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AllanGardyne
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Posted: Tue Feb 03, 2004 2:16 am
Post subject: Should merchants compete with their affiliates?
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I've just been reading a fascinating interview with Scott Marino of WebUndies.com in Corey Rudl's Secrets To Their Success Private Site.
Scott sells novelty boxer shorts.
Without giving away too many facts from Corey's private site (although I imagine most of you have subscribed by now, anyway) it was interesting to note that Scott says he has about 4,000 affiliates and 35% of last year's sales of $650,000 came from his affiliates.
However, as you'd expect, most of those sales came from only about 200 active affiliates. That's an average of only about $1,000 in sales (not commissions) for a whole year, per active affiliate.
So while Scott was pleased with the results, to me that doesn't look too exciting for affiliates.
However, you can read too much into stats. Simply by looking at stats we can't tell what percentage of affiliates have put some real effort in promoting Scott's novelty boxer shorts. If only 5 or 10 did that, they might be very happy with their results.
What bothers me is that Scott, like many - or most - affiliate merchants, competes with his affiliates.
He buys keywords on pay-per-click search engines and optimizes his web pages so that he's competing with his affiliates in free search engines.
Am I being hopelessly idealistic in expecting affiliate merchants to resist competing with their affiliates? My favorite affiliate merchant doesn't.
Allan Gardyne
[Edited to delete faulty old link.]
Last edited by AllanGardyne on Tue Nov 01, 2011 12:38 am; edited 2 times in total |
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Debs
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NY
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Posted: Tue Feb 03, 2004 3:26 am
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When it comes to non-IM products, I think it is unrealistic to expect merchants not to compete. For the very reason you stated ...
| Quote: | 4,000 affiliates and 35% of last year's sales of $650,000 came from his affiliates.
However, as you'd expect, most of those sales came from only about 200 active affiliates. |
Now, if Scott hadn't competed, maybe his 200 affiliates would have produced more sales, but I doubt it would have covered the 2/3's worth, but maybe I'm wrong.
How many of those affiliates did the PPC to drive traffic? Would you? Sometimes PPC is worth it, sometimes it isn't, it depends on the product, and, from an affiliate standpoint, the commission. Of course, it always depends on the ROI 
I don't have a problem competing against merchants since they aren't the ones showing up in the SE's for the most part ... it's other affiliate content sites I have to compete against.
I've done some research on a few projects and will be targeting SERPS where merchants are showing up in the top 10 heavily ... why? Because I think I can beat them with content since no content sites exist ... it will be interesting to see if that works
Debs
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Learn how to turn keyphrases into quality, well-targeted articles your visitors and SE's will love with Gary Antosh's new ebook "Web Content Made Easy!" |
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robertb
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Charlie
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Posted: Tue Feb 03, 2004 3:15 pm
Post subject: Re: Should merchants compete with their affiliates?
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| AllanGardyne wrote: | | WebUndies.com |
Someone deserves a medal for the domain name alone! 
| Quote: | | However, as you'd expect, most of those sales came from only about 200 active affiliates. That's an average of only about $1,000 in sales (not commissions) for a whole year, per active affiliate. |
| Quote: | | we can't tell what percentage of affiliates have put some real effort in promoting Scott's novelty boxer shorts. If only 5 or 10 did that, they might be very happy with their results. |
I'm guessing "active" includes people who send any traffic at all. Baed on this definition, I bet you'd be lucky to find 5 affiliates "big in undies".
| Quote: | | What bothers me is that Scott, like many - or most - affiliate merchants, competes with his affiliates. |
| Quote: | | Am I being hopelessly idealistic in expecting affiliate merchants to resist competing with their affiliates? My favorite affiliate merchant doesn't. |
What's the difference between the merchant doing this and a super affiliate? For the small players, the outcome will probably be the same.
I think it's more a lifetime commissions issue than a SE competition one...
| robertb wrote: | | TigerDirect does this. They overwrite affiliates cookies if someone clicks one of their links in the search engine results. I'm not for or against this, but they have taken some heat for it |
This is not a lifetime commissions program, so what's so terrible about it? Wouldn't another affiliate's cookie overwrite yours in the same way? When you study programs without lifetime commissions, most tracking looks poor.
Back with Sitesell...
If Ken did actively promote via the SEs but didn't overwrite cookies (in the spirit of the 5P program), wouldn't this be a good thing? Another chance for afiliates to profit from Ken's marketing. You have said before how you love the wave of commissions every time Ken sends out a newsletter, Allan, so wouldn't there be similar benefits here?
The crux is the lifetime commissions. As long as the merchant didn't get them for life, there wouldn't be a problem.
