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For as long as I've promoted affiliate products I've suspected fraud. You can track your results, but only based on what the affiliate network reports to you. Many times I've seen leads mysteriously disappear without warning at the end of the month (what? what do mean they suddenly don't count? If someone comes through my link and fills out a lead, I should get the profit; it shouldn't matter if the merchant isn't able to convert that lead to a sale), I've seen suspiciously high rates of return on per sale sites, and often conversions rates vary beyond statistical norm. Programs like clickalyzer, which claims to be able to track affiliate links to the sale, just don't work in my experience (I really wish it did, but I'm sorry to say that despite claims it just doesn't... yet). Anyway, I've always suspected affiliates were being routinely defrauded, but I've only recently been able to prove it, with the help of my joint-venture partner. Here's how we did it:
First I should point out that this particular merchant was pay-per-sale, and we aren't run of the mill affiliates. In the 2 months we had been promoting this merchant, we had already done over 1 million in sales, and jumped to their #2 affiliate in their whole network (I think we've since moved to #1). I mention this not to brag, but to point out that because we did such a volume of sales for them, we were able to get some leeway from them. Interestingly, no matter how many sales we ever did, only the merchant would converse with us. It didn't matter to the affiliate network how many millions in sales we did - they still treated us like dirt.
Initially the problem started as one with tracking. The affiliate network we were promoting through was so delayed in its reporting (sometimes 2 weeks for sales to show up) that we felt paralyzed to make adjustments and optimize our campaigns. We wanted something closer to real-time feedback.
We contacted the merchant we were promoting (because the affiliate network wouldn't even talk to us) and requested help. Because of the volume of sales we were generating for this merchant (sometimes 40k/day) they agreed to supply us with daily reports telling us exactly what we'd sold the day prior. In this way we could make adjustments quickly and optimize our campaigns.
We immediately saw a huge discrepancy between what the merchant reported we had sold and what the affiliate network was reporting we had sold on any given date. About 43% of our sales were simply missing.
Now we knew that the merchant had the power to hold back a certain percentage of sales from being reported, based on the premise that some sales would be returned or prove to be bought with fraudulent credit cards, etc... The trouble is over time we had established our fraud/return rate at just over 3%, and this doesn't account for the other 40%. And once sales are proved to be genuine, non-returns, the commission should come through. But these sales/commissions *never* appeared in the affiliate network reporting.
The merchant blamed the affiliate network and expressed surprise, but it's difficult to tell how much of the missing sales were due to the merchant witholding them (they claim they weren't) and how much is due to the affiliate network stealing them. Either way, because the affiliate network runs the tracking mechanism, they bear the most responsibility.
But the merchant also turned out to be guilty of other fraud. After analyzing our sales (which we do to determine customer buying habits) we discovered another statistical impossibility. This merchant, like many others, operates on a cookie. The timeframe the cookie covers isn't 30 days, but for the purpose of simplicity, I'll use that timeframe as an example. What we discovered was out of millions of dollars of sales, not one single sale occured after day 15. We had strong sales right up until day 15 (in fact, 10% of our total sales occured on day 15), but nothing on day 16 or beyond. Not one single sale.
We brought this to the attention of both the network and the merchant, and pointed out it was statistically impossible. We suggested that although the merchant was purportedly operating on a 30 day cookie, they were in fact only operating on a 15 day cookie. We were told it was just a coincidence, that people just didn't buy after day 15, that there was no problem. We couldn't even get them to look at the possibility that we might be right.
So we went through our own affiliate link and made a small purchase. Then we went back to the merchant's site every day after that, not through our own links, and made a small purchase every day. Surprise, surprise, after day 15 none of our purchases were credited to us. Now armed with proof, we went back to the merchant. They grudgingly admitted there might be a problem, but it surely was restricted to just us. Well, my partner had a smaller separate account with the same affiliate network, and his numbers confirmed it was a system-wide problem.
Finally the cookie was fixed, only a few days before Christmas. In essence though, this particular merchant defrauded all of its affiliates (hundreds at least, probably thousands) for half of the cookie timeframe for all of last year at least, and possibly several years prior. This is a big merchant, who did billions in sales last year. Even if only 10% of sales occur after day 15 (which seems from our new data since the problem was fixed to be a lowball projection), 10% of a billion dollars is 100 MILLION DOLLARS in sales and commissions that affiliates were defrauded last year alone.
