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Old 06-07-2001, 11:22 PM   #1
jokaroo
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Unhappy Where do we go Today?

Now that Commission Junction has eliminated CPC and are scaring off all of the good lead programs, where do we go?

In my opinion CJ is making a huge mistake. For one, they are going to lose thousands of affiliates, and even worse they are going to lose hundreds of merchants. Is this the idea of a profitable business? I understand that they may want to make an extra dollar, but they are scaring everyone off with a 500% incline on the transaction fee (from 5 cents to 30 cents per transaction). I find that a little to dramatic. Honestly what are they trying to gain?

Is Clicktrade, or Linkshare the answer? Either way, all the merchants that are leaving are just relocating, right? But where?

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• C. Pavlovski - Co-Owner
Site: http://www.jokaroo.com
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Old 06-07-2001, 11:30 PM   #2
Czar

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The great thing about lead-based networks is that publishers may chop and choose as they deem fit. While things are somewhat more complicated for merchants, from our perspective the best solution is to establish accounts with 3 or more affiliate managers, and pick and choose from the programs best suited to your site/audience.

Many quality lead-based programs will remain at CJ after the changes come into effect, so you shouldn't abandon them completely. In order to supplement your revenue, though, you should give ClickXchange, FineClicks, Websponsors.com, DirectLeads and/or OnResponse a try. These aggregate systems offer the greatest freedom.


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Old 06-08-2001, 05:04 AM   #3
BrianClark
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Jokaro,

I think you're being overly alarmist ... loosing thousands of affiliates? hundreds of merchants? Over per-lead programs?

Granted, the email list acquisition market is going to get price squeezed out of CJ, a decision that I don't really understand, and per-click is eliminated. But this squeezing results in a minimum commission floor of $0.01 per event (for a total cost of $0.31)with a pressure towards a natural low commission of $1.00 (for a total cost of $1.31.)

I went to CJ just now to examine what this really means for their merchants, and here's the facts:

1. The highest CPA in the CJ network right now is $35/action (Elite Titles in the Gift category)

2. In the list of top 200 merchants by commission value per CPA, there isn't a single CPA below $1.

3. The lowest CPA of the top 100 merchants by commission value per CPA is $2.50.

4. After about 240, you start hitting the $0.80 to $0.15 per lead market -- mostly smaller merchants, email acquisition efforts and "freebie" sites. I agree that these will be under price pressure to either find another solution or a more value CPA.

5. By the time you get to about 450 in the list, the CPA has bottomed out to $0.05 per lead -- in my opinion a nearly scandalously poor commission rate, even for email opt-in actions. By the time you get to 500 on the list, the value per action has dropped to a penny per.

These sites shouldn't be in CJ -- they should be working on finding a business model that makes a damn action worth more to them! Some of them, with the $0.01 actions, probably have already abandoned their affiliate programs and anyone who signs up is just throwing their traffic away.

6. In total, there are 546 programs in CJ that include a CPA reward (and it appears that roughly 20% of those are hybrids ... per sale plus per lead.) Of those:

210 have a CPA of $1 or higher
63 have a CPA of > $0.50 but < $1
96 have a CPA of > $0.25 but < $0.50
177 have a CPA of < $0.25

Ok, that's the facts, Jack. Now we can all interpret the facts. I'd argue that for 210 of the CPA programs ... or 38% of the total ... this CJ change is just raising administrative costs by 10%. For 159 programs ... or 29% of the CPA programs ... this represents a real challenge and merchants will have to (1) drop commissions, (2) find more valuable CPAs or (3) find another affiliate solution. For 273 programs ... or half the total ... this is a real problem: of course, the good news is that they were either (1) email list acquisition models, (2) ****ming affiliates with commission rates far less than competitors in their own category, or (3) have already abandoned their CPA programs [for example, Listen.com has a "$0.01 CPA" program even though they are out of business.]

My point isn't that this isn't going to change to CJ ... just that it's not this nightmare that affiliates are making it out to be, except (and this is the BIG EXCEPT) in the category of email list acqusition.

My $0.02,


Brian Clark
Producer, ReveNews.com http://www.revenews.com
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Old 06-08-2001, 05:21 AM   #4
kerplunk
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Thanks guys.

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Old 06-08-2001, 06:02 AM   #5
Knut
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Brian, here's my thoughts on why some of us aren't too happy about the changes :-)

Generally speaking, high-converting, lowpriced CPA merchants in the category of email list acquisition is probably among the most profitable for entertainment sites.

I think that's why some of us aren't too happy about losing the ability to find merchants with lowpriced high-converting merchants (at CJ - who until now also have guaranteed payments - I believe they've been the only affiliate network to do so for a while, too :-)

While there are some low-paying merchants who "shouldn't be in CJ", there are also many that perform very well, and averagely better than others who pay 10 times as much per lead.

I've made plenty of money with Nonsense2000, for example, a merchant who now only pays 10 cents per lead. I have constantly been getting 10% CTR's, and 8-25% CR's (depending on how I link). Believe it or not, but this is actually GREAT stats for an entertainment site. (We make it back by getting huge quantities of traffic :-)

(As a sidenote regarding Nonsense2000, they've now changed the sign-up process so that it won't convert as well as it used to...)

