Yesterday I got an email from one of the merchants I work with that said in order for the affiliate program to remain profitable they needed to cut the commissions. They were paying 6% with some performance tiers (commission bumps at $750, $3500, and $6000). Now they are at 5% with commission bumps at $6000, $12,000, and $24,00o in sales. And the cookie was going from 20 days to 7.
Today I got an email from another merchant that was cutting their commission from 10% down to 5% and adding in the performance tiers at $6000, $12,000, and $24,000.
Yeah, I know there is a statement in the affiliate agreement that says the merchant can change the terms at any time. So yeah, legally they are entitled to do this and there is pretty much nothing I can do to fight it (that is if you consider sending traffic to a competitor “nothing).
But the thing is I have already done the work to promote this merchant with the understanding I would be getting a certain commission. Now they cut that in half? That just doesn’t seem right. Can companies buy some ads in a magazine and after 4 issues decide to only pay half of the agreed upon rate? What would happen if I was getting some teeth pulled at the dentist and halfway through the procedure I told the dentist I would only be paying him half of what we he was owed? Sure, if he raised his prices before I came in again I would have to decide if I wanted to stick with him or find a different dentist but you can’t change mid-stream. Doesn’t make sense.
Once I have done the work and have the links and websites up it doesn’t seem to be good form for a merchant to change the terms. If they want to change their commissons or terms going forward that is fine. At that point I can choose not to build any more links for that merchant or join your program but the links I already have up were put up under the previous agreement. Of course there would be tracking issues to deal with and I know that it isn’t really realistic but based on common sense (which really isn’t too common) there is something messed up about this.
Of course I know I won’t be changing the merchant’s mind here but I just wanted to give this as a warning to other merchants and affiliate managers. In my opinion lowering a commission is a no-no. If the merchant had the 5% commission to start I never would have promoted them (plenty of viable competitors in this market) in the first place.
Not really angry here since I don’t have a ton of traffic going to these merchants and it won’t really do anything to my checks. I have started integrating them more and more into some of my sites though in hopes of sending some decent traffic to them. Not now though.
And if you will excuse me I have to take down some banners and update some datafeeds…
When a merchant cuts commission, it means they didn't do their due diligence when setting up the program or something is happening in their niche to cut profit. Both are red flags if the reduction isn't clearly explained to affiliates.
It sucks but I don't blame you for swapping out links. Glad it wasn't one of my programs.
Well, there is something happening in this niche: Rich guys are fighting over money and screwing the fans.
If it was a small merchant who just got in over their head with an affiliate program I could cut them some slack but these are multi-million dollar merchants who have had affiliate programs for years.
I guess they are getting ready for reduced sales then if/when their is a strike.
Seems like the would want to up their marketing efforts instead of cutting them back.
On the other hand, if a merchant is overrun with fraud or channel conflicts, what are they to do? Can the entire program? Or try to tone it down a bit with a reset of the payouts?
(I've been on both sides of this issue, and it sucks)
For a merchant – I would rather shut down a program, than cut the payout.
If there is fraud they need to deal with that and not cut payouts across the board. And that is where good, pro-active affiliate managers come in. They should be dealing with the "bad" affiliates and keeping the good ones, not just cutting commissions.
And if they do have to cut commissions they should grandfather in existing affiliates.
This is a good reason to have multiple merchants with which you can partner. It is just business. I am assuming the merchants had to cut to be profitable. Affiliates have to make the same choice, i.e. what kind of profit margin they want from whatever they promote and sell. Personally, I think it is a really bad business practice to change mid-stream, though. It shows everyone you can't be relied upon.
As a relatively new affiliate, I would love to know which merchants so I can avoid them, but I understand why you can't say in a blog post.
I'd agree with you Joe, if their having to cut their commissions and payouts due to fraud they have other issues they need to address and should do so while working with honest partners who have put in the work to support their program.
Of course, I'd be curious to know how long these programs have been running, maybe the higher commissions and lower commission bumps were simply to attract new affiliates or get existing affiliates active and their not considering the consequences of these changes.
It is odd timing after talking about this topic briefly last week at lunch.
These merchants have had affiliate programs for a number of years. Probably 8-10? The old commission rates have been around for quite a while, I think at least a couple years.
They must have been evesdropping on our lunch!
I guess that would rule out any type of "introductory" or "activation" incentive.
Maybe a little more off the track spot is in order for lunch next time.
More off the track? Are we gonna do lunch in Hillyard or something? Doesn't get much more off track than Vien Dong.
Just to give a quick update: I spoke with the affiliate manager and got my commission bumped back up on one of these programs but he said there is nothing he can do right now about the other one. It is good to see him do what he can to make this right. Still, there are plenty of other affiliates who are getting the shaft on this. In most cases it will be worth your time to talk to your affiliate manager and see what they can do.