Author: Tony Pantano

  • Amazon Tax (Affiliate Tax) Revenue Generator or Small Business Killer?

    I've been watching the issue of the "Amazon Tax" ever since it snowballed through New York.  In some cases, it has passed and in other cases (either publically or privately) it has been defeated.

    For those of you who may not know what I mean here's a recap: 

    Online businesses are ONLY required to collect sales tax in states where they have a physical presence, called a Nexus.  Recently New York, in its infinite wisdom has stated it is losing hundreds of millions of dollars because of sales to online businesses like Amazon.

    As such, the state legislature has redefined nexus to not only include brick & mortar stores, but also to affiliates.  Affiliates are in essence commission only sales reps…they are small business run by entrepreneurs trying to make a living.  And guess what they pay TAX to the state on their income.

    When NY enacted this tax, Amazon, instead of figuring out how to collect sales tax, simply discontinued working with all of its New York affiliates.  The same has happened in other states as well. 

    Result?? 

    1) States see $0 - THAT'S ZERO - new tax revenue from the people it went after like Amazon, Overstock etc.

    2) Small Business is hurt badly since they can no longer market for companies like Amazon and Overstock which results on lost revenue.

    3) States sees LOWER actual business revenue from these Affiliate Businesses who would pay taxes on business income.

    There are a couple of thoughts and realizations I have come to:

    1) Politicians tend to operate in sound bites and press releases.  What do I mean by this?  Well it's easy to propose a *new* tax when you are crying foul against a large retailer like Amazon and holding up a sign with a Giant Number like $220 Million.  The reality is that once these taxes pass, Politicos are not accountable to what the end result it.  Did it work, Did it hurt small business?  We don't know.  They don't go back and look at results.

    2) Taxes are VERY RARELY repealed once passed.

    From the Providence Business News:‘Amazon tax’ has not generated revenue

    The Performance Marketing Association has done a good job of fighting these issues when they pop up, but one begins to wonder..….should we be fighting this one state at a time?   The current administration has put focus on small innovative businesses perhaps there is a course of action there?

    Excerpt from state of the Union 2010

     ....is there a way to take this fight to the federal level and oppose it ONCE rather than 50 times?  Perhaps our industry needs to engage some policy experts.  One thing is certain, with almost all 50 states facing huge budget deficits, this issue is sure to raise its ugly head everywhere this year. 

    Bottom line:  This tax hurts (and is some cases Kills) small business. 

  • Google Forgiveness… hard to achieve?

    A few weeks ago I received an email from Google suggesting that 1 or more of the ads in an AdWords account were disapproved.  In looking at that account, I discovered that they were showing disapprovals for ads that had been deleted.

    As anyone who works with Google knows, their notices can be somewhat ominous and sometimes suggest that upon any further disapproval that your account will be suspended.

    Obviously concerned, I contacted them and was told that this notice was sent regarding ads that were disapproved in 2007.  

    Now, I'm no rocket scientist, but I think it's now 2009…almost 2010?  Why in the world would I be getting this email for ads that had been disapproved 2 + years ago?

    I dig further……

    So these ads were in fact disapproved in 2007, and paused, where they sat until May 2009.  In May 2009, they were deleted (well at least the best delete you can do in AdWords).

    So here it is 5 months later and the ads were: paused 2 years ago, DELETED 5 months ago….why in the world would the policy team even be looking at these in a review process?  They are gone, deleted, not active.  Well here is the response I got:

    …Thank you for your email. I understand that you are concerned about deleted ads resulting in a policy warning. Please be assured that our policy team and I understand completely that the ads from 2007 that violated policies were later deleted.

    Our policy team reviews accounts based on past disapprovals: the fact that you paused and deleted the ads from 2007 does not erase the fact that the ads were submitted and violated policies in 2007.

    If our policy team did not look at all disapprovals, and only looked at undeleted disapproved ads, then it would create a situation where advertisers could violate policies and effectively delete the fact that they violated any policies.

    Our policy team will look at the full history of an account when issuing suspension warnings as well. The fact that two years have elapsed since the violation does not remove the policy violation from our policy team's consideration….

    Never mind, that this was 2 years ago,

    Never mind that the ads have since been deleted

    Never mind that there have not been not other since then

    Apparently any disapproval you may received, just sits out there…forever and at any time, paused, deleted or not, you can be forced to pay for past sins. 

  • What is (should be) the Job of the Networks?

    I’ve debated this post for a while because it’s really calling out the some pretty basic flaws in the affiliate business.  But the issue keeps popping up and I have to express my feelings.

    What should be the function of the networks in the role of the affiliate space?  

