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  1. #1
    ABW Ambassador isellstuff's Avatar
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    1% Commission Rates = No Incentive
    Yesterday I saw something that really upset me. I sold $1,000 dollars worth of stuff and made $10 bucks.

    So sure, you could say, "geeze ISellStuff, you made $10 bucks, why are you complaining?".

    But here's the point... My first inclination was to figure out how to drop that merchant. When I "run the numbers", I find that I should NEVER allocate ad space to a merchant that pays 1%. These merchants are basically "leaching" off of higher paying affiliate programs. I could never stay in business based on a 1% commission rate. So higher commission rates are subsidizing the existence of these 1% programs.

    My advice to affiliates, if you see a 1% program, run away. You can find better commission rates elsewhere.

    My advice to merchants, don't do it, you will get dropped.


  2. #2
    ABW Ambassador superCool's Avatar
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    tru dat

  3. #3
    ...and a Pirate's heart. Convergence's Avatar
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    Yep.

    Under five percent doesn't flip my trigger, either...
    Salty kisses, Sandy toes, and a Pirate's heart...

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  5. #4
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    I had a low payer that converted well and was able to negotiate a higher commission. I'm still working with them.
    If it converts and they're willing to work with you... IDK, just my 2¢.

  6. #5
    ...and a Pirate's heart. Convergence's Avatar
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    Quote Originally Posted by calebtheredwood View Post
    I had a low payer that converted well and was able to negotiate a higher commission. I'm still working with them.
    If it converts and they're willing to work with you... IDK, just my 2¢.
    Ah, yes - IF they work with you. Then it's not 1% anymore...
    Salty kisses, Sandy toes, and a Pirate's heart...

  7. #6
    ABW Ambassador isellstuff's Avatar
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    It's tough... I mean, if you have a high volume website how much are you willing to "lose" via lost opportunity prior to negotiating for the higher commission? Sometimes for an established niche I will negotiate a temporary increase when I join so that I can prove that I can provide enough volume to warrant a permanent bump. What a pain and frankly I don't like where this sometimes leads. Affiliate managers try to up my performance by threatening my higher rate.

    If it is a new niche, there is no guarantee that I will have sufficient volume in the first 1, 2 years to be able to negotiate a higher rate. Now multiply this problem by 10-20 merchants and you are talking a bit of money lost. So I dump the low commission merchants and replace them with higher paying ones.

    Let's take a concrete example. Newegg... I e-mailed them and said, "Hey your 1% commission rates aren't acceptable, I'm going to drop you". No response... I just didn't have enough sales volume to be able to negotiate. I've notice new e-mails from them lately along the lines of "we are raising our commissions to make our program more attractive". But you know what? The damage has been done and they haven't been on my site for quite some time. (and I should point out my traffic is growing, and growing, and growing)

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  9. #7
    OPM and Moderator Chuck Hamrick's Avatar
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    Let's take a concrete example. Newegg... I e-mailed them and said, "Hey your 1% commission rates aren't acceptable, I'm going to drop you". No response... I just didn't have enough sales volume to be able to negotiate. I've notice new e-mails from them lately along the lines of "we are raising our commissions to make our program more attractive". But you know what? The damage has been done and they haven't been on my site for quite some time. (and I should point out my traffic is growing, and growing, and growing)
    Good to hear that stated. If you play with an affiliate commission you burn a bridge.

  10. #8
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    Quote Originally Posted by isellstuff View Post
    Yesterday I saw something that really upset me. I sold $1,000 dollars worth of stuff and made $10 bucks.

    So sure, you could say, "geeze ISellStuff, you made $10 bucks, why are you complaining?".

    But here's the point... My first inclination was to figure out how to drop that merchant. When I "run the numbers", I find that I should NEVER allocate ad space to a merchant that pays 1%. These merchants are basically "leaching" off of higher paying affiliate programs. I could never stay in business based on a 1% commission rate. So higher commission rates are subsidizing the existence of these 1% programs.

    My advice to affiliates, if you see a 1% program, run away. You can find better commission rates elsewhere.

    My advice to merchants, don't do it, you will get dropped.
    Just curious, what type of site do you have? i.e. coupon, deal, loyalty, blog

  11. #9
    OPM/Moderator Hectic GHC's Avatar
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    Quote Originally Posted by iLab View Post
    Just curious, what type of site do you have? i.e. coupon, deal, loyalty, blog
    Better luck asking the lady at the grocery counter in front of you how old she is.
    Greg Hoffman
    Affiliate Marketing Advocate of the Year 2016; Best OPM/Agency - 2014; Best OPM/Agency, Five Years in a Row - ABestWeb.
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  13. #10
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    Newegg... the program is managed very poorly in my eyes. One advertiser that clearly does not respect their affiliates and will do a lot to kill affiliate commissions from "mysterious" cancelled orders to crippling commissions. TRU... they are another program that is poorly set up but not sure where the downfall occurs. I think it is at the corporate level, not program level. One of the funniest things I ever heard was TRU had a "budget" on affiliate marketing. I scratched my head on hearing that one. But I digress...

