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The dangers of relying on a single merchant

     
12:53 pm on Aug 14, 2002 (gmt 0)

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It's been pointed out in other threads that it's a good idea work with multiple merchants / programs to protect your site against a particular merchant withdrawing their program, going bust, or whatever. I'd just like to give an example of why this is such a good idea.

In July, the best-producing merchant on one of my sites was enjoying a clickthrough rate of 38.6%, and with a click-to-buy ratio of just under 4.5% I was enjoying an EPM of $174 :)

I was happy, and I assume the merchant was happy with the sales I was sending their way.

So far this month, clickthroughs have gone up slightly to 42%, yet the click-to-buy ratio is precisely 0%

The reason? The merchant removed the deep linking facility, so instead of surfers being sent straight to the order page, they are now sent to the site's entry page. Additionally, potential customers now have to register on the target site before they can view the products available.

Luckily, I have other revenue streams on that site, so if I can't persuade the merchant to mend their ways I can keep the site running while I look for a replacement, but I think this illustrates quite neatly that an affiliate site's income is ultimately at the mercy of your merchants... so hedge your bets!

1:00 pm on Aug 14, 2002 (gmt 0)

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Amen!
10:39 pm on Aug 14, 2002 (gmt 0)

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There is another danger when you are putting too many eggs into one basket. And that is that the affiliate program can use this to their advantage, and reduce your commission rate, or delay your payments, knowing that you have no alternative program to switch over to.
10:41 pm on Aug 14, 2002 (gmt 0)

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Wow, numbers speak for themselves on that one. Hopefully you can use them to leverage getting the deep linking back.

That is a great example of the importance of deep linking in some circumstances.

10:41 pm on Aug 14, 2002 (gmt 0)

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oy... your merchant is a moron :)
10:52 pm on Aug 14, 2002 (gmt 0)

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>> eggs in one basket

amen to that. Up to now I've had all my eggs in one vitual basket and Google nailed me to the wall a couple updates ago and all of a sudden I'm scrambling to build new sites as well as find new niches to get into so I don't wind up with more outgo than income on my bank account.

11:18 pm on Aug 14, 2002 (gmt 0)

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That's good food for thought. I seem to remember some similar advice recently suggesting that it's a good idea to diversify - this makes it even more convincing.

What I wonder about though, is that there are a lot of sites out there doing well with product-specific domain names. Reading this, I wonder if it might not be safer, for the sake of not risking a domain name possibly going to waste, to use a generic domain name. Then if the specific product doesn't pan out for some reason the site can just be revamped for a suitable alternative.

12:33 am on Aug 15, 2002 (gmt 0)

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At the prices domains go for these days, why worry about it? If the product doesn't pan out, you're only out $8.95 or less for a year's registration...

That said, I wouldn't be registering any merchant/product specific domains at the 10 year discount rate. ;)

12:49 am on Aug 15, 2002 (gmt 0)

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Hehe, the way I figure it, the 10 year discount rate actually costs more. Imagine if we had all registered for the 10 yr discount rate 10 years ago with internic. $350 plunk.
1:14 am on Aug 15, 2002 (gmt 0)

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>At the prices domains go for these days, why worry about it?

.net
.org
.info
.us

Buy the hyphenated as well as the type-in

......and diversify

12:30 pm on Aug 15, 2002 (gmt 0)

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Oilman - thank you for a sobering message. Prudence dictates that if you're in this game, not only should you diversify, but you should build up a reserve to carry you through if the worst does happen.
4:56 pm on Aug 15, 2002 (gmt 0)

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>> reserve to carry you through if the worst does happen

absolutely. I keep a seperate bank account with 6 months worth of bare living expenses (mortgage, food, internet connection etc). I've not had to dip into yet but it's sure nice knowing it's there and one or two bad months won't kill me.

7:41 pm on Aug 15, 2002 (gmt 0)

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Thanks to diversification among affiliate merchants, products, search engines and websites, my revenue swings these days are down to about 50% quarter to quarter. There were times when I went from riches to rags overnight when a key merchant went belly up or when I got the big boot from a major SE.

Diversifying is painful and it creates a need for more maintenance but I see it necessary for long term survival. Sometimes I have to pass up putting to much effort into a high-dollar program to build diversification into my infrastructure.

5:34 pm on Aug 17, 2002 (gmt 0)

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The way I see it there are two sides to this story.

First up, yes I agree with the other threads, you don't want to be reliant on a single merchant - this can get ugly. Its not just the investment in terms of buying a domain and hosting, but if you invested some time in building a quality site and they are the only merchant, if they pull the plug, thats gonna hurt.

Now for the other side, just because you want to have more than one merchant about for a give product/market, that doesnt mean you should push them all at the same time.

Why, well, sometimes the consumer can find choices confusing, resulting in no final sale, take the choice away and sometimes your conversions can rise. Another point, if the merchants actively manage their programs they should have a good idea which affiliates work well. As the affiliate webmaster, if you only have 1 or 2 merchants that you prmote you can squeeze your commissions higher by restricting your supply of ad space, eg another merchant may be willing to trump those you currently push. Or those that you currently push may offer you better rates to keep other merchants out. You might be surprised how many merchants are willing to double commission rates for exclusivity! If theres only one merchant in the market they dont have to worry about exclusivity!

Cheers

 

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