Now we've fixed that problem, and we've got a solution in the works to fix all our other problems so we won't have to worry about fraud, but what concerns me is that the problem exists at all, and that no other affiliate had apparently discovered this prior to us. I believe this is the tip of the iceberg, and I'm very concerned that affiliate networks seem to be accountable to no-one. I don't believe this is an isolated event... the affiliate network in question is one of the biggest on the net and the way they have dealt with this was to treat us like we were criminals for daring to bring proof of *their* fraud. I've been screamed at, lied to, and hung up on by their telemarketing division. That really frosts me - it shouldn't matter whether I've done $100 in sales or 100 million, as an affiliate I should be treated with respect. THEY WORK FOR US, NOT THE OTHER WAY AROUND. And since we have done several million in sales already in the very short time we've been promoting through their network, you would think they'd at least treat my concerns with proffesionalism. But the prevailing attitude from all the big affiliate networks, and this one in particular, is that "you'll take whatever crumbs I decide to give you, you little affiliate you, and don't you dare question me." They treat fraud like it's their god-given right to steal from affiliates, and honestly seem surprised that I would even dare to voice objection!
I believe this is common practice and a wide problem among affiliate networks, and I'm concerned that there is no-one on the side of the little affiliate. The affiliate network should serve this purpose and guard the affiliate's interests, but they simply don't. I believe something has to be done.
Anyway, I know this has been a really long drawn-out explanation of what is at heart a simple problem, but I wanted your opinions on this, because I know I can't be the only affiliate in history who's ever caught the affiliate networks with their hands in the cookie jar. Have any of you encountered fraud like this before? Have you suspected it?
Most important of all, what solutions have you found for it?
In the spirit of sharing, I'll give the only solution I've found so far, which is unworkable for most affiliates I know but is I think 100% fraud-proof. That is the 'buy it yourself' method. Instead of sending traffic to the merchant, set up a website yourself displaying the same wares. When the customer orders, he's buying from you, not the merchant. Then turn around and buy through your own links from the merchant. That way you have a record of every sale, and you know of every return and any fraud, and can prove when sales get skimmed. The upside of this approach is it works. The downside is it takes an incredible investment of time (to set up a fully functioning website that converts at least as well as the merchant's) and money (you have to be able to buy all your customer's orders before their own payments to you have cleared through). It's highly unworkable for most rank and file, but it is one solution, and theoretically it could work for pay-per-lead campaigns too (the problem is that in pay-per-lead the merchant would have to allow you to set up a special system and then trust that your leads were all good... they just aren't going to be willing to do that, and why should they when they can so easily screw over affiliates in the current system?).
This whole problem has infuriated me, and the rank unfairness of it has moved me to take some action. I've started to put together a non-commercial (meaning no sales solicitation) mailing list to connect affiliates who are concerned about this problem, because what I discovered when dealing with the affiliate networks is that one affiliate, even a super-affiliate who generates substantial sales volume, really isn't taken seriously. I think that if I can build a large enough group of concerned affiliates that the networks will have to listen, and make reasonable concessions. So far I've only talked to other ppc marketers, mostly just associates, competitors and friends I know in the business, but there has been strong interest. I'm calling the project Stop Fraud Now (yep there's a website, you can probably guess it but I'm not looking to promote here and I think it's against rules anyway).
I'm thinking there needs to be some kind of oversight agency which verifies that everything is kept on the up-and-up. At best, it would overlook the affiliate networks and keep them on the square, at the very least it could operate as some kind of 'better business bureau'. I'm just looking for ideas on how to combat this problem on a wide scale.
Anyway, I know this has been a super-long post, and I should really close. The one thing that bothers me most is that a lot of affiliates I've talked to about this have sort of shrugged their shoulders and said "well, what are you going to do? I guess there'll always be fraud; it's just the cost of doing business in this field." Well, I don't feel that way. Imagine if we used that same reasoning to justify murder: "well, there's always going to be someone committing murder. What are you going to do? You can't stop it all, so we might as well not bother trying." I feel very passionately about this and I can't understand apathy. I'm not saying that every affiliate network steals 30% of sales, but how do any of us know they don't? And ask yourselves what 30% of commissions not being reported to you equals. Is it 5 dollars a day? 10? Even if it's only 10 dollars a day that's still 300 dollars a month that's being stolen from you. Isn't that worth objecting over?
:) Now I'm straying, ranting about affiliate apathy. But I think apathy on this issue is deadly, and a big part of the reason that affiliate networks feel they can rip us off indiscriminately.
Any thoughts or opinions?
I too have noticed problems, but on a much smaller scale. I make it a practice to buy something from my merchants at least once a month. I have only caught 1 merchant so far, but with such a small volume of tests it could be more.
I encourage all affiliates to test shop as a consumer. Not only does it help you verify things are working right, but it helps you understand the customer experience better.