    It is well known that the whole affiliate marketing segment is lopsided. It only ever favors the advertiser. They have complete control. This is why I full-heartedly respect the advertisers that respect me.

    I believe a lot of affiliate managers miss one important facet of affiliate marketing; most affiliates start small. The successful small affiliates are the ones that have the greatest potential. Disrespecting these successful affiliates when they are small, even if they are not that successful with your particular affiliate program, can have very negative repercussions in the future.

    If an advertiser is not offering a fair/competitive commission, regardless if I send them 5 visitors or 500,000 visitors a month, I will not market them. Also, I am of the camp that believes I should never have to negotiate commission rates. All publishers should be commissioned the same. Offer bonuses on increased sales volume or order volumes to reward those with large traffic volumes, do not offer increased commissions. Play your commission games with someone else. If you play me and there comes a time when I've created a site that has millions of visitors a month, do not come knocking on my inbox or ringing my digits asking to be added to my site. We are business partners and by playing your games you have violated the integrity of our business relationship.

    I stick by and continue to market advertisers that treat me with respect regardless if my traffic is small or large. I have even gone as far as marketing advertisers for free (Nexus issues) because they have shown me respect. Treating me fairly is all I ever want and expect. Disrespect me and I will try with all my power to push my traffic everywhere but to you. (I have even gone as far as working with a respecting advertiser in creating new sales verticals, so they can cut into a disrespecting advertisers sales.)


  14. #11
    OPM/Moderator Hectic GHC's Avatar
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    Quote Originally Posted by jtoddv View Post
    Also, I am of the camp that believes I should never have to negotiate commission rates. All publishers should be commissioned the same. Offer bonuses on increased sales volume or order volumes to reward those with large traffic volumes, do not offer increased commissions. Play your commission games with someone else. If you play me and there comes a time when I've created a site that has millions of visitors a month, do not come knocking on my inbox or ringing my digits asking to be added to my site. We are business partners and by playing your games you have violated the integrity of our business relationship.
    You have to negotiate in my programs by showing effort. Content affiliates earn the most. Coupon affiliates earn the least. If you step up your basic efforts, you get more.
    Greg Hoffman
    Affiliate Marketing Advocate of the Year 2016; Best OPM/Agency - 2014; Best OPM/Agency, Five Years in a Row - ABestWeb.
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  15. #12
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    akagorilla,
    Your methodology can work, but not when you are offering up 1% commission or less from the onset. Why should I even put effort into marketing an advertiser where my commissions are so pitiful, then hope later I can negotiate a higher commission?

    As isellstuff said 1% = no incentive (especially true when the market average is i.e. 3% or more). So as an affiliate manager if you are offering poor commissions from the onset, I can assure you, you are not wisely attempting to draw in new, potentially valuable, affiliates who will work hard to make big money for both parties.

    Poor initial commissions = very limited affiliate audience with NO incentive to work hard from the onset.
    Market average initial commissions = close to full affiliate audience attention with some incentive to work hard. Then offer for bonuses to your affiliates who are driving the traffic you want more of. And never drop your commissions unless you have a damn good reason.

  16. #13
    OPM/Moderator Hectic GHC's Avatar
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    Quote Originally Posted by jtoddv View Post
    akagorilla,
    Your methodology can work, but not when you are offering up 1% commission or less from the onset. Why should I even put effort into marketing an advertiser where my commissions are so pitiful, then hope later I can negotiate a higher commission?
    I don't offer 1% on any programs. My content affiliates earn up to 50% in some programs. I only work with a handful of coupon sites and they have accepted their lower commissions through face to face meetings. Content affiliates get default until they prove otherwise.
    Greg Hoffman
    Affiliate Marketing Advocate of the Year 2016; Best OPM/Agency - 2014; Best OPM/Agency, Five Years in a Row - ABestWeb.
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  17. #14
    ABW Ambassador isellstuff's Avatar
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    Hmmm, if I thought 1% was a horrible motivator, try .5%, courtesy of Office Depot. Nothing like making 50 cents on $100 purchase to make me look for office supply alternatives!

    I already yanked Staples from my site though because their datafeed was so out of date (and a mess).

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  19. #15
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    Yes, 0.5% provides absolutely no incentive.

    Another item that is still shocking to me at this point is the lack of mobile sales tracking. There are many times I have thought of just stopping the promotion of advertisers that do not track mobile sales. This past holiday season I noticed at least 30% mobile sales with those advertisers that do track mobile. Losing 30% of sales from advertisers who do not track mobile sales might be worse than a poor commission in the end depending on what items and who you are promoting.

