Why Do Some Networks Thrive While Others Die?

How Top Networks Like MaxBounty Evolve & Thrive In A Changing Environment

How do some performance marketing networks keep succeeding against all odds? Why is it that while some CPA networks vanish almost overnight, others survive and grow?

Over the last few years the CPA sector of the performance marketing industry has experienced a series of massive changes. From Acai berries and flogs, payment processing shutdowns and changes in FTC enforcement protocols, the sector has borne the brunt of storm after storm of negativity. The sector itself has been transformed by the development of commoditized network platform software that has lowered the barrier to entry for new networks to near-zero. And, of course, just to make things more interesting, the recession has meant that more advertisers than ever have been going belly-up, unable to pay their bills. As a result, the industry has seen a series of major network flameouts, with names such as Epic, Hydra and MediaTrust effectively disappearing.

Through it all, some networks have continued to thrive, and we have seen the rise of a group of networks that somehow consistently overcome the odds. These are companies such as Max Bounty, Neverblue and Clickbooth, each of which have featured in every one of the BLUE BOOK Top 20 CPA rankings over the last four years.

What is their secret? How do the MADMEN of CPA keep winning?

150 years ago Charles Darwin coined the term “survival of the fittest” to describe the ability of organisms to evolve and compete in a world of ever-changing environments. Contrary to popular belief, he didn’t mean that the biggest and strongest would always win out. Instead, he meant that it is adaptability that is most important.

Tyrannosaurus Rex is the most powerful predator to have ever roamed the planet, but it was the descendants of the scurrying, mouse-like early mammals around Rex’s feet that ended up dominating the world. When the meteorite hit and the Earth’s ecosystem changed, the dinosaurs couldn’t adapt and so died out. Mammals evolved, adapted and then grew up to run performance marketing networks.

As the publisher of Revenue Performance magazine we see this same process of adaptation vividly illustrated each year when we research and compile our annual BLUE BOOK Top 20 performance marketing network rankings. Time and again we have seen networks that appear to be doing everything right but suddenly find themselves in trouble, with affiliates and publishers going unpaid, and reputations in tatters.

What is most interesting is that some networks consistently buck the trend. Max-Bounty for example, is certainly not the biggest CPA  network  in the industry, yet over the last three years it has ranked 6th, 5th and 3rd – a consistently high performance. Similarly, networks such as Neverblue (1st, 2nd and 2nd over the last three years) and Clickbooth (3rd, 4th and1st) seem to always find a way to beat their competitors.

So what’s going on? What are these networks doing right? Perhaps the place to start is to consider the effect of lowpriced, on-demand  network platform software. It brought an influx of new network owners into the industry, many with little or no experience in managing the kinds of risk that running a network entails. Many successful network owners see the network failures of the last few years as  evolution at work, with weaker companies falling away.

JP Sauve founded MaxBounty with his brother Steve in 2004. He says, “I think it is too easy to blame an economic downturn when you look at the number of networks that have gone out of business. I think it was more of a network bubble that finally popped. There’s such a low barrier of entry to becoming a CPA network – indirectly it plays a big part in the problems we have seen with some networks.”

Solid networks like MaxBounty who value and protect their clients, both affiliates and advertisers, are still running strong. Risk assessment is one of the most important parts of running our business. It’s important to consider whether we know an affiliate well enough before we recommend an advertiser to them, and it’s equally important to consider whether an advertiser’s campaign is simply too risky to list. The balance of looking out for both our affiliates and advertisers is critical. Protect your clients and you protect your business.”

That emphasis on relationships and the implied criticism of the short-term viewpoint of many newcomers into the business is echoed by John Lemp of Clickbooth, “we have been able to thrive and grow over the past ten years by focusing on building long-term value for everyone involved. Survival is about building quality relationships. Being successful in performance-based marketing is not a question of simply reacting to changes but of also building something of value for the future, not short term. Look ahead and create long term value
for you and your partners.”

What is interesting in talking to successful network owners is that there is a consistency about what they prioritize. Reducing risk while providing a high level of service is a constant theme. JP Sauve told us, “Look, the biggest threats to the performance marketing industry aren’t things like the end of continuity offers or evolving compliance terms. Those things make the business environment more challenging but good networks can cope with that and still thrive.”

“But what does not bode well for the industry is when anyone can create a CPA network overnight by simply signing a check, no questions asked. Who’s running these new networks and what effect are they going to have on advertisers? That’s the biggest threat to the growth of performance marketing.”

The point being made is that with no barriers to entry in place, a new CPA network can be set up in minutes by an affiliate embedded in the world of black-hat marketing. With so many offers being re-brokered through multiple layers of networks, poor quality or fraudulent traffic can be laundered and much harder to spot. JP Sauve brings it back to relationships, “Who needs yet another network without any direct relationship to an advertiser? Rogue affiliates look for networks that simply re-broker offers because they understand the network has much less invested in giving value to the advertiser. Reduce the number of networks and you’ll see less fraud. Less fraud will lead to more business for everybody.”

The longer-term viewpoint of these networks is also apparent when talking about opportunities, rather than threats. Identifying an  opportunity and then executing efficiently is deemed to be critical. Eric Gerritsen of Neverblue told us, “You need to start with an effective and long-term core strategy. In our case it has been international markets and mobile. We focus on long-term clients within multiple hundred-billion dollar global industries where we can embed deeply into the core marketing flow and conversion pathway.”

That scale of vision still needs to be built upon a foundation of the personnel within the company. John Lemp again, “We take advantage of opportunities by maintaining our values and focus. We don’t try to dominate every area of the vast performance marketing industry; instead we focus on our core strengths and values, and those of our partners.”

Eric Gerritsen also expanded on this theme, “We stay focused on our core strategies of international market development and mobile. We stay in learning mode, keep an entrepreneurial culture and connect to passion to do great work. We are focused on embedding deeper into the digital marketing processes and flows of the world’s great companies. That will allow us to take advantage of the giant inflows of money from non-digital to digital marketing.”

Ultimately, in talking to these network owners and executives, what comes out is that the personality of the company so often reflects the personality of its leadership. That makes sense if you consider the repeated emphasis on business relationships: competence,  trustworthiness and quality of execution are all characteristics of successful individuals as well as of great CPA networks.

JP Sauve captured this in describing his relationship with his brother and co-founder, Steve, “The personality of the network founder definitely affects the potential success of a network. It may be my insistence on risk assessment speaking, but I find that conservative people make the best network owners. If you need an accountant, do you hire one who acts like a rock star or one who quietly works hard to ensure your money is safe? The same logic should apply to being a network owner. I’ve was fortunate to be able to found MaxBounty with my brother Steve and we counterbalance each other. I’ve always been driven and focused on growth, while he is detail-oriented and emphasizes rooting out difficulties before they become a problem.”

The bottom line is that each of these networks is succeeding in the face of an international recession, challenging compliance conditions and advertisers that are often overly-worried about levels of fraud. It’s not how big these networks are that is letting them beat their competitors. It’s their unrelenting focus on what is important in today’s business environment.  They move when they need to, they look to where the long term opportunities are and they evolve.

Survival of the fittest.