[edited by: growingdigital at 3:45 pm (utc) on Jan. 27, 2005]
I also suspect skimming now but I'm not certain if it's intentional or carelessness involving CJ and a large advertiser. Actually I started a thread the other day at [webmasterworld.com ] but no one replied.
On Commission Junction when you run a "Transaction Report" the click date doesn't display. If you download the report (at least in Excel format) a "Click Date" field appears.
It's a quick way to check how long your cookie is being held.
We initially signed up with Linkshare and selected some appropriate banners to display. Despite having clickthrough rates upwards of 3% on some of them, since May of 2004 we have not made a SINGLE DOLLAR. Linkshare was completely unresponsive to the situation (i.e. we couldn't get any support at all) so we moved over to Commission Junction.
In an effort to ensure we were not being scammed, one of the first things we did after gaining approval from a number of programs was to make a purchase through one of the links on the site. Not only were we not credited for the purchase, but the vendor, even after we supplied the transaction number, receipt etc. did not give us commission after they promised to. We had to harrass them some more to actually get them to go in and manually credit us. Of course they blamed CJ for all of this.
Not being overly impressed with this, our first test, we decided to conduct more. We had 4 separate individuals go to our sites and click through to an affiliate to make a transaction. All of them had separate IPs, cookies enabled etc. Not ONE of the transactions was credited to us.
Fearing some technical problem with our site, we called up CJ and had them do some testing. Everything checked out... our IDs were being passed, all our links were going to the correct places and so on. I have an audio recording of the conversation with the CJ rep who basically says "I don't know what to tell you... you should be getting credited with these sales". Obviously we are not.
Needless to say, this experience has been quite frustrating. I hear about all these folks making money from affiliate marketing, but we are just giving away free impressions. This is not what we are in business for.
[edited by: mindspan at 6:08 pm (utc) on Jan. 27, 2005]
Why would you need to do this. Seems it would be best to just reenter the customers info and card number when you get to the merchant site. Main drawback would be the customer would probably not like you having their cc info.
The amazing thing is that if they would play fair they'd make ever so much more money. I can just picture a bunch of people from the affiliate network in some backroom, rubbing their hands together and chortling 'look at the hundreds of thousands of dollars we stole from our affiliates!'. The reality is that they're missing out on the millions of dollars in lost profits because affiliates weren't willing to promote apparently non-converting product. If they'd just play fair, everyone would benefit, including them.
Also, about CJ (in response to mindspan too). Don't let them tell you 'oh, I'm sorry, must be a mistake or glitch'. BS! The affiliate network *exists* to make sure sales are tracked correctly and to guard our interests as affiliates. Sounds like you've both uncovered incontrovertable proof that at the very least CJ isn't bothering to do their job, and more likely is complicit in fraud. Even if it's a shady merchant trying to screw over affiliates, CJ should be held legally liable - they are the tracking agency, for crying out loud! The merchant even has some plausible deniability, but the affiliate network never should.
Voices: you're right, but not thinking the problem all the way through. On the one hand, the customer is now buying from you, so there's no reason for them not to give you their cc info for the purchase, however you can't just turn around and use their cc to buy from the affiliate, because that's a legal breach of privacy info (I think). The safer system is have them buy from you, and you buy yourself from the affiliate. If you do this, though, you've got to have money yourself to cover the float period, because it takes time for their money to clear through into your account, but you'd want to be buying immediately on their behalf from the merchant, so there isn't a long delay on shipping or delivery of the product. Alternatively I suppose you could operate on a delayed basis, not making the purchase until the money actually clears through to your account, but that will likely lead to lower conversion rates (if you have a disclaimer that shipping will take longer) or unhappy customers (if you don't, and customers flood you with emails about 'I ordered over 2 weeks ago, why isn't it here yet').
It's a solution, but a very complicated one. We're not even talking about the problems a customer return can make for you...
jonstark, you are right in your assumption... it's something like this to make it clearer for everyone else, say I drive 1000 visitors to my site and say about 20 of them clicks on the BUY NOW button, only about 4 out of 20 shows up as sale. It's pretty low in my opinion since they already decided to buy or at least they know all they want to know about the product, and yet they still decided not to buy... or maybe fraud?
I guess it's really hard to find out.
I would also add that there's about 20% returns from all of my sales..if you use the example above you end up with only about 3 sales... which is really tiny...
I hope it doesn't come across as nitpicking. I'd like you to succeed in your immediate issue with the merchant/network and also the wider issue of setting something up to counter the widespread fraud that nobody doubts exists. I do agree that the affiliate networks are usually a bunch of w*nkers.
