Affiliates Networks Battle for Your Business
- 24 Comments
- By Zac Johnson on November 28th, 2008
It’s no surprise that business within the affiliate networks industry is cut throat and if you don’t have all areas covered, you could be wiped out over night. It’s a continuing battle for networks to offer the best payouts, while keeping their margins and beating the competition. Today we are going to take a look at how an extremely popular weight loss offer is making affiliates several thousands of dollars daily, and smaller margins for the networks themselves.
The offer we will be talking about it, “Easy Weight Loss Tea”. If you haven’t run or seen this offer in the past several months, then you have been missing out big time and must not pay attention to what is going on in the industry. For those of you that don’t know.. the Easy Weight Loss Tea offer is one of the most advertised weight loss programs out there, and only costs a small $4.95 shipping fee from the consumer for the affiliate to then earn a high $36+ commission on each lead.
Since the payout on the offer is so high, it leaves a lot of potential for how it can be promoted, while still posting a profit. We will leave talking about promotion of Easy Weight Loss Tea, Acai and other weight loss offers for another time. Instead, let’s focus on the different networks hosting this offer and what they are paying out.
Convert2Media $40.00
Ads4Dough $39.00
Neverblue $38.00
Advaliant $38.00
ClickBooth $38.00
CX Digital $36.00
Motive Interactive $33.75
As you can see, there is only a $4 difference between the low and high public rates offered by these different networks. What I’m hearing, is that most networks are getting around $42-$44 direct on this offer… meaning if they are paying out $38 on the lead, they would make a $6 profit (if they are getting $44). While these are only the public rates, and can probably get an increase with volume… it’s still a big effect on your overall campaign if you are sending 100 leads (at public rate) to Convert2Media vs. CX Digital… roughly a $400 difference.
When I was at AdTech NY a couple weeks ago, I met up with Ruck from Convert2Media… then a few days later, I got an email from his network saying they had added “Easy Weight Loss Tea” and paying $40 a lead. This was the highest public rate I had seen on the offer yet. I thought it was really cool that they would cut their margins so tightly, so they could accommodate to their affiliates and offer more than any other network. The same applies with Ads4Dough at the $39 rate.
Everyone knows NeverBlue, ClickBooth and CX Digital are huge established companies… but the smaller networks are realizing the potential in offering affiliates higher commissions and more personal services to make them succeed. While it may only seem like a $1 or $2 difference in payout… look at it in the huge scheme of a network. If network A is paying out $40 per lead and getting $42, and network B is paying out $36 and getting the same $42 for every lead pushed through their network… that is a 5% profit margin for network A… and a 15% profit margin for B. Network A is risking a lot more and profiting less by offering their affiliates the higher payout than network B. What I’m getting at is… these networks are pushing thousands of leads day and if they pay out $500,000 a month in commissions to affiliates, they may only be making $25,000 profit.
How do you feel when you see networks promoting the same exact offers at higher and lower payouts? Also, are you taking to the time to signup for these smaller networks, over the bigger names? You may be missing out!
- Posted in Affiliate Marketing, Make Money
"With great power comes great responsibility".... my Uncle Ben told me that. Haha, just kidding! I'm Zac Johnson and I've been making money online for over 10 years now. In short, I started making money online while I was in high school... but my passion for marketing and making money goes back way earlier than that. I created ZacJohnson.com to help motivate you to start making money online, and live the life the you always dreamed of.
I think you just nailed a big shift that is coming. The smaller guys with less overhead could potentiall dominate the larger networks due to higher payouts.
I find smaller networks are being more honest and open about what they are getting paid, they’re answering emails & calls on the weekend, they’re offering drastically higher payouts and most of them are affiliates so they are knowledgeable on the subject, unlike the clueless AMs at the big dogs.
The only problem that exists for smaller networks is their ability to cover large weekly wires. One of the networks you listed has the high payouts due to low overhead and small size, but due to that small size they cannot cover six-figure weekly wires which is what I need. If a smaller network can pay those large weekly wires, I am going with them. (Ads4Dough for example)
For the big networks it’s wake up call time. The days of CX Digital being able to offer a $36 payout on an offer they’re getting $44 on are over. It just doesn’t make sense for the affiliate anymore.
ReplyDon’t forget that even if they have a higher payout they might scrub enough leads to make up for the lower margin. This happens every day.
ReplyBeing pretty new to affiliate marketing I feel the ones that have proven they can track and reward purchases in the past are the ones I want to work with next. Also if an affiliate starts and then cancels campaigns quickly that makes it very difficult to build sites and make money on campaigns. PepperJam is my favorite at this time.
