Comments on: Which PPC affiliate or network will go bust first?

By: daz

daz — Tue, 21 Oct 2008 21:41:37 +0000

I’m expecting a big lingerie retailer to go t**s-up after Christmas. Any affiliate putting all their eggs into this basket is asking for trouble?

Who is it – here’s a clue: they never made a profit in the good times, they ain’t going to make on now?

By: Mark Walters

Mark Walters — Tue, 07 Oct 2008 08:59:02 +0000

Affiliate Window may be slightly different to others so it’s worth giving some clarity. We pay all of our affiliates on any validated transactions twice every month and usually ahead of merchants paying us. This allows us to facilitate the quick turn around of cashflow required for a fast growing affiliate business, whilst also acting as the financial buffer for any merchants who might go under.

Merchants are not required to pre-pay or validate ahead of time as again we act as their buffer to affiliates giving them both time and piece of mind regarding any transactions.

How can we do this? Well, we implemented this system 3 years ago and have always accounted for the advance affiliate payments as a requirement for the business. Our bad debt ratio has dropped year on year and our relationships with our merchants have allowed us to be seen less as a supplier and more as a partner which facilitates faster payment turnaround. Feel free to check out our financial standing or credit rating, I can safely say we are one network that invests in our future, i.e. our affiliates.

Doug, I can’t comment for other networks/affiliates so your thread is still quite interesting.

By: Doug

Doug — Tue, 07 Oct 2008 07:52:45 +0000

If I was a large affiliate/network I would be limiting my exposure to 30 days and/or asking for money upront or in escrowe.

By: dave

dave — Tue, 07 Oct 2008 00:54:45 +0000

How easy do you think it would be for affiliates/networks to get a deposit or pre-payment written into their merchant agreements though? Is that a very common practice at present?

Networks would also have to be trusted/bound to ensure that they pass on the appropriate proportion of any merchant deposit they’re holding to their affiliates?

By: Max

Max — Mon, 06 Oct 2008 17:03:28 +0000

Very true, I’m worried about this at the moment, if 1 merchant im promoting quite heavily doesn’t pay and the merchant doesn’t pay me, i’ll be out of pocket around £5,500!

By: Rumbas

Rumbas — Mon, 06 Oct 2008 16:47:24 +0000

Dougs thinks too much methinks ;)

But a very valid concern and something we’ve been pondering too as we spend quite a bit on ppc for merchants. 3 words: pre-payment-merchants

By: maxd

maxd — Mon, 06 Oct 2008 14:47:16 +0000

We had a mail go round this morning about being on top of big debts. Some companies pay 60 days after the transaction has occurred and we can run into financial trouble if they do not pay us.

By: Anonymous

Anonymous — Mon, 06 Oct 2008 12:08:25 +0000

I don’t think any of the big ones will go bust. This might be a set back for them, but as they’ve go so many millions swilling around in their bank accounts I can’t see them shutting up shop over one merchant going under.

By: Keith

Keith — Mon, 06 Oct 2008 08:41:31 +0000

Very true Doug.

A number of the networks who pay affiliates even if the merchant goes belly up do so only because they are sitting on a large deposit (just realised that sounds bad – though I guess in your scenario some could be sitting on a large deposit of a very different kind ;-) ) – as far as I know it’s not often the case that paying the affiliates hits the network financially, which is why some networks refuse to pay if the merchant fails.

There is one major network who is potentially very exposed to the risk you mention though, and as an aside I have heard rumours on the grapevine during the last week of one mid sized network having cashflow problems, so maybe the gremlins are starting to surface.

Undoubtedly interesting times ahead