Some would say that by properly targeting high-paying low-converting merchants (which will still be around at CJ), we could get similar results - but I beg to differ.

There is only so much targeting that can be done on an entertainment site - and those that ARE targeted (other entertainment sites) will never be worth more than what the low-paying merchants at CJ now pay. (In my humble opinion)

The new changes WILL result in that many "low-value"/entertainment sites will make a lower CPM in average - if they keep using CJ merchants. We're, at least, going to have less choices.

CR's and price per lead isn't everything. CTR's and the volume of traffic we're able to send to each merchant are equally as important - and there's no way one can get as high CTR's if there aren't any semi-targeted (entertainment) sponsors around...

I'll personally continue using CJ for my other sites (why wouldn't I?) - but I'll probably not use them much on my entertainment sites.

(I'm awaiting how my number one performing merchant at CJ (another email acquisition merchant) reacts to the changes.)

All, in my humble opinion, of course.


[This message has been edited by Knut (edited 06-08-2001).]
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Old 06-08-2001, 08:25 AM   #6
BrianClark
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Knut,

I'm not saying you shouldn't be angry, just that sometimes that anger leads to these over-the-top statements that just don't appear true when you look at the facts.

You wrote: "Generally speaking, high-converting, lowpriced CPA merchants in the category of email list acquisition is probably among the most profitable for entertainment sites." Absolutely. I'm not arguing that CJ isn't totally mucking up that business model and I have no idea why. That isn't the same as "scaring off all of the good lead programs".

You wrote: "Some would say that by properly targeting high-paying low-converting merchants." Don't cast me in that camp! I'm looking forward to EPC being published so that I can choose the "high-paying high-converting" programs that match my visitor's interest, which is what I've been doing all along (but will be easier now.) It's an improper analogy to suggest that the world falls into "low-paying high-converting" and "high-paying low-converting."

Believe you me ... I understand that position that you are in and how CPC and non-sale CPA has been the bread-and-butter for a lot of small sites. I don't mean to start a flame war here with this next statement, but those are also the kinds of sites that most merchants are looking to eliminate from the affiliate base. Again, no offense intended ... but most performance marketers want sites that can SELL, which relegates sites that can't into the branding market not the response market ... or to the response markets that don't require selling.

All those programs are going to go somewhere, so however painful it might be in the short-run, I hope it's not devestating for everyone in the long-run. On the upside, some consumers of that kind of media (moi, for example) have actually started DONATING more aggressively to those kinds of sites. I'm a bit of a computer gamer, which means I frequent a lot of sites that fall into what you call the "entertainment category" and they just don't have much to sell me ... but I don't want them to go away, so I pay to have pop-ups come off of ezboard, I donate to everlore.com, etc.

Perhaps, in fact, the solution for sites like yours is the subscription model ... just a low priced one? I know, a pain in th ***, but psychologically it works the loyalty angle with your audience which is your best media trait ... and the counter-balance for the fact that this audience won't buy.

Brian Clark
Producer, ReveNews.com http://www.revenews.com
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Old 06-08-2001, 08:41 AM   #7
emailer
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I keeping predicting a rush of merchants and affiliates to ClickXchange, but so far it has not materialized

Right now, ClickXchange has mostly repackaged offers and/or one or two cent offers. Its strengths are that it works flawlessly; it has thousands of offers; all US are accepted, with acceptance for individual offers up to each merchant; a two-tier payment; aggregation of commission and payment after $25; and until just a couple of weeks ago merchants could operate a program on a shoe string. IMO Linkshare, Befree and ClickTrade present formidable problems for affiliates and merchants alike.

And so far my prognostication is all wet.
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Old 06-08-2001, 09:01 AM   #8
PlanetLaunch
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I totally agree with Knut and Jokaroo on this. I think CJ is throwing the baby out with the bath water by creating such a high minimum transaction fee. Sure some of the low paying per lead programs were probably just stealing traffic, BUT there were also a lot of lower paying (under $0.50 per lead) programs which produced solid CPMs by converting well.

I assume these programs will move to other affiliate networks, but it sure was nice to receive the aggregated monthly check from CJ and not have to track down late-paying merchants such as those at Linkshare and BeFree.

We will all have to wait and see where the bounced programs end up - ClickXchange, Websponsors, Cyberbounty - maybe even BeFree or Linkshare.

PL
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Old 06-08-2001, 09:33 AM   #9
Knut
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Brian:

I hope my post didn't come across as an attack at you or your opinions. I've been a frequent visitor and reader at your great site for a long time, and you have plenty of great advice :-)

Regarding my statement that suggested that there's only two extremes - either low-paying, high-converting or the other way around - I agree that the world isn't as black and white as that.

What I tried to say was that since generally speaking an email acquisition isn't really all that valuable (unless we're talking about a merchant who agressively pushes towards a SALE), we'll probably never see high CR's (or high prices per lead) with any merchant relying on selling advertising space to a general audience (which most of these merchants do) at CJ anymore.