Boy, I'm beginning to think I'm lucky that CJ rejected my application to join their aff. network..whew! They saved me some money ;) I've had concerns about Linkshare as well..unfounded as of yet, so I am not accusing them of anything...but I've sent them thousands of visitors..highly targetted..and not one sale...seems odd, doesn't it? Obviously I've gone onto other networks that have better converting campaigns...
Dave.
We all know that the affiliate networks make a small percentage of what we make, and that their commission depends upon us. If the merchant is paying 10% commission to me than it's likely he's paying at least 12% commission total, and the other 2% is going to the affiliate network.
Ostensibly this *should* mean that the affiliate network has our best interests at heart and will track to make sure that all sales are reported. In reality, human greed and stupidity takes over, and somebody somewhere says 'hmm, why if we just don't tell the affiliate about the sale, we'll get 100% of the commissions instead of our normal 10%'. Of course, they can't do this with *all* sales, because then the affiliate would have no reason to keep promoting, sales would stop altogether, and the affiliate network would end up killing the goose with the golden eggs. But if they stole as much as they could without raising too much suspicion, and gave the affiliate just enough of the sales to have him keep promoting...
The common misperception is that the bigger the affiliate network is, the more chance you'll be protected as an affiliate. Let me tell you that the exact opposite is true. The smaller affiliate clearinghouses almost always have much higher conversion rates and much better performance levels. While I think any affiliate network is suspect, I do think the smaller ones are less guilty of fraud.
True story, and I've seen this pattern repeated. Back when I was just starting out, I was promoting a product through CJ and cutting a mild profit. This is just when I was beginning to learn there were smaller networks and other options than just CJ, LS, and CB. I found this tiny affiliate network (only carried like 150 products) but one of the products they had was the same merchant as the product I was promoting through CJ. Now this was the *exact* same product, same landing page, same merchant, no differences. The only differences were in the reported epc levels (the smaller affiliate network had a smaller and as it turned out more honest epc listed for this product) and the payout. This was a pay-per-lead, and CJ had a higher payout per lead, but like 4 dollars (fair margin). I guess the smaller affiliate network was taking a higher cut of the commission for themselves, or maybe they just hadn't worked as good a deal from the merchant.
Ok, seems like a no-brainer, right? CJ has the same product for a higher payout. Well, for kicks and giggles, I promoted the smaller affiliate network's offer in equal portion to CJ. Same ads were running the same number of clicks off the same keywords. I thought for sure I was just wasting profits but diverting half my traffic to the non-CJ offer...
BUT what I found was that the smaller affiliate network's version of this offer performed DRAMATICALLY better. Conversions were MUCH higher, and consequently so were profits. CJ's vaunted epc and higher payout meant nothing, because it didn't convert nearly as well. I ran them this way for a month, through tens of thousands of clicks, and the statistics emerged.
I thought it was a fluke, so ran it for another month, and the statistics started to look pretty undeniable. For whatever reason, whether it was incompetance or computer glitches or fraud, CJ didn't give nearly the profit for the exact same product.
This wasn't a one product fluke, either. I've seen the same thing happen for two other products in completely different markets. Since then, if I find a product I like in CJ, LS, or CB, I start looking around to see if I can find the exact same product offering in one of the smaller aff networks, and if I do, that's who I go with, even if there's a smaller payout.
In the UK we have seen considerable evidence of the larger affilate networks "skimming".
When possible I now use the smaller networks for the same advertisers, the change in results is astounding.
dregs33
Your story just has too many holes in it.
1) You say that you caught both the merchant and the network stealing from you, but you don't seem to have proof that either did.
2) In one place, you say that you've generated over 1 million in sales, but elsewhere you say you've generated "millions of dollars in sales". Which is it?
3) In your description of a merchant holding back a percent of sales, you make it clear that you don't know how most merchants work. Most merchants post sales after they ship.
4) You say that this merchant did billions of dollars in sales last year. Very few companies sell that much online. Office Depot did 2.6 billion in online sales in 2003 and claimed to be the third largest online retailer. I'm not sure how accurate that is, but I'm fairly confident that there are probably only a couple dozen merchants who do at least 2 billion a year in sales. ComScore reports that total non-travel online sales for 2004 was $52.9 billion.
5) You report that 10% of your sales occur on day 15. I highly doubt that. Usually, a very high percent is on day 1, then each consecutive day is less than the previous day. If your sales were steady from day 1 to day 15, that would be 10% + 10% + 10% ... + 10% = 150% of sales. I've seen many studies that say that 70-90% of sales occur on the initial session (day 1). To think that 10% would come back and buy out of the blue exactly two weeks later just doesn't make sense.
