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We now have custom backend reporting which enables us to identify the cost-effectiveness of specific publishers within CJ. We always knew that some publishers were obviously more or less targeted, but until now we didn't know how individual publishers affected the program.
We now clearly see how much certain publishers cost (ouch!) and how much others contribute. There are of course many that fall comfortably in the middle, but I am concerned here with the two extremes.
The very targeted, profitable publishers deserve a much higher commission, but in order to pay them and keep our own costs in line, we need to let go of the very low-end publishers.
Any suggestions on how to do this gracefully?
Explain how the costs outweigh their production. Give some details of what your costs are. The ones that won't understand that won't understand any other reasoning anyway.
They flesh out the site and help keep it current and that has to hold some value even if it doesn't directly translate into dollars. It may well indirectly help convert.
Perhaps a redistribution of the monetary pot is in order but maybe firing them will have an unexpected impact that software can't predict.
[edited by: mat_bastian at 7:13 pm (utc) on April 14, 2003]
[edited by: mat_bastian at 7:37 pm (utc) on April 14, 2003]
Be sure to allow for the possibility that a seemingly-unproductive publisher might be working on things that WILL be productive, but it takes time to do the keyword research, make pages, get them indexed, etc.
I'd be interested to hear you say more about your costs, etc. and why some affiliates are a drain on resources. Can a small affiliate who sends a small amount of traffic be benignly ignored without increasing your expenses? How would that compare with someone who makes sales but has to send zillions and zillions of visitors to do it?
As a publisher, it would be useful to have a better understanding of that. I sometimes sign up for merchants but it takes a while to generate any results for them.
It's not fun to be dropped by a CJ merchant (don't ask how I know that) but to call it a wrenching experience or equate it to being fired is over-dramatizing, I'd say!
We know a good portion of the bill-me-laters won't pay after billing them for 5-7 months, and we foot the cost for the billing and free gifts they receieve. This isn't a problem because overall, we receive enough payup for the program to work.
What we didn't know until now was how wide the gap was between the different publishers, because all we had was a generic payup percent for CJ as a whole.
The targeted publishers send leads that pay up at good to excellent rates, the untargeted publishers run "freebie" sites and it turns out the payup is dismal at best.
I would like to reward those targeted publishers, set up great incentives for them. But with untargeted publishers sending orders that significantly pull down our payup rates, I don't have much flexibility to do that.
It simply isn't smart business to keep rewarding these publishers - especially at the expense of relevant, targeted publishers.
Before I do anything, I thought it would be good to get some publisher-perspective feedback...
If I were you I would simply change the way your programme works. I would pay a lot less (even nothing) for leads, but start to pay the percentage on leads that actually pay up. Perhaps also pay a higher percentage.
I always wonder why people have pay-per-lead programmes in the first place when they are so open to abuse. Some affiliates are losing you money through no fault of their own, agreed. And as a freebie-affiliate-site owner I know that visitors to those sites rarely buy anything. But I bet some, are, shall we say, milking the system (even if only by having a notice which says "PLEASE KEEP THIS SITE FREE" or whatever).
By changing the programme your good affiliates should be able to work out that they would be better off (or no worse off), but the not so good ones would leave of their own accord.
But anyway, in answer to your question, I run a freebie site with affiliate programmes (that make next to nothing!), and I would not be offended if a merchant dropped me. A polite email would be good, but I would be a little bit wary of giving advance notice, as you may find you get a lot of non-paying orders from the publishers' friends/family as a result.
Not very trusting am I? I of course would never take advantage of an affiliate scheme. :)
It isn't to spare any feelings. It's more of a wakeup call to them. They may not even know that they are sending you bad traffic. If they can improve it, you win and they win. If not, they may take the hint and drop off themselves or you can drop them after the 30 days.
Long term go to manual authorization, ie. pre qualify them based on if their offer's focus on the free gifts or on the products.
Short term - explain the problem with the focus on free gifts vs. products and even a sample of their monthly payup rate verus your average, maybe send them a sample page with appropriate focus. Drop the worst, with an offer to reinstate if they are interested in changing their approach.
The moderate offenders, put on notice say 60 to 90 days to adjust their approach. They will need some time to implement changes and develop a more stable customer segment.
The mild offenders let them know you are watching, their payup rate versus the average or target rate and offer to provide them with suggestions to improve.
If it does not complicate your model to much maybe your existing publishers know that at a future date a sliding scale commission base on payup rate will be implemented.
Some merchants have a clause in their affiliate agreements that prohibit websites that drive incentivized traffic. Such traffic tends to result in low quality leads. Given that you do not have that implemented, you should give it some serious consideration.
It is surprising that your company compensates for leads. The majority of affiliate programs paying for leads are companies in financial services and companies that sell expensive items that are not impulse purchases, such as autos and real estate. Why not also consider abandoning the lead program altogether and just pay publishers for paid subscriptions? You can still let publishers promote the "bill me later" idea, but only pay them when they actually convert to a paid sale. This is instead of the current situation of either compensation for sales or leads.
Ted
[edited by: nativenewyorker at 11:01 pm (utc) on April 14, 2003]
We all know it's much harder to get a customer to plunk down their credit card after clicking on an offer, than it is to get them to try a risk-free trial offer.
Don't you think we'd be doing the targeted publishers an injustice by making it even harder for them to earn commissions? And how would they feel if we suddenly yanked the lead program out from under their feet? I'm not sure that would help them make more money.
I was not suggesting that you drop the "bill me later" lure for customers. Instead you should drop the payment of leads. Tell your publishers that you will pay them when those signups become paid subscribers. That will encourage your publishers to drive quality traffic to you.
What percentage of referals are immediate sales vs. bill me later leads? Perhaps, raising the commission for outright sales will offset the losses by publishers from eliminating their lead generation activities.
Ted
Do you think the publishers will be put off by having their lead commissions cut and then having to wait anywhere from 2-6 months for payup commissions?
Can lead fees be changed for individual affiliates the same way commissions can? That might be a way to approach this. If your general offer was less for leads and more for paid orders, you could tweak individual affiliates' lead fees to make sure that those who send quality traffic maintain or increase their earnings.
I don't know enough about CJ's merchant service fees to know if they'd be an issue, but it would make reasonable sense from the affiliate side as long as your top performers knew about that part of the plan when the changes were announced.
Some of them will see significant increases in their lead commission, and it seems this would be better received than being paid when the customer decides to write the check.
