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  1. #1
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    Question re Negotiating Rates Directly
    Howdy to everyone at ABW,

    I'd like to ask a question regarding negotiating rates. I've heard of several companies that have negotiated more favorable and competitive rates by contacting companies directly to do so. I'd like to know if any affiliate managers out there have any information on how to go about doing this? Is the rate negotiated with the affiliate marketing company? Or is it negotiated with the merchant directly? Meaning, if "Shopgreat" has an affiliate program for its goods and only offers a 2% commission, and I'd like to sign up for their affiliate program, but under a more competitive/favorable rate....do I have to negotiate directly with "Shopgreat"?

    Or do I have to negotiate with "Shopgreat"'s affiliate company...let's call it "ACME Affiliates"?

    I hope my question is clear. I'd appreciate any help you can offer, especially from affiliate managers with experience in this domain. Thank you.

  2. #2
    OPM and Moderator Chuck Hamrick's Avatar
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    You have to negotiate with the Affiliate Manager or Outsourced Program Manager. They will talk to upper management if needed.

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  4. #3
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    Quote Originally Posted by Chuck Hamrick View Post
    You have to negotiate with the Affiliate Manager or Outsourced Program Manager. They will talk to upper management if needed.
    Thank you, Chuck. Does this negotiation take place BEFORE signing up with an affiliate program? Or does it take place afterward?

    Also, if it takes place afterward, does it then take place BEFORE applying for inclusion as an affiliate for "Shopgreat"? Or does it normally take place after being approved as an affiliate for "Shopgreat"?

  5. #4
    Moderator MichaelColey's Avatar
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    I find that I have the most leverage in negotiating higher rates BEFORE I sign up, put links up, or start producing. Once you've taken the steps and are producing (for standard commission rates), most seem to take the "what else can you do for me" approach, even if you're their top affiliate.
    Michael Coley
    Amazing-Bargains.com
     Affiliate Tips | Merchant Best Practices | Affiliate Friendly? | Couponing | CPA Networks? | ABW Tips | Activating Affiliates
    "Education is the most powerful weapon which you can use to change the world." Nelson Mandela


  6. #5
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    Quote Originally Posted by MichaelColey View Post
    I find that I have the most leverage in negotiating higher rates BEFORE I sign up, put links up, or start producing. Once you've taken the steps and are producing (for standard commission rates), most seem to take the "what else can you do for me" approach, even if you're their top affiliate.
    Michael, is that before you sign up with the affiliate marketing company itself? Or with that merchant's specific program?

  7. #6
    Moderator MichaelColey's Avatar
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    Before signing up with the merchant.

    Keep in mind, though, that you have to be able to offer the merchant something pretty substantial to get a bump in commissions. You need to have a track record and a proven game plan, and the ability to generate a lot of sales. Just a pie in the sky claim that you're great won't cut it.
    Michael Coley
    Amazing-Bargains.com
     Affiliate Tips | Merchant Best Practices | Affiliate Friendly? | Couponing | CPA Networks? | ABW Tips | Activating Affiliates
    "Education is the most powerful weapon which you can use to change the world." Nelson Mandela

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  9. #7
    Affiliate Manager BryanAffiliates's Avatar
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    I actually might suggest the opposite. As an affiliate manager, when someone emails me that I've never met/heard of and immediately asks for a higher rate, it can be a shot in the dark whether they will actually perform or not.

    Instead, if you've been making consistent sales and do well in our program, it's more advantageous for the merchant to keep you 'fat and happy', and so negotiating a commission rate is much easier to do.

  10. #8
    ABW Ambassador isellstuff's Avatar
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    Quote Originally Posted by BryanAffiliates View Post
    I actually might suggest the opposite. As an affiliate manager, when someone emails me that I've never met/heard of and immediately asks for a higher rate, it can be a shot in the dark whether they will actually perform or not.
    I have to agree with Michael, it is most affective to negotiate prior to joining. You need to be a top affiliate in their niche in order to have leverage.

    Let the affiliate manager know how many sales you are making for their main competitors and then tell them why you can't promote them unless you get a higher rate. My main argument is always the same. If a merchant has lower commissions than their competitors, then they are going to "bleed" off profit from my business, therefore I have no incentive to promote their program.

    You can also use very high conversion rates as a negotiating tactic because you will raise the perceived quality of the program by raising their EPC.

    The bottom line is that affiliate managers need their programs to look good in order to secure their jobs. If you are a superstar affiliate, you can help an AM look good and maybe even help them make more money.
    Merchants, any data you provide to Google Shopping should also be in your affiliate network datafeed. More data means more sales!


  11. #9
    Affiliate Manager BryanAffiliates's Avatar
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    Quote Originally Posted by isellstuff View Post
    You need to be a top affiliate in their niche in order to have leverage.
    Your argument really rests on this point. If you have never marketed the product before, or are building a blog from the ground up around the product/service, it's going to be incredibly difficult to negotiate without any history.

    It doesn't sound from the original post that this individual has past experience marketing their product (which they totally might). Traffic might be good and relevant, but it's hard for an AM to go in and cut their bottom line for someone that has not had experience with marketing in this area.

  12. #10
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    Not sure if this makes a difference, but it is for a large-scale app, and we're a team of developers. I'm hoping that will somehow make a difference in negotiating, as the app is not yet released.

  13. #11
    OPM and Moderator Chuck Hamrick's Avatar
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    It all starts with a conversation and not just an email.