6) Your calculation of how many sales weren't tracked due to cookie problems is flawed. First, most sites average about 20% of their sales from affiliate programs. Assuming that 10% of sales are made 15-30 days after a click sounds way too high. I would estimate closer to 1%. So, you're talking about 1% of 20% of sales, or about $2 million for a company doing $1 billion in sales. Most companies average about 5% in commissions, so you're talking about $100,000 in commissions. Not $100 million.
7) You talk about 43% of your sales being missing, but you don't explain why they're missing. Have them break it down. What percent is fraudulent? What percent was reported to the network and just not reported? What percent was returned? What percent was past the cookie duration? What percent had invalid credit cards? What other reasons are there? You need to find out why.
8) You accuse networks of doing this regularly, yet there is one type of affiliate who could catch this every single time. Rebate sites. Their customers expect to see their rebate come through, and they complain if it doesn't. Many of these sites generate tens of thousands of orders per month. If even 10% of orders didn't track, it would be a customer service nightmare.
I think you found a valid problem with the cookies (although I wouldn't go so far as to call it fraud), and I think you may yet discover other problems with further analysis, but I think the majority of what you bring up is unfounded.
This fraud is well known by those "in the know" in the industry but the problem is you don't know until you do some investigative work. For many thousands of affiliates, this never crosses their minds. Their is a forum I frequent every now and then that deals with this very issue and the people over there have caught merchants and had them booted out and have had legal success over the matter. The networks are just as guilty because they turn a blind eye and have not set up adequate safeguards against the practice. They networks make more money on fees they charge the advertisers for being part of the network than they do on their cut from actual leads/sales reported and that's one of the reasons why you better believe they don't give a rat's you know what about the affiliates.
The best solution is to hit these merchants and the networks where it hurts and that's their pocketbooks. If they don't convert, then drop 'em. Better yet, let them know why you dropped them and tell them which one of their competitors is getting all of your traffic and sales now.
Adsense is a much better alternative to low and non converting merchants in just about any industry.
The original poster's solution is basically what I have started to do on one of my websites. It's called dropshipping actually.
In the UK we have seen considerable evidence of the larger affilate networks "skimming".
And I thought UK affiliate networks are the better ones as they are so strongly against parasitewares.
My conversion rate is also better with them.
I am an affiliate myself as well as an employee of a large merchant.
I have some inputs about how the sales are tracked. I don't know about other merchants but our company has our own trasaction reports and post them to the network regulary. The network compares our numbers to theirs but eventually the merchant's number matters. Unless there is a big discrepancy on those two numbers, the number from merchant becomes final. In the original poster's case, if the merchant is holding part of the transactions due to cookies or intentional activities, network company would try to match the numbers as Macro suggested. However, for any problems, the network will have a favorable decision for the merchants over the affiliates because of the total business size and credibility. If there is a problem, who do you think the network will believe? If one of the affiliate has a milllion dollar sales, that means the merchant will have tens of millions dollars business with the network. The network has a motivation to please the merchant than the affiliate.
I belive that if there is a tracking issue with a specific merchant, affiliates need to take it to the merchant. I think the merchant was very cooperative on the additional tracking for the affiliate. If they were to steal the money from affiliates, it wouldn't allow the merchant to test the additional tracking fot the affiliate from the first place.
Many merchants as well as affiliates have problems...everywhere. Until someone points out and cry out, they will not listen. that's what the original poster is doing, I think.
You have to speak out any problems. Many people in business just ignore little voices. If you want to fix a problem, bring it first. You will find a solution in one way or another.
You imply that there are 'holes' in my story as if I were up to something nefarious, but what is so wrong with sounding the call to affiliates to be wary? I can't fathom your response, but I'll certainly respond to it, in order:
1 - I have absolute proof that both did commit fraud. A certain amount of sales that I *can irrefutably prove* I generated, I can also prove I did not recieve commission for. That I cannot absolutely identify how much (percentage wise) of it the affiliate network stole and how much (percentage wise) the merchant stole doesn't change the fact that between the two a certain amount of sales were stolen from me. When the matter was brought to the merchant, they scrambled to put all blame on the affiliate network, claiming that all sales had been reported but that the affiliate network must be stealing. The affiliate network, though not as proactive in covering their own asses, claims the sales were never sent by the merchant. So each is pointing at the other. If you left 10 1 dollar bills on a table in a room, and two men went in at the same time, and when you followed them in the money was missing, does it really matter whether they split the ten dollars fifty-fifty between them or not? Even if one of the men only took one dollar and the other took nine, they were both complicit, and it doesn't change the fact that you can prove that between the two of them $10 was stolen from you.