    Seems like a loaded question and to a certain extent it is. 

    I’m not trying to raise the ire of any one network (or all of the networks), but I think there is a fundamental truth here that is often overlooked.
     
    Affiliate Networks need to focus on getting the basics right before they implement these crazy widgets and gizmos. 

    1) Track the Sales
    2) Pay Affiliates
    3) Provide all the necessary Reporting

    It's not rocket science.

    We work with a lot of different networks and there are good points and bad about each, but the number of network s that have problems paying commission and providing accurate reporting is amazing. 
    In some cases reports just don’t work. 

    In Linkshare for instance, some months you click on a payment amount to get the detail report and you get an error.  They seem to know about the problem and will fix it when you ask, but it keeps happening month after month.  This forces us to get a manual accounting.  To their credit they are prompt with that, but it’s still a pain.  Perhaps they should just fix the problem?

    In some cases the reports just don’t exist.  OneNetwork Direct is the worst.  They send a payment with no accounting of what merchants we are being paid for.  They have promised a solution for at least a year, but nothing.  So, every month when the check comes in we have to ASK for the detail.  Isn’t someone calculating these payments?  Someone HAS to have this info.  All I ask is that you give it to us with the payment.  We had a similar problem with PepperJam but in just 2 days they provided that needed report in their interface.  Kudos to Kris and his team.  Now if we could just get PepperJam to pay on a calendar month all would be well.  (Hint, hint)

    Share A Sale also doesn’t have this report in their interface.  They provide it manually each month when I ask, but it would just be nice to pull it off the interface.  Brian Littleton has told me he’s working on it, but my guess is it’s a bigger programming issue and that it is just easier to get it to us manually than fixing the code.  But again, a it’s a pain because I have to ask month after month.

    We have been hounding Google Affiliate Network for years about the length of time it takes to get paid by their merchants.  For some reason they don’t require pre-pay like other networks which we’ve been told is the main reason for the delays.  For a search affiliate like us, getting paid 60-90 days after the fact means that we are floating the advertising cost.  But worse than that is that there are critical reports in the interface that are missing.  We recently discovered that there is NO WAY to get a report of outstanding commission that have been earned but not paid yet.   So basically if you are not keeping track of your receivables you would have no way to know what commission you are owed and from what merchants.   And with the 60-90 day delay, this can get a bit confusing if you don’t have a good system.

    I have a hard time believing that I am the only one having these issues. 

    I know I have a minor in accounting… perhaps that may be part of the issue? 

    There have to be more affiliate companies out there struggling with these issues.  If you want to run a successful business managing receivables is critical.  I just wish that the networks would understand this and help us by solving some of these issues. 

  • Can an Affiliate Manager Really Know Nothing about Affilate Marketing?

    Last week I had an email conversation with an affiliate manager and just had to post it verbatim for your reading pleasure.  I left in all the typos and spelling errors just for fun. Oh and I omitted the names, too.  I’m not that cold 😉 

    — Original Message Separator —

    Hey Tony,

    I emailed you last week and still havent heard back from you.

    I was going through our list of Publishers to verify our the placement of our banners on thier sites. Can you please direct me to where our banner is on your site?

    Thanks

    Affiliate Manager

    — Original Message Separator —

    Affiliate Manager,

    We typically get hundreds of emails through the CJ Mail, and aren’t able to respond to all, so please feel free to email directly at <email address>.

    As to your question, we are a Paid Search Affiliate. We generate traffic via paid search and not via banner placement.

    Tony

    — Original Message Separator —

    Hey Tony,

    Thanks for your email. Can you send me a link so I can go through the steps that a customer would to go through you and get to us to make a purchase?

    Thanks

    Affiliate Manager

    — Original Message Separator —

    Affiliate Manager,

    My apologies, I did not explain our process very well.  I cannot ‘show’ you a link.  We purchase paid search ads in Google, Yahoo and MSN then create ad copy that links back to our merchant partners.  Once they click on the link in the ad, they are taken immediately to your site where they complete the transaction.   

    Tony

    — Original Message Separator —

    Hey Tony,

    Thank you for your quick response. So what can I type to search for in Google, Yahoo, and MSN and what would be what I see of yours coming into play from a customer pespective as a means to getting to our site.

    Thanks again

    Affiliate Manager

    — Original Message Separator —

    Affiliate Manager,

    As a company policy I cannot give out the keywords that we use.  The value that a PPC advertiser brings to the table is our ability to create keyword lists and ad copy that converts.  If we share that info, our value is lost.  Is there something specific that you are concerned with?

