If you didn’t read Part I read it. The following is a continuation on that thought:
Affiliates are far from the ONLY problem in affiliate marketing. Advertisers are a big problem which perpetuates a lot of the selfishness on the affiliate side. Let’s go through a quick list of common affiliate complaints about advertisers:
- Advertiser doesn’t like my quality so they are kicking me off the offer
- Advertiser is refusing to pay for the leads
- Advertiser is shaving leads
- Advertisers pixel isn’t firing
- Advertiser changed the landing page without telling me and caused my conversions to drop
- Advertiser stole my landing page
- Advertiser stole my ads
- etc etc
Affiliates don’t feel like advertisers are on their side hence they take an adversarial position with the advertiser. This adversarial position causes affiliates to take on the mindset of the salesperson working the kiosk in my part I example. Advertisers rarely want to work with affiliates to make an offer work for both parties. They are usually more concerned with their own bottom line then letting an affiliate work toward a higher quality lead so that everyone makes money. Instead the advertiser will just shave, cut payouts and refuse to pay until they make it profitable for themselves. There needs to be realistic expectations on both sides of the equation aka a partnership and synergistic relationship. Unfortunately I don’t see this happening anytime soon. For the time being I think that greed on both sides will continue an endless circle of poor quality affiliates and poor quality advertisers.
Another thing has been heavy on my mind lately: payouts.
I think that payouts/commissions are a huge issue facing this industry (particularly lead gen). Let’s take the example of a new car lead. At a quick glance, the highest street payout I can find is $8 for a new car lead. I guess that on first thought that doesn’t sound too bad since no credit card is required but let’s look at some inside info:
- All new car leads are sold to auto dealers
- Auto dealers pay on average $20-$25 per lead that comes from a lead provider
- The lead provider sells the same lead to on average a minimum of 4 auto dealers – At $25 that makes 1 valid lead worth $100 or more.
- The affiliate that generated that lead was paid $6-$8
- The lead providers average CPA when marketing themselves through paid advertising equals more then $6-$8
So what’s happening here? To me it seems that lead providers are trying to pick up leads for way cheaper then they can possibly acquire them themselves by using affiliates to do the dirty work. Don’t get me wrong. The advertiser deserves to make a profit and if the affiliate can make a profit too it’s good for everyone. The problem becomes that when the affiliate determines that the CPC for car quote related keywords on search engines are $2+ and media on automotive related sites is expensive, they come up with shadier plans which produce low quality leads. You can’t blame them. They are in it to make a buck and if they can’t make it with high quality traffic, they’ll turn to low quality traffic, incentivizing or misrepresenting the offer.
The bottom line is that if you want high quality traffic you need to provide a high payout. You need to give affiliates the wiggle room to make something work using legitimate high quality advertising. The less you pay for a lead, the lower quality your going to get. If an advertiser is reading this I guarantee I know what their argument is. “Well we need a lower payout to account for all the crap leads we get that we can’t actually sell.” It’s a great point and we end up in another vicious cycle of selfishness on both sides. The only possible way I can see of breaking the cycle is if an advertiser was willing to pony up a much better payout with higher quality controls such as you get x amount of leads and if you can prove quality we can work out a payout that works for both parties. A probationary period if you will. This does currently happen but not as often as it should and not with an increased payout to start in order to provide quality leads. This type of setup requires a lot more hand-holding and communication which doesn’t currently exist in most affiliate relationships.