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  1. #1
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    We all applaud CJ for taking the transparency stand well over a year ago with introducing EPC stats. Now we need to nip in the bud their blindness to what some merchants are pulling to reduce commission payouts. BOGUS REVERSALS.

    CJ -Take some hints on these reversal trends that rise every month.
    __________________________
    NeoComputers 64%
    PcMall 40%
    eCost 35%
    Jumpline Hosting 55%
    MacMall 26%
    Advantage Superstore 40%
    ___________________
    Honest merchants in the exact same traffic base show these figures on completed transactions

    Ubid 1%
    Half.com 0%
    Inkjet Experts 0%
    123 Inkjets 0.20%

    TigerDirect 1%
    ComputerGeeks 2%

    Dell computers reversed every single sale of mine this year at LS and BeFree.

    What can we expect from the compliance departments on these networks to police and kick out merchants who purposely inflate their reversal rates well beyond the online published industry averages. Last year the entire 12 billion dollar retail computer system and parts industry averaged 4.2% returns, which often were for "buyers remorse" issues.

    WebMaster Mike

  2. #2
    ABW Ambassador
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    Help me out here, Mike; I don't understand this. The three-month EPC is calculated taking all reversals into account -- in other words, they're subtracted out of the calculations. So how could a bogus reversal possibly could help anyone's EPC? What's the point?

    The logic escapes me.

  3. #3
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    I think the effective commission rate should also be posted. The offered commission rate is in most cases nobody's rate.

    Something like this should be posted on Merchant Detail:

    Zappos:
    Commission Rate: 15%
    Omission Rate: 5%
    Effective Commission Rate: 10%

    Global Sports:
    Commission Rate: 5%
    Omission Rate: 4.5%
    Effective Comission rate: 0.5%

    123inkjets:
    Commission rate: 36%
    Omission rate: 0%
    Effective Commission Rate: 36%

    - BluesX

    ---------------
    Affiliate Marketing is built upon honesty. Tracking is not affected.

  4. #4
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    EPC was developed to publish some measure of a merchants capability to convert affiliate traffic into sales. EPC is a recruiting tool and should be trusted as CJ's leading statistic for choosing a new merchant within a product category. Sure it can be manipulated by a merchant creating a huge sale from their own links. All merchants by default are affiliates in their own program and can create a trackable link for testing purposes. They show the sale in their EPC stats and ship the products to no one.

    They don't reverse these EPC building sales and just eat CJ's 30% cut on the small commission % that would have been paid to the affiliate. Notice how the 50% commission merchants like the Inkjet guys show 1% reversals. Then look at the 1-2% commission merchants like eCost and PcMall who don't mind paying a few pennies/dollar to CJ to fudge their EPC rate.

    Those same merchants can show a respectable EPC but underneith, in the all telling reversal area, they show they wack 40-50% of all affiliate generated sales. My advice to all ABWers is to check the merchant's reversal ratio and see if you can stomach the percentage.

    WebMaster Mike

    [This message was edited by EcomCity.com on September 18, 2002 at 10:50 AM.]

  5. #5
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    Thanks BluesX for explaining my point.

    WebMaster Mike

  6. #6
    Ad Network Rep ToddCrawford's Avatar
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    Mike,

    One thing to point out here is the reversal rate is calculated on the sale amount reversed not the number of transactions. In other workds, if an advertisers sold $10,000 from 100 transactions but reversed one sale of $1,000, their reversal rate would be 10% but in actuality only 1% of total transactions were reversed.

    Todd Crawford
    Commission Junction

  7. #7
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    Todd these are product sales merchants not lead merchants so the # of transactions has no bearing on the points being made. CJ affiliates in this case are paid a commission based on the total amount of each sale x the commission rate. I used CJ's own network wide figures for the above merchants. My own reversed sales stats are even worse since I push the higher end items.

    Merchants like PcMall and eCost have wacked me for sales above 500.00 like clockwork. Should we poll the crowd here to see if they too have large sales reversed for reason "other". Funny that the same visitors using my Cybermall static links ( I don't e-mail offers) buying from TigerDirect to the tune of 784 sales over the last 12 months only show a 1% reversal rate. Only one sale above 500.00 was reversed by TigerDirect.

    If the one sale cancelled in your example represents 1 item or 1% ...it represents 100% of the items sold over 100.00. That's my objection and cry for help from your compliance department. I try like others here to promote the higher ticket items from these merchants who choose to pay only a 1-4% commission. eCost sure doesn't sweat paying the 30% fee to CJ on the 1% commission rate when it jacks up their EPC. 1% of a 10,000.00 sale is 100.00. They get charged 30.00 by CJ for that boost in their published EPC figure.