    Tony

    — Original Message Separator —

    Hey Tony,

    Thank you again for your response. We are in the process of refining our list of publishers so as to filter out those that would be recieving commissions on orders that we would normally get paid the full amount of the sale on. All I am asking is to see how your company is driving sales for us so we can intern get you more commissions paid. The easiest way I can see to do that is going the route of the customer and experiencing how, first hand, I would get to my own site by the means of your business. Do you have any other suggestions on how this can be communicated?  Also, the way we are set up through Commission Junction, is not pay per click, it is pay per order. Im not sure if that helps or not.

    Thanks again

    Affiliate Manager

    — Original Message Separator —

    Affiliate Manager,

    It sounds like you may not really understand your publishers and honestly it also sounds like you are looking for ways to take these sales in house rather than paying publishers, which is precisely why I won’t give out my keywords.

    We have only produced $70 this year to date in commissions from your program so honestly the opportunity isn’t worth the time to get into a discussion on the value of PPC affiliates.  We will just stop promoting the program immediately.

    Tony

    So, in review… first we have a situation where the affiliate manager obviously does not know their publishers, does not know anything about Paid Search or what value a PPC affiliate can bring to their program.

     

    Second, the merchant is trolling for ways to cut publishers out of the loop in general.   Why don’t Search Affiliates give out their converting keywords?  The value of the PPC affiliate is that they can create a list converting keywords that you didn’t come up with on your own.

     

    Lesson 1: Whether your business is Affiliate Marketing, Performance Marketing or really any other on or off-line business, you really should understand your industry especially before you contact your partners.

    Lesson 2: There will always be partners who believe they are paying affiliates for sales they would have generated on their own and are looking for ways to cut the affiliates out.  This is a slippery slope and in my mind the downfall of any good affiliate program.

  • Some affiliate managers really know how to get you motivated…..

    I received this message today via email from an affiliate manager:

    Due to lack of sales this year we are lowering your commission payout to the default payout of $45. We’ve only seen XX clicks from your site and XX sales for the entire year. We want to help you succeed, so if there is anything we can do to help kick start your site, please let me know! If you make more than 10 sales in a month I can again up your pay to $55, and if you make more than 50 sales in a month, I will up your pay to $65.

    Please let me know if there is anything we can do to get your program back up and running!

    Now, I may not be the most motivational guy in the world, but isn’t this a little backwards?  We sign on to many programs and sometimes it takes a little longer to get them going, or in some cases, we test them and they don’t gain any traction, so we put them on the shelf and test again later.

    Either way, is sending a message that you are lowering my commission rate a way to get an affilaite motivated to pick up the program and run with it again?  I’m particularly fond of the last line:

    Please let me know if there is anything we can do to get your program back up and running!

    I have found that the best programs that we have are ones where we have open communication from either the OPM or the Affilaite Manager.  one where we can have an ongoing dialogue about the program and how to make it better.  In my humble opinion, these kinds of form emails do not go very far to build long term lasting relationships.

  • ShareASale Think Tank – October 2007

    This year I was invited to participate in the Share A Sale Think Tank session. The session was hosted in Scottsdale AZ. I don’t do a lot with SAS right now, so I was excited to be involved and to learn more about them and merchants in their program.

    The hospitality of Brian Littleton and the Share-A-Sale staff was amazing. And frankly, I left feeling like I should explore their network and theie merchants more.  Which I guess was the point of being invited. 😉
    By my estimation there were about 70 attendees including Affiliates, Merchants, OPMs, and SAS staff.

    Overall, for my first Think Tank I had mixed feelings.
    On day one, 12 SAS merchants each had about 40 minutes to present their company and their programs and allowed time for Q&A from the group. The presentations were as I expected…sales pitches to get affiliates into the program. However, it was the Q&A that left me somewhat confused. The questions meandered from the normal percentage commission in the program and cookie duration to extreme conversations about website function and UI details. At one point the conversation went on for 30 minutes regarding where the user landed after they added an item to their shopping cart and the location of the checkout button. I certainly can understand why UI is important for conversions, but I question the value of the conversation in a forum such as this. Some of these program managers were getting hammered on issues that they may not have any control over.

    It seemed to me like that time would have been better spent hearing from more merchants or discussing industry issues.

    From what I understand this is only year 2 of the Think Tank so maybe this is just growing pains. I also understand that both the affiliates and merchants in Share A Sale are pationate and are vested in each other. Maybe this detailed discussion is just thid passion in overdrive?