If what you're saying is that it can't be proven that it was intentional fraud vs computer error/glitch... who cares? My money was not delivered to me, and they are liable by contract. It's not my duty to prove conspiracy, only theft. I do submit however that with the many man-hours we've spent in talks, the many lies that have been told to me, the *refusal* to even fix their cookie system (!) that this was not unintentional theft. But unintentional or not, this is theft.
2 - The precise answer is 'both'. We had generated over 1 million in sales when we first identified the problem and began working to resolve it. That was early Dec, we're over 2 million in sales now.
My question for you is: What difference does the amount make, unless you're raising some sort of class envy objection to me (which would be utterly ridiculous if you knew me - I come from a low-middle class family, not silver spoon in any way). I started out happy when I first broke $5 profit a day, and I haven't stopped working to build up my campaigns since then. And the amount shouldn't matter - the percentage of fraud should, because that applies to everyone. I would be just as outraged if I was doing $10 worth of sales/day and realized that the affiliate network wasn't reporting $3/day.
3 - Is there an objection here? You say most merchants post sales after they ship, so what? This merchant doesn't, never has. I'll concede you might be right about 'most merchants' (though that's not my subjective experience, most per sales I've promoted have posted within 2 days of the sale, but I admit that's subjective, and it's not a coincidence that as a ppc marketer who tracks as close to real time as possible that I tend to steer clear of merchants that have significant delays in reporting). Again, so what?
4 - And? This is one of the largest online merchants, I'd be very surprised if they didn't fall into the category of 'top dozen or so' that you describe. I haven't done huge research on them; I haven't looked at their earnings sheets, but there own affiliate managers claim proudly that they did over a billion in sales last year and while I don't believe everything they say, I'd be very surprised if that wasn't true. My point was that neither the merchant nor the affiliate network are some fly-by-night tiny little concern that cheats people and then heads out of town. This is a problem even among the very biggest merchants and affiliate networks.
I'm curious. What would your objection be if it turned out this company hadn't quite done a billion dollars in sales? Is it ok for the smaller merchants to cheat us affiliates?
5 - Actually, I'll explain this a little better, but first let me say I have no idea what studies you've seen where 79-90% of sales occur day one, or what markets those studies are based on, but our customers buying patterns don't hit that profile. While our biggest numbers of sales come from days 1-3 (nowhere near 70% on any given, maybe 50% between the three), we find that those few who come back again and again are *more likely to buy* than those who chance on the site on day 1, who are much more likely to be 'just looking'. By day 15 our conversion rate is very good, it's just the number of day 15 visitors that has decreased. At the time we brought the complaint to the merchant about only having a 15 day cookie when promised a 30, our percentage of sales on that last day was 9.7something% - I was rounding up to say 'almost 10%' but not exagerrating. Now that the full cookie period has been implemented, day 15 sales account for a smaller percentage of our total sales than 10%, because days 15 - 30 are now adding to the pile.
Yes, people do come back long after the first visit to make purchases, for a variety of reasons, but not always 'out of the blue'. There are those who were looking at an expensive item, and had to come back and window shop several times before buying (makes perfect sense... how many people buy a car, for example, at the first car dealership they stop at, never even seeing the competition - when you deal in high priced items, you've got to expect they aren't going to buy immediately, they're still comparison shopping). There are those who made a purchase on day 1, said 'man that was a great site, I need some thingamabobs to go with my new widget' and come back to purchase again because their first experience was so good. There are those who came through my ad, decided not to buy, found the site again (not through my link) looking for something else, still came through within my window, and are still credited to me. There are in fact a lot of reasons that people come back 'out of the blue' to buy after two weeks.
But again, what does it matter? Suppose no-one came back and bought anything after day 3. That doesn't change the fact that the merchant has promised a 30 day cookie and is delivering only a 15 day cookie. How is that not fraud, and how am I out of line for objecting to it?
6 - My calculation of how much in sales was lost due to the cookie problem is a quick and dirty guess. I will tell you that now that we have the data from day 15 - 30 that 10% is low; it appears closer to 13%. You make a good point about the percentage of sales generated for a given site by affiliates, though I'd appreciate you citing a source to quote 20% as a general number. I have no idea what percentage of sales this company generates from its affiliates, I only know they have a lot of affiliates. Alright, I'll work those numbers. 20% of 1 billion is 200 million in sales. 10% of 200 million is 20 million. That's still 20 million in unreported sales!
Again, I'm baffled. What difference does the amount make? Are merchants/affiliate networks somehow justified in lying to affiliates about the cookie length, not abiding the contracts of their own affiliate agreement, and stealing commissions from affiliates?
