Originally Posted by **********

I have an idea on the subject. The affiliate program CRASHED, just like the markets did in '08.

Consider this:

Back in the day, programs were making money by offering 5% and 10% commissions to affiliates. Consumers were hungry and online porn was new. Things were good.

But then programmers owners started competing for affiliates, and affiliates sought out higher payouts. Commissions began to rise.

Affiliates then demanded more tools along with higher payouts. Program owners took on greater and greater costs by paying out higher and higher commissions while simultaneously spending more and more on programmers creating new tools, photographers and models creating new content, etc. Then of course affiliates demanded even more such as >50% Rev Share, putting a serious strain on some companies and crushing others. How do small companies compete?

In effect, the cost of affiliate support soon became so expensive that programs weren't making enough money anymore. This, plus the ever expanding amount of free content hit some people by surprise. Not knowing how to adapt or not realizing what was happening before it was too late, they went out of business.

We ourselves closed our own affiliate programs twice (once in 2006, then again after a second try in 2010). We never did crazy business with affiliates, but we did some, and it was my accountant that alerted me to the problem years ago. She setup our books so that everything was a separate account. For example, Telephone, Electricity, salaries, etc. Under advertising and marketing, she listed various forms of advertising as separate accounts including PPC, Affiliate commissions and Affiliate Support.

When asking her how we were doing one day, she ran a spreadsheet and showed me that Affiliates were were almost 70% or our total advertising budget even though we were only paying out 30% at the time.

Of course, the affiliate business model works for many, but if anyone reading this is struggling with their sites despite having good traffic and paying customers, do the math - you might be spending more than you think.