K) even though we were unlikely to recoup anything back bar the goodwill and loyalty of those affected.

Tradedoubler

Once per month, on the third Tuesday

We do require that the merchant has cleared funds with TradeDoubler before we pay affiliates

We have a number of measures in place including a dedicated accounts receivable manager who monitors the financial stability of all of our clients, as well as their payment history. In the event that a client should be in financial difficulty, we will inform affiliates immediately and pause the programme. Our legal team have previously been successful in managing to collect payments where a client has gone into administration, and our first priority is always affiliate payments.

Affiliates should also note that for added security we have a number of prepayment programmes on the network where clients pay a commission fund in advance, allowing us to pay affiliates faster. When applying for a programme, just check if prepayment is selected as yes.

Linkshare

LinkShare pays affiliates weekly

Does the payment require you to have received the money from the merchant before you pay affiliates?  Yes

The agreement is made between the merchant and affiliate.  However, in the past, if a merchant has gone out of business LinkShare has done everything within their power to reclaim payments on behalf of affiliates.

Commission Junction

CJ pay publishers 1 x monthly – usually around the 20^th and on the proviso that payment has been received from the merchant first

Does the payment require you to have received the money from the merchant before you pay affiliates? Yes

CJ are very particular about the type of merchant they sign and all new clients are credit checked prior to going live and in most cases, merchants are required to lodge a deposit with CJ that will cover a month’s payments in the event of an advertiser going into administration.

Commission Junction has extremely thorough credit control measures in place with a dedicated finance team following up on a regular basis with merchants to ensure payments are received on a timely basis reducing the exposure CJ and the affiliates should a merchant go into administration.

Should a merchant go into administration CJ will also follow up with any necessary legal action where possible to ensure all measures are taken to collect any outstanding funds.

Just a quick post to say a huge congratulations to Neil Hutchinson and everyone else at Forward Group (formerly TrafficBroker) on their purchase of uSwitch. A tremendous example of how to grow a sustainable affiliate business.

Really interested to see what their plans with uSwitch are, particularly whether they continue to work with advertisers direct or work with networks. Also I wonder if Neil’s going to appear in his own adverts…

Great interview with Neil here.