7 - We've found that 3% of sales turned out to be either returns or invalid credit cards. That's what has actually proved to be the case. Say it's a fluke and low ball, say the actual fraud/return rate is twice that, there's still a hell of a lot of missing sales. Say that the merchant is holding back 20% of sales 'just in case' - these sales should eventually be reported after a month, or two months, or three. They're still missing, and the merchant is claiming that they've forwarded them on to the affiliate network to be reported. At this point it becomes a question of who's lying. When I said 43% of sales were being stolen from us, that included our estimates of how much was lost from half the cookie being missing. Now that the cookie is fully in place, we are gathering data to prove statistical variance and see how close our estimate was - looks low so far, but the cookie's only been fully operational since shortly before christmas. Not counting missing cookie time and excluding known fraud and returns, right around 30% of our sales are missing. The merchant isn't claiming they're returns or fraudulent. The merchant is stating that they're our sales, and they've been forwarded onto the affiliate network. It's not a question of whether the sales are being stolen, it's a question of who's lying. No honor among thieves I guess, because each is blaming the other. I personally suspect the affiliate network of being the guiltier party, but one thing I know - as the tracking agency the affiliate network bears full responsibility. It may be impossible for me to ever discover exactly what percentage of sales was stolen by which party, but I do know and can prove how much was stolen.
8 - I'm not familiar with rebate sites. Please explain why a merchant or affiliate network defrauding the affiliate would mean that the customer wouldn't see a rebate from the merchant, as I don't understand how the affiliate plays into it. Again, I don't have any idea how rebate affiliates work, so I only claim ignorance here.
One thing I should clear up about the merchant giving us backup tracking - I don't believe for a second they would do it again, or give any other affiliates this option. I like dealing with the merchant *much* more than the affiliate network (by cosmic coincidence, even though I've promoted products from companies headquartered all over the country, I live within driving distance of where this company is headquartered, and I've been invited to lunch with the affiliate managers on several occassions; they're nice guys), and I really want them to turn out to be as clean on this thing as possible, but at this point it's almost undeniable that they're at least complicit in some ways.
The thing about the fraud we've caught is how stupidly it's been done. This may be an indication that on the merchant's side it's unintentional (and I'd really like to think that), but even if it is intentional, their business is so huge and the fraud is so poorly hidden that even if they were intentionally defrauding their affiliates I don't think they ever thought anyone would bother to check the numbers and figure it out. They insisted that we were flat out wrong about the cookie problem, and when we brought proof they were so surprised that we found such a simple way to prove it they could have been knocked over with a feather. Since I really like them, and because the affiliate network is the tracking agency, I'm hoping that the merchant really didn't know the full extent of the cookie problem and most of it was the affiliate network's fault. But if the cookie problem turns out to be intentional, I can't see anyone other than the merchant having a motivation for fighting us so hard in fixing it.
I had instances of 1 in 6 sales reported,the crap you get back when querying it is behind belief, still,the bottom line is, until something better comes along you either take it or drop it and move on.
[edited by: valley at 6:27 am (utc) on Jan. 28, 2005]
The smaller affiliate clearinghouses almost always have much higher conversion rates and much better performance levels. While I think any affiliate network is suspect, I do think the smaller ones are less guilty of fraud.
I agree 100%. I have switched to smaller networks dozens of times and almost without fail, the conversion rate has gone up immediately and sometimes dramatically.
Draw your own conclusions. Bottom line: It is true. Try it out yourself.
My purpose in posting here wasn't to generally #*$! and moan, but to offer and solicit opinions on possible solutions. It isn't written in the stars that we're doomed to be cheated as affiliates, unless we take no action. I ask myself, what can be done to curtail this problem? In my specific case, with this particular merchant, I think we're on the brink of finally getting it licked, but on a larger scale, can something be done to change the marketplace? I think the answer is yes, but only if we as affiliates change our general attitudes. We are not powerless - we drive their sales. Without affiliates, affiliate programs don't work. If masses of affiliates started demanding some sort of oversight on affiliate networks, there would be some concessions.
I understand apathy on this. Those of us in the know might have a tendency to shrug and say 'well, it's the way of the world; it's too much trouble to try to fight it, and it's too big a problem for any one person'. Hell, from my own standpoint, with my personal problem solved (and we were heavily profitable even with the fraud) the temptation is to think 'well, I fought for it and I got my problem solved; to hell with any other affiliates or the marketplace in general'. And not bother any further. But I believe that this is an unacceptable standard and things must change. I don't expect overnight miracles, but mountains can be moved one teaspoon at a time. Someone has to do something, and it might as well be right now. So even having this conversation is a start, building awareness that the problem exists.