    The $10,000 in Inkjet sales at a 50% commission is 5K. The CJ cut of 30% would cost them $1500.00 to jack up their EPC. Can we get on with the pattern here.

    WebMaster Mike

  8. #8
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    I love reading all this great publisher insight.

    In our case, even if we have to refund a customer and it's our fault (or the customers fault), there is NO reason why our affiliate should loose their commission (unless it's fraud). It's only the affiliates job to bring in the sales, not hand hold merchants. I think one major problem is that merchant only look at their numbers rather than their relationships. In the merchants defense, hundreds of affiliates try to scam merchants with every opportunity provided, so it forces merchants to be a little more defensive. That's why these posts are so important, they allow good communication back and forth. My personal opinion is pick merchants you might buy from, merchants who convert, and not just commission paid. It's very easy to put a merchant program in cruise control and not realize your publishers are busting their ass with no results or support.

    PS. EPC seems to be pretty effective as for our numbers and charge backs are taken out, BUT this is only one measuring tool.

    Good luck,
    Mike Zaya
    123inkjets.com

  9. #9
    ABW Ambassador
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    When we calculate effective EPC for our clients we always go 3-months and factor that in on an on-going, daily basis. One reason why I think automation is good for this type analysis. If you do it by hand it would be impossible to factor in the impact of reversals, charge-backs, etc. etc. (CJ does take this into account when the provide metrics.)

    So I agree an affiliate must look at the overall impact of corrections on the bottom line and on EPC. If you factor in charge-backs, etc it can make an impact. If you only sample and do analysis once a month it can give artifically inflated numbers.

    -wayne

    Wayne Porter
    V.P. Product Development
    AffTrack LLC.
    http://www.afftrack.com
    http://www.revtrends.com
    Advanced & Automated Data Analysis for Performance Marketers.

  10. #10
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    quote:
    Originally posted by ToddCrawford, CJ.com:
    ...if an advertisers sold $10,000 from 100 transactions but reversed one sale of $1,000, their reversal rate would be 10% but in actuality only 1% of total transactions were reversed.



    You bring up another good point...Why do they ALWAYS seem to reverse the $1000 sale and not the $10 sale?

  11. #11
    ABW Ambassador
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    Merchants need to be held accountable. They must demonstrate that 'invalid CC' and such are truly invalid, and not be able to reverse on the basis of just saying there was an invalid transaction.

    There are too many cases where there is a Joe's Gizmos that reverses a high percentage of sales and a Bob's Gizmos who reverses a very low percentage. There is something wrong with that picture.

    The time will come soon that 'trusted third parties' are regulated by the government as the financial institutions that they are.

    Why wait to do things right?

    AS SEEN ON SE!!!

  12. #12
    Ad Network Rep ToddCrawford's Avatar
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    CK,

    quote:
    You bring up another good point...Why do they ALWAYS seem to reverse the $1000 sale and not the $10 sale?


    Because $1000 sales tend to be fraudulant or the credit limit is exceeded and the sales must be reversed.

    Todd Crawford
    Commission Junction

  13. #13
    ABW Ambassador
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    I'd really rather just see a straight CR. No. of sales or leads divided by number of clicks or visitors times 100.

    I realize CJ is trying to "help" by using the $ figures for EPC and return ratio, but really it's not a help, because frauds tend to be high dollar and skew the results. A strict sales/visit is more helpful to me to determine how well a site closes the sale, which, afterall is what I'm trying to find.

    http://SearchToSale.com - Turns your search box into money.

  14. #14
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    I would like to see reversal rate also stated as number of purchases divided by reversals. This would help us filter out some large bogus orders that are reversed. I remember a merchant I nearly dropped because their reversal rate was over 50%. I kept them on and gradually that number dropped down very low. They are my most trusted merchant now. Why the large reversal? Well from what Todd says, the >50% rate was probabl;y due to one or more huge fraudulent orders.aybe only 1% of sales were reversed, yet reversal figure said > 50%. Very misleading (yet valuable too).

    Andy Williams

    Keyword DARTs - New search engine optimization software
    http://www.affiliate-masters.co.uk/k...timization.htm

  15. #15
    ABW Ambassador
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    I still say the best CJ guide is the dollars volume. Percentages can't be taken to the bank, but the $$$$$ can.

    When I see a big pile I say, hey, some of that can be mine!

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