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  1. #1
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    Negotiation Commission Structures
    Hi,

    I am looking for some advice on how to approach negotiating commission structures within the retail sector of affiliate marketing, more specifically in fashion. What are people's experiences of negotiating with affiliate managers etc? Is there much room for negotiation or are affiliates generally confined to the default structures?

    My main experience of affiliate marketing lies within the gambling industry where I know that there is huge room for negotiation and commission structures can vary wildly. From my research into retail, so far it does not appear to be this way. Is this true for anyone else?

    Thanks
    Ben

    (I do appreciate that the larger affiliates have far more bargaining power than the smaller ones, no matter what sector. But it would be nice to think that the smaller guys can negotiate on some level)

  2. #2
    Affiliate Network Rep JCrooks - AffiliateWindow's Avatar
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    Hello Ben. I know you have some questions, but we'd like to get to know you first before we start right in with business. Tell us more about yourself. Here are some suggestions about how to do that.
    Jeannine Crooks - Always happy to share what I know! - Voted Best Network Rep 2013 & 2014
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  3. #3
    Moderator MichaelColey's Avatar
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    It really depends on the program and what you're able to offer.

    Many of the smaller merchants in the more mainstream areas of affiliate marketing pay out pretty close to the maximum that they can afford to pay out (not realizing that they might need to budget for a program manager, incentives, promotions, network fees, slotting fees, "raises" for affiliates, etc.). Others hold back some (or even a lot).

    Probably the easiest way to tell if they should be able to pay more is to look at their competitors. Do others pay more? If so, that tells you that they probably can, too. And it also gives you some leverage. If you email a merchant and tell them that you would like to promote them, but that WidgetCompetitor.com is paying twice as much in commissions and could they match that, many will.

    Often, you're going to need to offer them something (improved placement or special promotion) to get more.
    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


  4. #4
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    Many thanks for the response.
    I have looked into what each program is offering and they all seem to be very similar, particularly within the clothing industry. I guess what I really want to know is, while there is clearly room for negotiation, how far can I take this? In the gambling industry it is not uncommon to see people earn CPAs that are quadruple the default, and revenue shares that are double or more.
    For example, is it likely that a program which offers 5% across the board as default will be negotiable up to 15%, perhaps even 20%?

  5. #5
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    I've found two pathways, that actually go hand-in-hand, that can lead to increased commission rates. One is to establish a track record with a program. If you are just starting out in a niche, why should you receive a higher rate than their established, productive affiliates? You need to prove what you can do first, and then when you have a measure of success, ask for a higher rate. Second, and really the other side of the coin, is to build up relationship with affiliate managers and OPMs, and the quickest way to do that is to produce. But, it also needs the personal touch of communicating on a variety of issues, and also going to conferences and meeting them in person. When you have such relationships, then not only are you more likely to be able to negotiate higher rates, but when they take over new programs, you may well be offered higher rates to join up.

    Also, the profit margins in consumer products are very different than what you describe as far the gambling niche is concerned. If a default commission is 5% for a tangible product in fashion, home & garden, etc., you can hope to get bumped to 7% or 8%. 15-20% is totally unrealistic.
    Since June 10, 2012 a vegan aarf but still writing the Hound Dawg Sports Blog
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  6. #6
    OPM and Moderator Chuck Hamrick's Avatar
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    Often, you're going to need to offer them something (improved placement or special promotion) to get more.
    If you ask me for a commission increase without a track record I am going to ask what you are going to do to deserve an increase. If you outline a plan I may give you a temporary increase for 30-45 days while you prove yourself.

    It never hurts to ask and you have a 50/50 change of getting a yes. As commented start the conversation and develop the relationship.

  7. #7
    OPM/Moderator Hectic GHC's Avatar
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    In the fashion industry, I doubt you will be able to get much more than 5%. What Chuck said is very true. You have to have a plan and work with the manager.
    Greg Hoffman
    Affiliate Marketing Advocate of the Year 2016; Best OPM/Agency - 2014; Best OPM/Agency, Five Years in a Row - ABestWeb.
    Visit Greg Hoffman Consulting

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  9. #8
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    Thanks for the responses, they have been very helpful.
    So it would seem that within fashion/retail I would struggle to negotiate more than 7 or 8%. Obviously I understand that I would need to build my relationship with the affiliate management before attempting to negotiate.
    I do have one more question as I'm trying to wrap my head around the differences between affiliate marketing in the gambling industry and the fashion/retail industry. Are affiliates able to get other types of commission structure than just a straight up revenue share? Such as tenancy agreements or fixed fees per sale (no matter how large the sale).

    Thanks again

  10. #9
    Affiliate Manager AffiliateWarrior's Avatar
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    Your success rate at negotiating increases without a track record of production in a program or with a particular manager or OPM will be low. If you're going to request one before you have the track record established, you definitely had better have a pretty well thought out plan to present.
    Wade Tonkin - Affiliate Manager - Fanatics
    NFLShop.com|Shop.NHL.com|NBAStore.com|Store.NASCAR.com
    Email wtonkin // at // Fanatics.com

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  12. #10
    Affiliate Network Rep JCrooks - AffiliateWindow's Avatar
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    You will find that the commissions for physical products will never be as much as those for gambling or other virtual products, as the margins are very different.
    Jeannine Crooks - Always happy to share what I know! - Voted Best Network Rep 2013 & 2014
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  13. #11
    OPM and Moderator Chuck Hamrick's Avatar
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    Are affiliates able to get other types of commission structure than just a straight up revenue share? Such as tenancy agreements or fixed fees per sale (no matter how large the sale).
    Some programs offer a fixed amount per sale and you will find those as you search programs. Lead gen offers a flat rate per lead.

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