Flipping the Switch

Maybe your relationship with your network has soured. The reports are frequently late, revenue is down and your questions are not being answered in a timely fashion. You’re thinking about switching to another network, but that means learning new tracking processes and establishing relationships with an unknown group of affiliates.

So, is it really worth all the potential trouble to move over to another network?

Switching networks is a disruptive business decision that temporarily reduces income and requires additional commitment of resources to restart your affiliate program. Yet merchants large and small are choosing to change networks primarily out of frustration.

Anger Management

Merchants cite a variety of customer service reasons for jumping to another network, but they share a common theme: Merchants aren’t happy with the way things are and think they can get better service elsewhere.

While increasing revenue is the ultimate driver of most business decisions, the impulse to switch is usually a reaction to negative experiences. A nagging feeling of neglect from the network foments the frustration and leads a merchant to end the relationship. These feelings of frustration can be found on merchant and affiliate blogs and message boards and are aimed at each of the largest networks.

Ask a dozen people about the performance of their network and you are likely to get a range of opinions from highly positive to very negative, according to Noelle Bermingham, site manager of affiliate SavingsWatch.com. Bermingham says it is similar to the opinions rendered about mobile phone companies. While some people switch from company A to B to get better customer service, others are switching from B to A for the same exact reason.

Each network also has its strong and weak points, according to Bermingham, who worked as a consultant for Home Depot on its affiliate program before becoming a publisher.

The networks “all have their issues,” says Bermingham, who has worked with many of the leading networks during her career, including Performics, LinkShare and Commission Junction.

Lee Gientke, affiliate manager of ProHealth.com, was dissatisfied with the service she was receiving and decided it was time for a change. In August she switched from Commission Junction to LinkShare. A few months after the switch, Gientke is thrilled, saying she has already eclipsed her previous high in monthly income.

She attributes her improvement to LinkShare’s superior reporting capabilities, as well as a “better commitment to service,” she says. She is saving money because LinkShare includes services such as emails to affiliates at no cost that previously required paying additional fees.

Seth Greenberg, who runs eHobbies .com, used a change in technology platform as an excuse to re-evaluate his entire operation and change networks. He shares the blame as to why his program with Commission Junction was under-performing. “We haven’t done a great job internally with affiliate programs,” he says. “We weren’t taking advantage of them in a positive way.” Greenberg says that oversight of the affiliates was an internal bandwidth issue.

Greenberg decided to move eHobbies from internal fulfillment and Yahoo’s online store platform to Amazon.com’s technology and distribution services. Reprogramming the site for a new network at the same time would eliminate the need for another round of updates later.

For Greenberg, the risk was outweighed by the opportunities of starting over. “We didn’t have much to lose because we weren’t taking advantage of the channel,” he says.

Change Is Good

Regardless of motivation for switching networks, merchants undergo a cathartic experience in ridding themselves of a negative relationship. Similar to periodically cleaning out your wardrobe closet, it feels good because you are being proactive, closely evaluating what stays and what goes.

As part of the housecleaning process, merchants will cut the ties with under-performing affiliates and focus on what is being done right with the 10 to 20 percent that are bringing in the cash. While revenue will hopefully increase as a result of the change, you feel better for having done something, which will likely motivate you to work smarter in the future.

During the network switch, merchants also reflect on the internal processes that have been successful. In many cases, this new attitude and focus makes it difficult to determine whether it is the change in network or improvements within the merchant’s operation that prompt subsequent increases in revenue. If a merchant reverts to bad management habits, then the improvement could be only temporary.

Preparing to Switch

Reducing the disruptive impact on your revenue flow of switching networks requires several weeks of preparation to bring your most effective affiliates to the new network, as well as learning the new system for reporting and communications. Although sometimes the work can be done within 30 days, a two-month period of preparation will increase the likelihood that a merchant will start earning comparable revenues from a new network.

The first two weeks of a planned switch are dedicated to contacting the top performers who bring in 90 percent of your revenue, according to Todd Crawford, vice president of sales for Commission Junction. Successfully recruiting the top affiliates, setting up their accounts and updating their links can take up to 30 days, Crawford says, after which the attention is focused on the remaining affiliates that merit moving over. Merchants may see a dip in revenue during the transition, but ordinarily that disappears quickly.

During this time Commission Junction also notifies the top 20 to 30 performing affiliates on its network that a new merchant is coming on board. These affiliates often share the news about the new merchant’s arrival with their peers, creating the “network effect” of additional affiliate relationships, Crawford says. If done correctly, growing the stable of well-performing affiliates should boost revenues above previous levels.