  • Misinformation in Affiliate Marketing

    Each day I am surprised by the level of misinformation that is being spread regarding PPC marketing. It all started with Google’s one URL rule and has snowballed from there. Some is being propagated by internal search teams and some by outside agencies. Either way it all boils down to protecting their turf.

    The Direct Linking issue has been one that is most often misunderstood.  Here is an example of a recent communication that I had with a program manager via email.

    [PROGRAM MANAGER]
    IMWAVE is in violation of MERCHANT’s keyword policy. MERCHANT affiliates are not allowed to use www.MERCHANT.com (or any variation thereof) as the visible URL. Please comply ASAP or we will have to deactivate you.

    [ME]
    Thank you for your email.  I have paused all of our promotions for MERCHANT while I review our campaign.  Imwave does not currently build out landing pages for our merchant partners and instead works only with ones that we can direct link to.     Do you have an alternate URL that we can use to promote your company?  If not, I’m afraid we may have to stop promoting the MERCHANT program permanently.

    Thanks in advance,
    Tony

    [PROGRAM MANAGER]
    Thanks! I’ll get back to you with our Search Policy as I am waiting for an update from the Search team over here. As far as I know, you can use your affiliate links to link to MERCHANT but the display URL in the ad can not be www.MERCHANT.com or any variation of that.

    Otherwise, our own ads get knocked out.  I’ll get you the search terms as soon as I have them in hand.

    Note that the Internal Search Team is apparently writing the Search Policy

    [ME]
    I appreciate you looking into this.  There are a few concerns that I wanted to share with you.  In Google, if I directly link to the URL from your CJ links (MERCHANT.com) Google requires me to show MERCHANT.com in my ad.  If I show something else, they will shut off my ads for violating their guidelines (inaccurate display URL).  It may not happen immediately (usually does) but it will happen, so that is not a good long term solution.

    As PPC marketers, the chances that our ads will “knock out” yours, is almost zero even if we use your URL.  Many times, internal search departments do not understand this and simply think that allowing it will increase their costs.

    In the rare case where our keyword terms do overlap, we would typically not be bidding high enough to have our ads show over yours.  The hope is that we can generate a huge list of terms that you are not currently bidding on and if that’s the case, then again there isn’t a conflict on ads.  We have done this with other advertisers very successfully and without increasing their internal search costs.  If this sounds like something you may want to pursue, please let me know.  I’d be happy to have a call to discuss how we have made this work with other large merchants.

    Tony

    [PROGRAM MANAGER]
    According to our Search team, 2 ads can’t use the same display URL on the same keyword. One will always be knocked out. If you are seeing otherwise, we’d love to see a screenshot.

    Per Google’s policy: http://www.google.com/adwords/learningcenter/text/18928.html
    Affiliate Policy: Affiliates get paid a commission to promote a merchant’s website and drive traffic or create sales on that site. We allow affiliates to use AdWords advertising. Please note that we will only allow one ad for affiliates and parent companies sharing the same display URL per search query.

    As far as bidding on terms we are not bidding on, you are right. It would not raise our costs. However, MERCHANT has not given any affiliates permission to use the display URL www.MERCHANT.com so, for right now, that option is blacklisted. This is not to say that it won’t change in the future. We’re in the process of building a new affiliate/search policy to present to MERCHANT so this is something we will bring up with them.

    [ME]
    Yes, that is Google’s policy.  It is 100% correct that 2 ads can not show at the same time for the same keyword and using the same display URL. 

    The issue is which one will get “knocked out.”   My point was that even if we had the same display URL AND the same keywords the chances that we would knock out MERCHANT are slim to none.  The merchant will typically always be bidding higher than an affiliate and that higher bid will knock the affiliate out, rather than the other way around.

    It’s about gaining a volume of keywords.  I realize that you must adhere to their policy.  I just wanted to point out that they may be losing volume due to a lack of understanding of the process

    Tony

    PPC affiliates typically can not afford to bid high enough to trump the merchant’s ads.  There is also another key point in this correspondence.  Channel conflict with the affiliate program.  The affiliate channel is like hiring a commission only sales person, generating sales at a fixed cost per acquisition.

    In my mind, placing an Internal Search Team in charge of creating the Search Policy is tantamount to having the fox guard the hen house.  Our industry has got to find a way to get our message up to the “C” level. 

    Can you imagine a conversation with a company CFO about what we do?
    “Wait, you are generating incremental sales, I don’t pay you unless you sell something AND each sale is at a fixed CPA.”

    UPDATE:
    As it turns out the Program Manager here works for an Agency not the merchant.  The Agency is apparently handling both the Internal Search AND the management of the Affiliate Program….now that REALLY is the fox guarding the hen house!