Posts Tagged ‘Expedia’
In an industry worth billions how much money is being “bunged” around to get people to change links.
If I was a “streetwise” affiliate manager at a merchant, or even an affiliatenetwork, I would make sure I had some spare cash in a black swag bag or something to persuade affiliates to change links. Now I am not saying this goes on, but it’s a thought.
Lets assume I was a company with a large online presence with a large affiliate business. I had deals with the large affiliate networks to run some of my global affiliate business. This online affiliate business was worth hundreds of millions per year in sales and I am paying out 5% in affiliate commission, with a 20% management fee to the network.
So with a US$200 million affiliate business an affiliate network is making 1% on the total sales numbers , or $2 million per year. Over 90% of most affiliate business for any merchant comes from about 10 affiliates, and as a merchant I know who these people are.
One day as a merchant I may be tempted to persuade the affiliate to deal with me direct, hence I call up the affiliate and say:
- Fancy working with us direct?
- I can pay you a signing on bonus
- I can pay you more commission as I will not have to pay the affiliate network
- We can deal direct without those affiliate idiots in our way
Is that legal business or bribery?
Doug poor but trying to be honourable
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You got to be joking.
Why oh why would they do this? Expedia is a travel company in the real sense of the word.
It just does not fit with Googles business model…not as I see it anyway.
Google as a business lives off real companies having online wars to get eyeballs. They don’t care where the traffic goes as they make as much as possibel from the visitor
Please can some explain the rationla here
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Did you know that IAC owns the following:
- HSN.com – Home Shopping Network
- and more
It’s not just Google buying everything.
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Expedia recently seemed to be buying anything they can get their hands on.
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Well today I started a blog. So rather than all the crap reasons why, here is the first one. Yesterday I posted about the arrogance of merchants over at Matt Woods affiliates4u forum, here is a brief snippet:
In my new role as diplomatic ambassador (not). It astonishes me and I wonder what I am missing, having ran and ownded numerous companies I would always talk nicely to people who could give me business. I would make their life easy and try every way to help them send me more business.
So today I am in my new play role and applied for the NEXT affiliate program on buy.at. Now buy.at know of me but we have never done much together, notably because affiliacy really is not our game. But they know our volumes over the years have been very very large. NEXT have no idea who we are or what we do….arrogance of merchants
So thought I would expand on this as it is something that still astonishes me.
In the real world of business most companies are split into seperate divisions and each division is now having to justify its existence. Hence you have the sales department out their knocking on doors and making deals, always aiming to make profit on every widget sold. You then have the marketing department, who are out their brand advertising, in many cases without ROI targets but focussing on awareness at what is called “opportunity to see”, ie the chance of a customer seeing our adverts. The rest of the company including IT is seen as a cost centre and not a profit centre.
So along comes the internet, and the IT department, who run the web site, develop the seo,ppc and affiliate channels. A smart IT director realises this is his or her chance to make money for the company and beome a profit centre and hence have a chance to make some bonus and maybe getter a better company car. So now we have IT doing sales…..and an internal fight starts.
In the meantime the marketing department has been buying banners and started doing ppc…again another fight ensues.
So each department internally is fighting and then they try to build an online strategy…but remember they are still fighting for power internally.
Now this bit confuses me:
- banner buying is viewed as marketing and brand building and does not give true roi
- ppc initially was viewed as an roi channel, but is now properly in the hands of marketeers and hence many campaigns are viewed as brand building exercises. And google are more and more pushing this idea. The bid prices go up, the roi goes down, but hey its better than TV and newspaper advertising.
- affiliates for some reason are viewed still as profit centre and hence can be treated differently
In the normal business world the profitable sales channel would be seen as the channel to look after, but for some obscure reason in the online world it is treated as the scum.
So why are affiliates treated as the scum? My view is quite simple so many affiliates run this business part time and treat it as an extra income, so they are happy to be given it hard up the a**e and take the crumbs from the merchants table. It’s beer money. But the times are changing and the small affiliates are dying and being replace by specialist affiliate companies,with 10 to 500 staff. These affiliates are very different in their view, they run it like a business. As time rolls on these affiliates pick a sector and aim to dominate all the search engines and all the top slots, the law of avergaes says they will get a few rankings. But these sites aren’t horrible one page wonders but real value sites that the search engines want to rank. Eventually all the top slots are held by large affiliates, who then dictate the terms for merchants.
Yes merchants can still spend fortunes on ppc, but they will not rank long term in the organic results, simply because they can only hold at bext one slot for one keyword, where as a affiliate can hold them all. So ultimately the traffic will be controlled by the large affiliates, who have real value sites. If you are a company like expedia and watching your market share grow by a staggering 12%? Wow guys thats amazing, if our sales numbers had grown only buy 12% we would have sacked everyone. Maybe buyout some of these sites, ie note the recent sales of www.travel-library.com and www.holidaywatchdog.com, these sites will be encompassed into the global suite of sites and ultimately fall foul of the corporate beast and slowly loose some rankings.
So merchants can continue to buy up the online sales channels or start to work closer with some of the major affiliates, or maybe both.
Course you could just sit in your corporate tower and ignore this internet thing, who cares you are still being paid and with dodgy tracking systems or the inability of anyone to understand the 200 plus Omniture reports, no one will ever find out. If you run out of money why not
Then what about buy.at has your vision become clouded looking at the money. You are nice bunch of guys:), sorry couldn’t resist. I like you and have complete respect for what you have done, but dont turn into the nasty merchants bitch. The SS did that and it didn’t work long term. Mind you, have you already left the bunker and got the pad in Argentina? Watch out people can still hunt you down and Chris has some nasty friends:)
Doug having fun:)
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