Heather Paulson’s one of the guests I’ve been looking forward to inviting on the Friday Podcast for some time and the 6 month wait has been worth it. Besides being a very technically competent marketer, Heather founded her own full service internet marketing agency, Paulson Management Group, which offers affiliate management, search engine optimization and pay per click management services among others.
Having racked up experience at affiliate management firm PartnerCentric, as well as serving as a contractor for Microsoft’s iSEM team, Heather also sits on the boards of the Affiliate Summit and Affiliate Classroom.
During our discussion, Heather talked about:
Issues and considerations for merchants adding affiliate marketing as a new component to their marketing strategy
Advantages and disadvantages of using an outsourced affiliate program agency compared to hiring an in-house affiliate manager
How affiliate managers can enhance programs they manage with some best-of-breed industry practises
Tips for better affiliate project management (from the affiliate and affiliate manager perspective)
An insight into how super affiliates operate and key strategies and techniques they use
How affiliates can get more out of working with their affiliate managers
Resources for affiliate marketers and tips for growing and scaling your business
It’s always a pleasure talking to affiliate marketing veteran Rachel Honoway who’s one of the pioneers at affiliate marketing service agency Kowabunga (later acquired by Think Partnership), having started in 1997.
She’s not only friendly, but highly knowledgeable about prevailing issues in the affiliate marketplace.
I called the merchant and talk to them, and what they told me surprised me.
But first, a summary: With a gap in a web service merchant’s affiliate commission payouts on an affiliate network and their in-house program, I was keen to hear what veterans in the affiliate industry had to say. The commission payout through the affiliate network was about 50% higher, compared to the merchant’s in-house program.
Communicating with the merchant was certainly a key point in addressing this issue and some might say the information gap was being unfairly used in this instance:
“ThatÃ¢â‚¬â„¢s retarded. Tell them to retroactively apply the network rate to your in-house sales from the date they started that network rate. If they wonÃ¢â‚¬â„¢t, dump them..” – Geordie Carswell, RevenueWire EVP.
“I attribute the fault in this to the affiliate manager/team handling your account. It is he or sheÃ¢â‚¬â„¢s job is to make sure affiliates (super or not) are taken care of. That person should have given you the choice as to which network you promote their program through, or at least told you about both offers. You are a well known affiliate and blogger and you should have been informed of both options. The affiliate marketing managers of Pepperjam are in constant contact with the affiliates who make a difference our programs. We build and form relationships to gain trust. The affiliate manager who was assigned to you did not do that.” – Robyn Martin, Pepperjam Affiliate Marketing Director.
“Before I began working for LinkConnector Affiliate Network, I was the affiliate manager for a few different companies. I considered it one of my responsibilities to keep our payouts consistent between the in-house program and the network programs. If anything, our in-house program sometimes had a higher payout because no additional fees were involved. I would never have considered that disparity between commissions Ã¢â‚¬â€œ thatÃ¢â‚¬â„¢s just shooting yourself in the foot.” – Jeannine Crooks, LinkConnector.com Affiliate Sales Manager.
“I personally feel strongly that bigger and pro-actively managed programs SHOULD offer 2 versions.
In-house and a good network. TYPICALLY, but not in this case the in-house commissions would be a little higher, possibly longer cookies, etc. to make the in-house option more attractive and offset network costs…a possible scenario hit me that COULD make sense of this situation. Not saying this scenario would make the situation any easier for you to take but…
If the merchant, like many are was clueless and the affiliate program was not being tended to properly and they hired an OPM.” – Linda Buquet, 5Star Affiliate Programs Founder.[See the 5Star discussion thread]
Which is in-line with what I would expect. An in-house program would have lower operating costs and could give out higher payouts, but the opposite scenario is at work here.
“you got hosed and it is your own fault. This IS the standard practice and fully within the marketers code of ethics. (I can see the shit flying at me alreadyÃ¢â‚¬Â¦)…In House programs are notoriously low payers. They are also usually the most poorly managed of the places you can pull a particular offer from. CPA networks have schwacks of experience with a wide variety of offers, merchants and publishers. In house affiliate managers are often the webmaster as well, and quite possibly the night doorman to boot (not always Ã¢â‚¬â€ **dodges shit** Ã¢â‚¬â€œ)…
You got hosed. If you were doing well at $60, think how much better youÃ¢â‚¬â„¢ll at $90. Hell if the CPA network is offering at $90 on the street and you can push some volume, IÃ¢â‚¬â„¢ll bet the can get $95 no sweat. Suck it up. DonÃ¢â‚¬â„¢t make that mistake again. Lot at the bright side – You just got a $30 pay bump!..Join all the big networks and shop around. Get them fighting each other for your traffic. You have to be the squeaky wheel to get the big payouts. Logging into CJ to see what is new doesnÃ¢â‚¬â„¢t cut it.
As an affiliate marketer, I have to deal with challenges (or you might view them as opportunities) during the course of your campaigns, but when happens when you find out a merchant has been sticking it to you?
A case in point, I’d be promoting web services for a merchant through their in-house affiliate program. It paid about $60 per customer who signed up for their services.
And I discovered a couple of days ago that they’re running the same offer on one of the biggest affiliate networks and paying out $90 a customer.
Boy, I was fuming.
I can understand a $5-10 gap differential when the same offer is listed across various affiliate networks (the networks might be willing to cut out a chunk of their profits to give more to affiliates).
But when there’s a near 50% commission payout gap I feel it unconscionable.
There is an unspoken affiliate marketers’ code of conduct, but there isn’t a formal regulatory body which presides over affiliate networks and merchants.
In other words, who watches the watchmen?
Some might say that in a capitalist society, you are welcome to vote with your feet.
I tend to view business as a series of long term business relationships with real people.
I can only guess that:
The various marketing/ad departments within the merchant or the network aren’t talking to each other, such that you have a 50% gap in affiliate payouts.
The service provider faced some stiff competition and upped their payouts in real-time to remain competitive. But wouldn’t you be talking to your in-house team too?
Affiliates? Who cares.
For the purpose of this post, I prefer not to name the merchant, nor the network, nor the type of service and focus on the core issue instead: Trust.