I believe many of these types of merchants WILL be scared off CJ, or will have to dillute their site with leaks (unpaid links out from their site) to increase their prices per lead. (Of course, this will reduce their EPC, etc)

Anyway, it seems we basically agree on all this :-)

Personally, as for my own entertainment sites, I think I'll manage to do okay without going for the subscription model. I still make a good CPM, and there's a loong way to go before they're not profitable. I'm also going to play around with sales too.

I must admit, though - that I've lately started focusing on other sites on "high value" topics, and per sale programs.

Safer, more stable income (though slower/more work to build, at least for me :-)

Regarding CJ, in overall, I agree that they're still a great option for sites who're looking to sell (and/or sites on "high value" topics).

[This message has been edited by Knut (edited 06-08-2001).]
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Old 06-10-2001, 07:53 PM   #10
jokaroo
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hmmm...

"It's an improper analogy to suggest that the world falls into low-paying high-converting and high-paying low-converting."

In my case that specific statement is completely proper. I can not find one single merchant on CJ that is high-paying and high converting. Not one high paying merchant can produce the CPM I get with the low-paying high-converting merchant. Thats why I don't understand why CJ is doing what they are doing. Are we not all suppose to profit from this change? I am sure I won't.

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• C. Pavlovski - Co-Owner
Site: http://www.jokaroo.com
Email: cpavlovski@jokaroo.com
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Old 06-10-2001, 08:27 PM   #11
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My prediction that CJ will go belly up this year.


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Old 06-11-2001, 05:24 AM   #12
jokaroo
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What I can not understand is that CJ was in a no lose situation before they have decided to make this dramatic program change. Were there employee’s under paid or something? Or is this tactic in goal to pay them even higher? When any company makes a huge change you either figure that they are having problems, or they are looking for a way to make things better then they currently are. In this change, I can only see a lose, lose situation. For example, I can basically say bye-bye to CJ since I love those high converting – low paying lead programs. My CPM for the month of May was $20! Do you think the programs that make up that $20 were of over a dollar per transaction? Not a chance!! They were easy converting programs that pay under 30 cents!

To conclusion, those programs should be gone by July and so will I. I run an entertainment site, and the CPA programs that will still exist in CJ won’t convert for an entertainment site. Being positive that thousands of affiliates in CJ do run entertainment sites, I am pretty sure that thousands of affiliates will leave. Now how is this a positive thing for CJ?

------------------
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• C. Pavlovski - Co-Owner
Site: http://www.jokaroo.com
Email: cpavlovski@jokaroo.com

[This message has been edited by jokaroo (edited 06-11-2001).]
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Old 06-12-2001, 04:44 PM   #13
bruin
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Quote:
Originally posted by emailer:
I keeping predicting a rush of merchants and affiliates to ClickXchange, but so far it has not materialized

Right now, ClickXchange has mostly repackaged offers and/or one or two cent offers. Its strengths are that it works flawlessly; it has thousands of offers; all US are accepted, with acceptance for individual offers up to each merchant; a two-tier payment; aggregation of commission and payment after $25; and until just a couple of weeks ago merchants could operate a program on a shoe string. IMO Linkshare, Befree and ClickTrade present formidable problems for affiliates and merchants alike.

And so far my prognostication is all wet.

We have found a bounce in business usually occurs after the competing program is completely concluded. Customers tend to wait to the last minute to change their programs around.
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Old 06-12-2001, 05:20 PM   #14
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"We have found a bounce in business usually occurs after the competing program is
completely concluded. Customers tend to wait to the last minute to change their programs around."

I think Brian hit the nail on the head.

They can expect to loose a lot of traffic along with affiliates and merchants. Alot of webmasters are just hanging on milking what is left before leaving the carcass for other options.

CJ seems to be downsizing the program to cater to the high dollar merchants, who will squeeze them hard.

I agree with ValueAd, I don't think they will last with the current model.

But then I promoted AA too http://geekvillage.com/ubb/smile.gif

Chazhound

[This message has been edited by Chazhound (edited 06-12-2001).]
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Old 06-12-2001, 05:29 PM   #15
Robert from SI
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If you'll allow me to give an outsiders opinion...

There has been such a great deal of discussion on the changes made at CJ. A remarkably similar reaction occured when GoTo.com announced the changes to their terms, with many of the same comments being used. "They'll go belly up", "They are abandoning the small merchants/advertisers"

There is one reason that CJ made this move, To increase shareholder wealth.

CJ isn't in business to run affiliate programs, sell clicks, or generate leads. They are in business to make money.

I can assure you that they looked at the current state of their business and decided that they would sooner reach profitablity by increasing their fees. And if it means that lower paying merchants no longer find CJ an attractive option than so be it. The days of "market share at all cost" are over on the net.

CJ did not get to be the eBay of affiliate programs by being stupid. They are looking out for the best interests of CJ. Not the affiliates or the merchants. Just as you look out for your best interests when deciding what advertising to place on your site.
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