Class Acts
A strange thing happened earlier this week for those running ringtone offers. Affiliates everywhere logged in, and their brows furrowed. Their previous night’s numbers didn’t look quite right. They checked their metrics to see why, and came up blank. They had the same number of clicks, nothing on their end broke, costs were the same, yet the virtual bank ledger read too low. What’s more, each didn’t know the other was going through the same exercise. Those on the East Coast would have noticed first, and by the time that the West Coast came online, the picture started to clear. What made this particular blip so unusual, and as a result not as easy to solve, had to do with its pervasiveness. It wasn’t just one offer that was effected, e.g. if True.com went down, it seemed that almost all ringtone offers went down. Those running everything from RockYourTones on Primary Ads to Blinko on Azoogle must have spent an hour if not more trying to figure out what could have happened, and initially, what they did wrong or whether another Quality Score update hit. In the end, affiliates learned that they did nothing wrong. The networks too also realized that they weren’t alone and were not at fault. A backend provider that many of the ringtone companies used had an issue, and for several hours, any customer trying to subscribe couldn’t.
Outages happen all the time, and the ringtone world especially seems to go through more ups and downs than the stock market. When such outages occur who should take the blame? The traffic providers turn instantly to the affiliate network, not so much to blame them as to look for information. When certain incidences do occur, the network steps in to make it right. If their mistakes lead to one of their affiliates making less than they should have, often they come in and offer some form of reimbursement, referred to most frequently as a "make good." If, for example, the network’s tracking software messes up, a page they host goes down, and/or they improperly set up a creative, you expect them to take the hit. What about in a case where the advertiser messes up? Let’s assume their site goes offline for a few hours. That, as we’ve suggested, can have a ripple through the whole affiliate marketing ecosystem. The worst part, though, no one makes money. Affiliates complain to the network, the networks to the advertiser, and the advertiser right back down the chain. They made no money. They care about the traffic, but it didn’t do them any good so most won’t feel like compensating the networks. The networks certainly didn’t make any money, so why should they pay the affiliate? Stuff happens. It’s part of the risk that affiliates take. Except that it isn’t.
Today’s affiliates take more and more risk than ever before. Instead of organic web traffic people dominating the landscape, you have arbitragers driving the majority of the volume. This means for the most part that each click costs money. Down times are more than just inconvenient, they cost money. The networks know this, and they want the arbitragers to continue, so they have begun more and more to compensate their affiliates for issues that have nothing to do with themselves. CPA networks, though, have always taken some risk. That is what separates them from their advertisers and from true affiliate networks like Commission Junction. CPA networks, in a tradition started by companies like Advertising.com, pay their affiliates / publishers regardless whether they get paid. Not only that, but they pay out much quicker than they get paid. Take Commission Junction; they pay what they get paid – if the advertiser pays them 80% of the gross, that becomes the pool of funds to pay the affiliates. Not only do they pay out what they get paid, by and large, they payout after they get paid. Advertisers will pay them Net 30, and they will pay their affiliates Net 45. Not so with the CPA networks. Many have always paid out quicker than they get paid, the standard being Net 15 payments to affiliates. Now, many networks have taken a page from the adult industry and pay out weekly. Unlike adult though, offers in affiliate networks don’t require the users to enter credit cards, meaning that when CPA networks offer weekly payments, they aren’t just paying out money they already have faster.
In the end, the conversion rate dip seen earlier has little to do with the ringtone industry and everything to do with CPA networks. Here are companies that operate on razor thin margins yet they won’t hesitate to make everything right. And in just about every scenario, making right means paying out money they almost surely will never receive. They take all the heat, are on the hook, yet somehow continue to get better and better at adding value to the those driving traffic. Now more than ever they seem to act like extensions of the arbitragers they support. And, many running the ringtone offers didn’t even have to ask for compensation. The networks came out and offered, even though I suspect, they won’t see much of that money. You might not have seen the issue in the first place, but it highlights how lucky we are as an industry. More than anything, this article is our way of thanking them for what they do for us. It’s a reminder that we shouldn’t take the make goods, and we absolutely shouldn’t take them for granted.
