24th December 2008

Another One Bites The Dust

posted in Affiliate Marketing |
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Bah Humbug! … Without sounding like The Grinch who stole Christmas what does 2009 hold in store for us. “As Another One Bites The Dust” (See Youtube Video Below) with demise of the The Mighty Woolies Mammoth, where my sympathies do not go with the company but for the 25,000 people losing their jobs, who else will follow rapidly in their wake? If it can happen to this Titanic it can really happen to any retailer like the Not So Savvy Zavvi (with their dependency on their supplier, the EUK distribution arm of the Woolworths Group, calling in the Administrators. Zavvi apparently owing them £126 million.) Yep the same merchant who wouldn’t pay commissions on Wii Fits & other items. It makes you wonder whether Richard Branson had some kind of crystal ball selling off Virgin Megastore.

However, with the recent announcements from a couple of networks changing the way commission are paid to affiliates, to protect their own interests, which is understandable to a certain degree, it still leaves a question of which gang is left at the end of the payment chain, it does seem it might be affiliates more so. I think we need statements from all networks in the current & forthcoming harder times (though with hard times does come new opportunities) on what their current status is with regard to how they invoice & collect payments from merchants, together with methods, processes & guarantees. Then affiliates can Pick ‘n’ Mix accordingly.

Such as:

  • Which merchants pay in escrow (pre payment)? Perhaps this should be significantly increased.
  • Clear & concise single page flagging systems to which merchants are late with payments of invoices. Even their track record.
  • What guarantees does the network offer for unpaid invoices whether a merchant is still on network or just left network?
  • With late payments do networks charge interest & fixed penalties to their client & are these subsequently passed onto the affiliate? In relation to this why can’t affiliates introduce their own fixed penalty & interest terms? After all it is all their cash flow & accruing interest which is affected too.
  • When a merchant leaves a network with pending commissions, are these conveniently deleted & disappear into the abyss leaving no audit trail?
  • There should be an archive for affiliates to refer to historical unpaid invoices when a merchant leaves a network or any suspected pending commissions which were deleted.

Networks, in their unenviable task, though this is partly why they receive over rides in commission, should show affiliates what efforts they have done to retrieve commissions & if all their avenues pursued fail, allow the affiliate if they desire to pick up the gauntlet & chase payments.

One question I do have though, is that if the network is a third party invoicing on our behalf, isn’t the network liable to pay the affiliate anyway, even if the merchant hasn’t? Or are they similar to a glorified factoring service. Is there mileage down a factoring route?

Next year, more so than before, perhaps we should be more selective with our  Pick ‘n’ Mix of merchants we deal with. With generous affordable commissions, lengthy cookies, good conversions, reliable & payment in escrow.

As some merchants will no doubt try and squeeze the cheese, and no doubt use the credit crunch / recession as a reason (whether a legitimate one or as an excuse) in seeking cookie shortening & commission reduction exercises over the forthcoming coming months making Scrooge look like a spendthrift, it seems that The Chain Gang of affiliates may well be first in line for any forthcoming eventualities & would like to see what affiliates (apathetic by nature) are generally going to do to ensure they are first to receive payments.

What I am basically saying is that we need to safeguard ourselves a little more. The barrier to entry for a merchant launching an affiliate program is low, but even more so on how low the barrier is on how merchants can dictact the terms. Big brands shouldn’t get special treatment or payment terms by networks as we’ve seen, and as we know doesn’t necessarily make it a better program & thus shouldn’tbe permitted to use their brand status on leverage on payments & other terms.

I also wonder which networks will be around end at the end of 2009 or even merge or buy out with each other.

More so will there be less pyjama affiliates & less cheques cut by a networks each month.

One thing for sure, affiliates should maybe be given a little more scope & unbound from some over zealous shackles. No doubt networks & merchants will dither on some of the current concerns regarding Voucher Code Sites, BBG’s, Over Zealous T&C’s.

One hard lesson I have learned this year is to no longer be selfless, but take a more selfish approach to the industry.

Merry Christmas One & All.

There are currently 2 responses to “Another One Bites The Dust”

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  1. 1 On December 24th, 2008, Jim Banks said:

    That’s a pretty good point.

    If a network has bad business or financial practise then ultimately it could (if you read most terms and conditions) land in the lap of the affiliate.

    Ultimately the advertiser gets the benefit, the network (even if companies go into administration) can take steps to protect their invoices, using factoring etc. so there should be no excuse for not paying affiliates, unless the quality of what is being sent is poor, in which case there should be a period for scrubbing then a final total agreed.

    If affiliates are investing heavily in SEO/PPC/e-mail/staff then they deserve to be paid for what they deliver…..no questions asked. They should also be paid fast.

    Most of the advertisers we work with we start out at pre-payment/weekly payments and go on from there. As can be seen from the rapid demise of the likes of Woolworths, Whittards of Chelsea (into administration yesterday), being a big brand counts for nothing without solid financial backing.

  2. 2 On December 27th, 2008, Joe Connor said:

    Some good points in there.

    Since the networks can work together to police voucher code affiliate perhaps it’s time they also jointly police merchants.

    If a merchant leaves one network with unpaid bills no other networks should put their program live until their debt on the original network is cleared.

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