The only choices can't be to either shut up and take it or find another merchant/affiliate network that'll treat you the same way. There has to be real solutions to this problem, and I believe there are.
If we do nothing, than we deserve to have our commissions stolen. All it takes for tyrants to flourish is for good men to do nothing... or something like that.
(I think I've used too many corny 'common wisdoms' in this post. :)
What you describe with merchants not posting a certain percent of sales to account for fraud is ridiculous. I work with many different merchants, and have never seen one do that. They'll reverse (or not post) fraudulent transactions, but I've never seen any merchant that indiscriminately holds back random orders.
It's easy enough to check to see how much sales a public company does, and if they're as large as you say they probably are public. You say that they do billions a year in sales, yet you say you haven't checked. What other "facts" haven't you checked? Credibility.
Your distribution of sales based on the initial click date is still quite suspect. You say 50% on days 1-3, 10% on day 15, and 13% spread between days 16-30. That's 73%, which leaves 27% for days 4-14, or about 2.5% per day. Why would your sale spike up 4x on day 15? This strikes at your credibility once again.
Rebate sites are sites like Ebates that give a rebate back to the customer when the customer shops through Ebates' affiliate links. You can imagine the customer service issues if 30% of orders weren't tracked. I don't hear those types of sites screaming.
Thanks for clarifying that the majority of the missing sales are missing because the merchant reported it to the network but the network didn't post it. You should follow up more on this. Did the merchant pay the network for those sales? What is the network telling the merchant about those sales?
Networks charge merchants either a percent of commissionable sales (typically 2-3% of sales) or a percent of commissions paid (typically 20-30% of commissions). When the network bills the merchant, they're given a list of commissions earned by each affiliate and the associated network fee. For instance, for you it might say sales: $1,000,000 / commissions: $75,000 / network fee: $15,000. Does what the network show you match what it shows the merchant? If so, the network isn't skimming commissions from you. In fact, it's losing out on it's own fees by not reporting all the sales.
It sounds to me like your affiliate manager doesn't really know what's going on. Based on their initial responses to the both the cookie problem and the discrepancies, it looks like they're not digging deep enough. You're going to have to force them to dig deeper if you want to get to the bottom of things.
Networks charge merchants either a percent of commissionable sales (typically 2-3% of sales) or a percent of commissions paid (typically 20-30% of commissions). When the network bills the merchant, they're given a list of commissions earned by each affiliate and the associated network fee. For instance, for you it might say sales: $1,000,000 / commissions: $75,000 / network fee: $15,000. Does what the network show you match what it shows the merchant? If so, the network isn't skimming commissions from you. In fact, it's losing out on it's own fees by not reporting all the sales.
That's not true. The networks charge fees for just being part of the network. That's the most profitable part of their business model. Processing and reporting and customer service issues dealing with reporting of the sales are the least profitable part. That's why they focus on attracting as many merchants as possible rather than on making as many sales as possible which is why they don't really care about the affiliates.
Have you ever wondered why some merchants with extremely low EPC stay with the networks so long? It's because they're there for the free impressions and they know there's always a sucker publisher who'll come along and throw their nonworking banners up and just forget about it or be happy to send them tons of impressions and clicks because they "are making enough to cover their bandwidth costs".
That's not true. The networks charge fees for just being part of the network. That's the most profitable part of their business model. Processing and reporting and customer service issues dealing with reporting of the sales are the least profitable part. That's why they focus on attracting as many merchants as possible rather than on making as many sales as possible which is why they don't really care about the affiliates.
I challenge that. I know that one of the aff network with which our company involved get a revenue share. I heard that the others also get a set up fee and monthly threshold for fees, too.
So, the more revenue generated by affs, the more the network makes.
When customers came to my website, clicked through to the "more info" page and filled out my form, I was converting about 13%. I signed up with one of the larger Aff nets and now use their link to land on a merchants info form. Now my conversion rate is 7%.
Of course, taking into consideration that some people may have previously visited this merchant before or may be outside the coverage area of this merchant, I cant really say if the drop in conversions is normal or not.
I am concerned though because of instances where my traffic was very high for 6 or 7 hours without a single conversion being reported. Its almost like the system goes down or something.
It doesnt really matter because Im going to go back to collecting the info on my site and then work with the merchant directly. Ill let you know what happens to my conversion rate.
I wish you good luck in your fight against fraud..
-qwik
40% of my clicks (which resulted in sales) were from day 1
42% of my clicks were from days 2 - 15
18% of my clicks were from day 16 and beyond
This is for a mid-range priced product. I'm sure the click conversion times will vary depending on what your selling.