Before notifying your current network that you are leaving, merchants should make sure that another network relationship is cemented. Commission Junction carefully screens merchants and accepts only 50 of the 1,000 or more that apply each quarter, according to Crawford. The network looks at the merchant’s existing revenue figures, and if Commission Junction isn’t sure it can do better, the company will decline to accept the merchant.

“I would rather have someone unhappy that they are not with us than have them unhappy for being with us,” Crawford says. He says it is important that both parties agree up front on realistic expectations for revenue growth and earnings per click. “The last thing I want is for people to join from a competitor and be unhappy and go back.”

Crawford, who recently won the business of outdoor equipment maker REI and shopping site Buy.com from competitors, says larger merchants are less likely to switch networks than small and mid-size merchants because the amount of work and perceived risk is greater. “It’s similar to the difficulty of turning around a large versus a small boat,” he says.

Commission Junction isn’t happy when a merchant chooses to go with another network, but Crawford says the company doesn’t want to impede a merchant’s business. He says the company allows the existing network links to stay in place for an overlapping period of 30 to 60 days. “If we turned it off as soon as they went live with someone else, we would be foregoing some revenue,” he says.

More Than Money

Merchants that switch networks primarily to save on costs or reduce the revenue share are likely to be disappointed, according to Heidi Messer, president and chief operating officer of LinkShare. Messer says merchants focusing on costs are more likely to “under-invest in the channel” and have unrealistic expectations. LinkShare screens potential customers to make sure that they will make the necessary investments in the technology platform to make the affiliate program succeed.

Having the contact information of your existing affiliates is crucial when switching networks, according to Messer, who says LinkShare has won more than 40 clients from other networks during the past year. “A migration is only as useful as the information you have about your affiliates,” she says.

Messer recommends that merchants expect the switch to a new network to take several weeks, although it can be accomplished more quickly if necessary. However, she advises merchants against overlapping the networks because it makes managing revenue and crediting sources difficult.

If a merchant switches networks, Messer says, the impact on most affiliates will be minimal. Most affiliates likely have relationships with all of the networks, so they are familiar with how to code their links and work with their reporting systems, she says.

A merchant that frequently switches networks also risks losing partnership opportunities, according to Linda Buquet, president of affiliate consulting company 5 Star Affiliate Programs. Merchants that regularly require their affiliates to change their links will develop a reputation as a “network hopper” and have difficulty finding new affiliates.

Buquet spoke with one merchant that had switched from Commission Junction to LinkShare and then back to Commission Junction. She declined to work with the company because it was viewed as untouchable by many affiliates.

Sharing Affiliates

Merchants that also have in-house affiliate programs should consider if they want to convert any of these relationships to the network as part of their switch, says James Green, affiliate manager of MingleMatch.com.

Moving your high-performing affiliates to the network could raise your earnings-per-click statistics, making you a desirable partner for affiliates, Green says. By boosting EPC, “you represent yourself better to recruit other affiliates,” he adds, but at the cost of having to share a percentage of the revenue with the network.

While adding your best affiliates to the network could enable you to attract new affiliates, you may also lose some of the direct connection, as communications must then go through the network.

Merchants might avoid having to switch if they better understood the strengths and weaknesses of each of the networks. For example, LinkShare is great at protecting large brands while being weaker at publisher development, according to SavingsWatch.com’s Bermingham. Commission Junction offers hands-off affiliate programs that enable merchants to “be more of a do-it-yourselfer,” and is improving the way it works with larger merchants, she says. Performics’ strength is in comprehensive affiliate management, but the company does not have programs that allow merchants to manage affiliate relationships themselves.

Turning the Tables

The frustrations of one affiliate lead to the creation of a network competitor. J. P. Sauve, who ran several affiliates, says he was frustrated with not being treated well by the major networks’ “our way or the highway” attitude. His emails to network representatives went unanswered, statistics were often incomplete and campaigns sometimes disappeared without warning, he says.

After sharing his frustrations with peers, Sauve co-founded MaxBounty as a competitor to the large networks. “Our policy since day one has been to treat all affiliates, big and small, with the same respect we’d expect from others,” he says. The network encourages direct communication between the merchants and publishers and competes on price by charging a lower percentage of the revenue, according to Sauve.

The decision to transfer networks requires careful consideration of your existing relationship and a dispassionate critique of internal business practices. It is a good time to focus your energies on what is working while eliminating affiliates that have not been contributing. Terminating the relationship with your network sends a clear signal that service is important, which needs to be communicated to the next partner to ensure that the problem does not recur.


JOHN GARTNER is a freelance writer in Portland, Ore. He is a former editor at Wired News and CMP. His articles regularly appear on Wired.com, AlterNet.org and in MIT’s TechnologyReview.com.