All the best,
Charlie.
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"Before I speak, I have something important to say."
- Groucho Marx |
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AllanGardyne
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Posted: Wed Feb 04, 2004 1:15 am
Post subject: Re: Should merchants compete with their affiliates?
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| Charlie wrote: | | What's the difference between the merchant doing this and a super affiliate? For the small players, the outcome will probably be the same. |
I suppose in the end the effect is similar. However, here's the big difference.
If a merchant is bidding on pay-per-click search engines, the merchant has an unfair advantage. The merchant can afford to pay higher prices than the affiliate, because on those sales the merchant doesn't have to pay a commission.
The merchant also bid higher because he can take into account the effect of attracting lifetime customers, and in most affiliate programs there's no residual revenue for that.
Regarding competing on search engines, the merchant is likely to have deeper pockets and so can pay for all sorts of things that most affiliates can't afford: pay for search engine optimization consultation, pay to be listed in every directory which charges for a listing (and thus boost PageRank), and perhaps even pay for a full-time employee to do nothing but work on search engine rankings.
If instead of doing that, if the merchant put that time, effort and money into encouraging and teaching his affiliates how to succeed, he'd achieve awesome results. (Assuming he had top-notch products and a decent affiliate program!)
That's what Ken Evoy does. Instead of competing with his affiliates, he works hard to help them succeed. He says that their efforts dwarf anything he could achieve.
| Quote: | | If Ken did actively promote via the SEs but didn't overwrite cookies (in the spirit of the 5P program), wouldn't this be a good thing? Another chance for afiliates to profit from Ken's marketing. You have said before how you love the wave of commissions every time Ken sends out a newsletter, Allan, so wouldn't there be similar benefits here? |
Yes and no. I love the wave of commissions I receive when Ken points out the benefits of one of his products in his newsletters. As you know but some affiliates might not, once you've sold one of his products, the customer is "yours" for life. So you earn commissions whenever the customer buys anything.
You're right - up to a point. If Ken did compete with his affiliates and promoted his products on search engines or in any other way, that would help affiliates who had already achieved sales.
However, what all the about brand new customers? If he competed with his affiliates he'd attract first-time customers - sales which at the moment earn his affiliates nice commissions. So I think he's made the fairest decision.
| Quote: | | The crux is the lifetime commissions. As long as the merchant didn't get them for life, there wouldn't be a problem. |
Sorry. I disagree. The crux is a large number of sales upon which affiliates could have been earning commissions.
An affiliate merchant who refuses to compete with his affiliates is a rare bird. Does anyone know of any other affiliate merchants who don't compete with their affiliates?
Allan Gardyne
My favorite affiliate program and why...
http://www.LifetimeCustomers.com |
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edburdo
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Posted: Wed Feb 04, 2004 2:49 am
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I know of several who I wish didn't.
I don't think they overwrite my cookie if I send them, but I do know that while they have an affiliate program, they do nothing beyond posting some banners and text links to "help" the affiliate produce income.
Its a shame really... Some of these have really nice products... the only decent product in that niche. Yet they aren't helping out their Affiliates very much..
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Eric D. Burdo
They Made $6,513 a day With Clickbank Doing This... |
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Charlie
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Posted: Wed Feb 04, 2004 2:20 pm
Post subject: Re: Should merchants compete with their affiliates?
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Hello Allan.
| AllanGardyne wrote: | | Charlie wrote: | | What's the difference between the merchant doing this and a super affiliate? For the small players, the outcome will probably be the same. |
I suppose in the end the effect is similar. However, here's the big difference.
If a merchant is bidding on pay-per-click search engines, the merchant has an unfair advantage. The merchant can afford to pay higher prices than the affiliate, because on those sales the merchant doesn't have to pay a commission. |
That's true, but doesn't it still apply in part with affiliates..?
With some programs, super affiliates are paid higher commissions per sale, which in turn helps them bid higher on the PPC... to get more sales.
| Quote: | | The merchant also bid higher because he can take into account the effect of attracting lifetime customers, and in most affiliate programs there's no residual revenue for that. |
One way to work with this is to "do a Whiley" and offer your own bonus for buying through your link. Then you can build your own list and simulate something that tends towards lifetime commissions.
| Quote: | If Ken did compete with his affiliates and promoted his products on search engines or in any other way, that would help affiliates who had already achieved sales.