  20. #16
    ABW Ambassador Bob Lawrence's Avatar
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    It could be worse than that, 2 metrics that I'm watching is showing roughly 60% are mobile on some of our sites.
    Where's the Great Life of Affiliate Marketing Hiding?

  21. #17
    Moderator leeann's Avatar
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    Evo just dropped me to 1% and I instantly pulled the plug. I only signed up with them less than two weeks ago. What a waste of time. I also don't believe merchants should be allowed to change a commission within the month that you agree to the terms.

    I mean.. let's be honest. If they feel our value is worth just 1%.. why do they even sign us up?
    leeann


    Shoppers determine what has value and they like coupons. Stop manipulating who set the cookie just because you do not like coupon and promotional sites.

  22. #18
    ABW Ambassador isellstuff's Avatar
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    Quote Originally Posted by jtoddv View Post
    Yes, 0.5% provides absolutely no incentive.

    Another item that is still shocking to me at this point is the lack of mobile sales tracking. There are many times I have thought of just stopping the promotion of advertisers that do not track mobile sales. This past holiday season I noticed at least 30% mobile sales with those advertisers that do track mobile. Losing 30% of sales from advertisers who do not track mobile sales might be worse than a poor commission in the end depending on what items and who you are promoting.
    jtoddv, this is very interesting. I've spun off your comment into a new thread here: http://www.abestweb.com/forums/blogg...ng-174453.html

    Let's discuss...
    Merchants, any data you provide to Google Shopping should also be in your affiliate network datafeed. More data means more sales!

  23. #19
    OPM and Moderator Chuck Hamrick's Avatar
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    I mean.. let's be honest. If they feel our value is worth just 1%.. why do they even sign us up?
    Its because they want to be on coupon sites but not pay them much for closing the sale.

  24. #20
    Full Member gamweb61's Avatar
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    Amazon pays at least 4%.

    So, why would I offer a product for sale on my real estate for less than a 4% commission from a different source?
    :coffeetim

  25. #21
    Full Member bobby131313's Avatar
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    Just looked into Fandango.... 10¢ a ticket. Gee thanks.

  26. #22
    Affiliate Network Rep JCrooks - AffiliateWindow's Avatar
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    Quote Originally Posted by leeann View Post
    Evo just dropped me to 1% and I instantly pulled the plug. I only signed up with them less than two weeks ago. What a waste of time. I also don't believe merchants should be allowed to change a commission within the month that you agree to the terms.
    It's wrong! Our merchants can't lower a commission - only an AWin staff member can do that. We also make sure you have at least one week's notice before the change. Just saying.
    Jeannine Crooks - Always happy to share what I know! - Voted Best Network Rep 2013 & 2014
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  28. #23
    OPM and Moderator Chuck Hamrick's Avatar
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    Amazon pays at least 4%.

    So, why would I offer a product for sale on my real estate for less than a 4% commission from a different source?
    You should! There are tons of affiliate sites that are on auto pilot and take anything they get.

    This year I ran a test with my biggest merchant, cut the commission in half to dozens of affiliates like this. Those that contacted me I moved into a partner commission and work with closely. The majority said nothing.

  29. #24
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    Quote Originally Posted by leeann View Post
    I mean.. let's be honest. If they feel our value is worth just 1%.. why do they even sign us up?
    Think about it. Let's say …

    1. My content site sells a customer on the product. She clicks over to the merchant site and pulls out her credit card. I'm set up with a decent commission because I feature original content and double opt-in targeted subscribers, which the merchant says has "value."

    2. Customer does due diligence by checking for a code, and lands on your coupon site before completing her purchase.

    3. Merchant wins. I lose. You get a measly 1% because coupon sites add "less value." The sale is made through the affiliate channel and the lowest possible commission is due. Unless you're as huge as RMN, you lose, too.

    leeann: Believe me, I mean no disrespect. Just saying, the 1% tactic is how certain merchants screw us both.

    Merchants: Let's put the responsibility where it belongs. Either don't work with coupon sites, or only work with the ones you like and pay them fairly. If content sites can't compete, they will drop you and go in a different direction. Maybe you won't miss them. If the coupon sites suddenly stop converting once the content sites are gone, you will have your answer. A day late.

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  31. #25
    ABW Ambassador isellstuff's Avatar
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    Quote Originally Posted by Chuck Hamrick View Post
    You should! There are tons of affiliate sites that are on auto pilot and take anything they get.

    This year I ran a test with my biggest merchant, cut the commission in half to dozens of affiliates like this. Those that contacted me I moved into a partner commission and work with closely. The majority said nothing.
    So, I'm very much opposed to this practice. Look at it from my perspective. I've got a larger site, over a 1,000 relationships and 100's of e-mails each day. To me it feels like AM's are trying to "sneak one by me" because I am operating at a larger scale with information overload.
    Merchants, any data you provide to Google Shopping should also be in your affiliate network datafeed. More data means more sales!

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