Replywho do you use for your large volume zac?
ReplyI think to choice is obvious - why NOT go for the higher paying network, even if theyre smaller, as long as they deliver the goods (money) then I will be going where the money is, unless the larger established network offers a good reason for me to give them an extra 4 dollars of the commission, I’m sticking with the little guy
Reply@affiliateSecret:
ReplyFor sure - I just hope that it doesn’t turn into a case of everyones undercutting everyone to get the business, and then the service they offer starts to suffer because they aren’t making enough money to cover their costs
@Vlad:
I came here to say this.
Always split test your offers people. Always.
ReplyStreet payout is meaningless. But embarassing for cx nonetheless
ReplyZac
Thanks for the Advaliant mention.
Our payouts on some of our exclusives in this category are actually much higher. We have been creating campaigns that pay residuals to our affiliate partners. This can ad significant income to our affiliate partners based on the quality of the consumers.
ReplyPayouts in general are meaningless. Test all 6 and see where you get the highest EPC. If you are picking offers based on payout alone, you are making a huge mistake. After your test you may find that the one with the lowest payout gets the highest EPC, you never know.
ReplyFor me though, service is more important and having educated affiliate managers.Nothing worse then calling your AM and they have no clue about what your asking them when you ask them a tracking question. Affiliate networks need to realize that there are more and more people jumping on the affiliate marketing band wagon and if they new the in’s and outs on how to actually make money money doing what we do they could make a lot more money simply by helping to educate new affiliates.
Like for example, why not have tutorial videos on how there set up works.
Affiliate networks should also have basic tutorials on how to make money promoting offers and different ways to do it. It would really increase there bottom lines. I would be willing to be that out of 100 affiliate that’s join a network, maybe 10 know what there doing, and out of that 10 maybe one is uber good at it.
Lets say Zac that NeverBlue Ads hires you to build a teaching program of some sort for them covering the different ways to build affiliate marketing campaigns. They can turn there numbers around alot faster and increase there payouts to affiliates simple because there volume increased and attract more affiliate to there network.
What do you think about that?
ReplyAnother great article Zach!
Reply@Collin - Affiliate Marketing:
ReplyColin, definitely. I’m seeing some of the smaller networks provide a lot more information and even their own blogs to help affiliates grow in size. It’s a shame more networks aren’t doing this. It would only help everyone out.
@Zac Johnson:
Maybe one day someone will read this article of yours and these comments and act on this. I would love to see more people succeed in affiliate marketing and that information should come from the networks (and blogs like yours
ReplyI can’t wait to have your post about how to promote these weight loss offers, Zac.
When can I expect it?
Thanks
Muhammad Fayyaz
ReplyZac & Collin
That is a very good point EDU and information for affiliate partnerships with networks is very important. As a matter of fact from all the info we gathered for the “Performance Marketing Alliance” (launching in Jan) EDU on marketing and tools for being better marketers were the top across the board from affiliates thru merchants..
We have started having guests post on the Advaliant blog who are specialists in marketing to help teach our affiliate partners best practices and techniques here is a sample post http://blog.Advaliant.com/2008/09/how-to-optimize-your-landing-page/
We welcome anyone who would like to contribute thought leadership on the blog to our affiliate marketing community. Please feel free to email me if you would like to contribute or see a topic covered.
Peter Bordes
CEO
MediaTrust/Advaliant
pbordesATmediatrustDOTcom
ps… sorry for the long comment rant! But you have touched on a very important topic.
Reply@Zac Johnson:
ReplyHey Zac, How do you find out about good affiliate offers that are circulating?
@peter bordes:
ReplyHey Peter, I signed up for your network to check you guys out. Look forward to possibly working with you guys.
Agree with vlad and Ad Hustler.
The scrubbing problem is a lot bigger concern than a few bucks payout IMO. You can lose entire commissions which equates to nothing more than theft, no matter how you spin it.
But working with smaller networks is still the best way to go because of the aforementioned reasons. Better service and support from folks are or were former affiliates. As a semi-new affiliate myself the value of learning from and working with people who are good at their jobs is not lost on me.
ReplyI agree with the term ‘uber affiliate’
ReplyBTW; Your top commentator list is not working?
ReplyCollen
ReplyGreat to have you as a partner! btw there are many new things in the pipeline from offers to new technology that has been developed over the last year.
Yes.. it is a bit revolutionary. We see the margins continuing to be squeezed further and further perhaps to the point of shaking out some players. The network business is becoming quickly commoditized. We also see more vertical specialization among the networks - for example, ours does only dating.
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