However, what all the about brand new customers? If he competed with his affiliates he'd attract first-time customers - sales which at the moment earn his affiliates nice commissions. |
| Quote: | | Quote: | | The crux is the lifetime commissions. As long as the merchant didn't get them for life, there wouldn't be a problem. |
Sorry. I disagree. The crux is a large number of sales upon which affiliates could have been earning commissions. |
When I said "As long as the merchant didn't get them for life" I was meaning that customer would still be treated like new if an affiliate later referred him again (even though he'd previously bought from the merchant direct). If this latest referrer's temporary cookie was then baked, the customer could be added in as a lifetime customer when he bought under the affiliate.
Wouldn't this reduce the competition to a large extent?
I guess it all depends to what extent visitors are referred by multiple affiliates. In other words, how important is the lifetime aspect in protecting against other affiliates as opposed to just obliging the merchant to pay somebody for each sale?
Presumably, it's much more important in the "incestuous" internet marketing niche than the wider world.
| Quote: | | An affiliate merchant who refuses to compete with his affiliates is a rare bird. Does anyone know of any other affiliate merchants who don't compete with their affiliates? |
No. But actually, isn't it as much a matter of spirit, when it comes to promoting in the free SEs?
SiteSell do appear in the SERPS themselves, whether they go out of their way to optimise or not.
Just a thought,
Charlie.
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"Before I speak, I have something important to say."
- Groucho Marx |
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AllanGardyne
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Posted: Wed Feb 04, 2004 10:30 pm
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I could be wrong, but here's how I see it.
Most affiliate merchants don't pay lifetime commissions, so you've complicated the discussion unnecessarily by mentioning them.
As I see it, the central issue is that if affiliate merchants compete with their affiliates in search engines and pay-per-click search engines, they can achieve substantial sales which could be going to affiliates.
Anyway, I think I'm repeating myself, so I'll shut up about that.
Occasionally, I've seen web sites which can't be entered unless you enter by clicking on an affiliate link. I like that!
Allan Gardyne
My favorite affiliate program and why...
http://www.LifetimeCustomers.com |
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edburdo
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Posted: Wed Feb 04, 2004 10:34 pm
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The only downside I can see Allan, is that if the affiliates are not performing, then the merchant does not get any sales.
Which could boost them into teaching their affiliates to sell, as you have mentioned.
I know for myself, when I start promoting some of my own products, I will compete with my affiliates, until I can afford to let the affiliates take over. As someone starting out, I think the goal to not-compete is altruistic, and very hard to accomplish.
If you have some padding (cash to float you in case of bad times) then I think the non-compete idea is nice.
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Eric D. Burdo
They Made $6,513 a day With Clickbank Doing This... |
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Charlie
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Posted: Thu Feb 05, 2004 12:42 pm
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| AllanGardyne wrote: | | Most affiliate merchants don't pay lifetime commissions, so you've complicated the discussion unnecessarily by mentioning them. |
I thought you mentioned "your favourite program" first.
Sorry if you think I'm complicating things, though. Actually, several times I've tried starting threads (on things I thought were interesting), very few people seemed to agree. Perhaps my passion sometimes crosses the border into "over complication" in other people's eyes.
Seems an ironic pity, if so. These are the things I want to hear other people's views on most. I'm certainly not trying to drive anyone away.
| Quote: | | As I see it, the central issue is that if affiliate merchants compete with their affiliates in search engines and pay-per-click search engines, they can achieve substantial sales which could be going to affiliates. |
Sticking firmly with non-lifetime programs, so do I.
Actually, whether it's non-lifetime commissions or competing with affiliates, isn't it all part of the same game (for a merchant)? Either every effort is made to afford all sales to an affiliate (and the right one), or the merchant is not paying for his branding.
Merchants can use "non-robust" tracking, rule changes, direct competition or any other excuse to avoid a commission. It's all a matter of degree.
At the end of the day it comes down to market forces - affiliates will go for the best deal they can find. Thank goodness people like Ken come along every now and again and shake things up a little.
| Quote: | | Occasionally, I've seen web sites which can't be entered unless you enter by clicking on an affiliate link. I like that! |
Another nice idea, might be to send direct traffic to a higher priced option. They could be asked whether they had a special code (an affiliate tag) and this would get them the cheaper price.
That way, people could choose to chop out an affiliate for a price. Would prove an interesting experiment - make 'em pay for their "principles".
| edburdo wrote: | | I know for myself, when I start promoting some of my own products, I will compete with my affiliates, until I can afford to let the affiliates take over. |
I can't help but think that I'd be more tolerant of a competing "one man band" merchant, than a corporation. I know most of the issues would be the same, but that's my suspicion.
Cheers,
Charlie.
_________________
"Before I speak, I have something important to say."
- Groucho Marx |
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