  14. #12
    ABW Ambassador isellstuff's Avatar
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    Quote Originally Posted by style View Post
    Not sure if this makes a difference, but it is for a large-scale app, and we're a team of developers. I'm hoping that will somehow make a difference in negotiating, as the app is not yet released.
    You are going to have much better luck once you have established huge amounts of traffic. Its highly likely that your app will create very little traffic for merchants just because so few apps succeed. If you have partnered with some big names and have guaranteed exposure that might help.
    Merchants, any data you provide to Google Shopping should also be in your affiliate network datafeed. More data means more sales!

  15. #13
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    For an unreleased app that has no purchase or traffic history, it would be hard for me as an affiliate manager to agree automatically to higher commissions. We are happy to work with new affiliates who can give us analytics to prove high traffic and conversions/sales when they request special commissions, bonus commissions, or other things that are not our normal policy. However, when someone contacts me out of the blue with a proposal for an unreleased site/product and wants me to take their word for it that they will perform better than anyone else in the program and therefore require higher commissions out of the gate, it's hard to approve that. We very frequently put these new publishers in a review status at normal commission rates, to watch closely for 3-6 months. If they are performing as they predicted, then we can negotiate higher rates. But 9 times out of 10, I never see a single sale from them.

    I think that it will depend on the affiliate programs that you approach and what your solid marketing plans are to guarantee exposure and subsequently a high number of sales.


  16. #14
    ABW Ambassador isellstuff's Avatar
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    Quote Originally Posted by Melanie View Post
    But 9 times out of 10, I never see a single sale from them.
    Yup, and that is just the way affiliate marketing works. Let's put it this way. At the beginning of Web 2.0, I wrote an novel search engine for a couple of major merchants that was bundled with a very successful browser extension. We are talking 100's of thousands of DAILY users, major press on all the big tech sites (tech crunch, gizmodo, wall street journal, NYT, etc)

    Our affiliate sales just trickled in. You never really know what is going to work until you gain experience. User Intent Is Everything

    and just to be clear to all the veterans on this board, I wasn't writing a BHO, Spyware, Adware or anything like that. I would have had a lot more sales if I was :-)
    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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  18. #15
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    Quote Originally Posted by isellstuff View Post
    You are going to have much better luck once you have established huge amounts of traffic. Its highly likely that your app will create very little traffic for merchants just because so few apps succeed. If you have partnered with some big names and have guaranteed exposure that might help.
    How much is a 'huge' amount? What sort of numbers should I have under my belt before I should even consider approaching merchants, much less leveraging commission rates?

    What might be a good number to have under my belt?

    Thanks.

  19. #16
    ABW Ambassador isellstuff's Avatar
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    Quote Originally Posted by BOOBOOCH5 View Post
    What might be a good number to have under my belt?
    That's not really the way to look at it. I was using traffic levels as an example for the OP and his particular situation and was referring to the tactic of building up a lot of eyeballs and then thinking about monetization. Its a common strategy with software startups.

    You need to have the potential to "move the needle" for a program. Different affiliate programs will have different requirements.
    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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  21. #17
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    The feedback here was very helpful. Thank you to everyone who gave their input, it's much appreciated.

  22. #18
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    I can't tell from the posts here yet, but is the situation that you won't even consider any affiliate programs at the set terms? As in - either you get better terms or nothing? I would recommend that you join the programs that you are interested in, touch base with the AM and let them know that you're expecting X performance and would be very interested in renegotiating once that performance comes to pass. The only reason I can think of why someone would "demand" better terms up front is because they're expecting a one-time number of sales and nothing over the long term.

    I worked with a group earlier this year that was excited about our product, they had 80-100 people lined up that were going to purchase. They had all sorts of information to back up their claims that they just knew they would have that many people. I worked closely with them, set up sponsorship, the whole nine yards...and they had only 12 people in attendance and only 7 sales, and one of those 7 cancelled during the 60-day grace period.

    They approached me again this fall and wanted the same level of terms and sponsorship and we simply could not afford the risk, which turned out to be good, as their attendance the second time was 5 people total, and no sales at all.

    So my point is, if you're going to go in with something that has no proven track record of conversions or success, be prepared to be met with a bit of push back. Remember the term 'negotiate' means that both sides are willing to work with each other and give a little; it does not mean "Here is what I demand from you with nothing to back up my demands." Sign up for the program, prove that you're serious, and work hand in hand with the AM to make sure that both parties are happy.

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  24. #19
    Moderator MichaelColey's Avatar
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    It really is a chicken and egg thing. When you first start out, you're probably not going to be able to get anyone to give you a special deal. But after you've made a name for yourself in the industry (or the specific niche you're targeting -- which is FAR easier), you'll have the leverage. It'll be the AMs and OPMs (or at least the good ones) approaching you, asking what they need to do to get you in their programs.
    Michael Coley
    Amazing-Bargains.com
     Affiliate Tips | Merchant Best Practices | Affiliate Friendly? | Couponing | CPA Networks? | ABW Tips | Activating Affiliates
    "Education is the most powerful weapon which you can use to change the world." Nelson Mandela

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  26. #20
    ABW Ambassador isellstuff's Avatar
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    Quote Originally Posted by MichaelColey View Post
    It'll be the AMs and OPMs (or at least the good ones) approaching you, asking what they need to do to get you in their programs.
    Exactly.
    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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