Does PPS really work?

[slapass]

Trax - that is in my calculations called additional income, I call it www sales. As to other non referred sales ARS runs from 99 to 100% referral rate on referred clicks! If you have a technically sound system you should be VERY close to 100% I say that with 100% honesty and truth - in fact, today we're running at 99.5% That is pretty damn impressive!

Cool MArc thanks for that answer.

PS Alex, The 40 PPS on the model has too big of a jump in the loss column. I suspect an error

[Trax]

Yep... just read that...
so www sales or non refered sales should make a pretty nice part of a programs calculation.. asuming the site attracts the surfer and is non of those cookie cutter sites...
a site like milfhunter or bangbus barely needs promotion these days...

word of mouth (marketing) makes those a lot of money.

[iBanker]

Well, one thing we cal all agree on.

Post a thread of this topic, and watch all the big boys start posting. Good stuff all. I give it 10 minutes before somebody starts posting Own3d pictures here and ruins it.

[Trax]

I mentioned these twice but notice how the program owners never seem to give a number for those? This is not shaving, it is just life. People look and shop and come back.

exactly...
and its not all people that like to click on ads...
still they might be interested in the site... and if the banner says...
e.g. "all @ xyz.com" the surfer might not be too lazy to type it in and check it out...

[iBanker]

Cool MArc thanks for that answer.

PS Alex, The 40 PPS on the model has too big of a jump in the loss column. I suspect an error

I'm looking at it now, tell where to be percise please. $40?

[SykkBoy]

It's all about volume, inhouse traffic and "the tail"

[S.A.K.]

I also have a spreadsheet that is very detailed that shows that the PPS model works and for the same reasons as Marc De I am not going to post it for everyone to see. You have to be a very good business person to make it work and you have to be willing and able to take a large loss in the initial months of the program as it takes a little while to even start breaking even just on the variable costs (not including fixed costs) but eventually it does come, sooner for those then others, but once it does come the rewards mount up and mulitply nicely at a large rate.

I do also agree that every program owner out there large or small wishes this industry operated only on a rev share model as it is more profitable to the owners but that would require every company in the industry to change because the one that didnt would have tons of traffic because (eventhough I am sure I will get arguments to this) most of the time the PPS model makes more for the webmaster.

[quiet]

great thread.

[Strife]

It's all about volume, inhouse traffic and "the tail"

yup that and and upsells.

[Marc De]

Yep... just read that...
so www sales or non refered sales should make a pretty nice part of a programs calculation.. asuming the site attracts the surfer and is non of those cookie cutter sites...
a site like milfhunter or bangbus barely needs promotion these days...

word of mouth (marketing) makes those a lot of money.

This is where investing heavily in very good domains pays off. If you have a really good short domain, your www income can take that additional income (that I have listed at 20%) to 25-30% This makes profits SOAR!

I can't stress enough, less that 1/2 of the battle is having the spreadsheet and creating those variables, the biggest part is executing on those variables...

And I agree, GREAT thread!

[Drake]

Great thread and I commend everybody who has participated in it. I like the examples provided. It would be great to see a spreadsheet of a PPS example other than the one Alex provided. Purely hypothetical just the way his was hypothetical. Nobody needs to know true values. It's just very difficult to read textually. A graphical presentation with numbers would be much easier to read.

[slapass]

I'm looking at it now, tell where to be percise please. $40?

Here:

($3,523.35) ($125,700.40)

The jump was 5 times 100 sales up to this point. and here it is 2k over the $35 spot.

Related issue if you guys make 1.87 on pop ups why do you cut $5 off my commsion when I opt out of them? This must help the PPS model. Those of us who don't use pop ups subsidize the other guys.

[Drake]

MarcDe, thanks for your input. Just going by the numbers you used. Would it be fair to say that PPS only works if it's used in junction with cross sales? Or extremely difficult?


100 sign ups
$4.95 trial
$39.95 monthly
$1.00 x sell
$39.95 monthly x sell
25% x sell opts

100 sign ups * $4.95 = $495
25 x sell opts * $1.00 = $25
35% trials convert = 35 * $39.95 = $1398.25
35% x sell convert = 8 * $39.95 = $319.60
Membership Income in 3 days = $2237.85 gross
Processing Fees, Refunds, C/Bs, Revokes = 20% = $1790.28 net

[Marc De]

Mike33 - well all those numbers can be changed. If it was in a spreadsheet it would quickly tell you if you could make those changes and still be profitable.

The payout amount, the trial amount, the monthly amount, the x sell amount, x sells at all, trial to fulls, credit on secondary processors, etc...

I don't know how any program pays $30+ per sign up without the use of x sells. It makes things VERY tight.

[Marc De]

It's all about volume, inhouse traffic and "the tail"

In house traffic doesn't equate into the profitability of a PPS program. What you earn from your own traffic sources is a separate issue all together. Also, volume doesn't really equate to the profitability per sign up from commissions. If you lose $5 per sign up, doing 1,000,000 sign ups / mo is only going to lose you $5,000,000 / mo plus operations & overhead expenses.

I'm assuming by the 'tail' you mean the longevity of a customer rebilling? If so that is very correct...

[Alex From San Diego]

In house traffic doesn't equate into the profitability of a PPS program. What you earn from your own traffic sources is a separate issue all together. Also, volume doesn't really equate to the profitability per sign up from commissions. If you lose $5 per sign up, doing 1,000,000 sign ups / mo is only going to lose you $5,000,000 / mo plus operations & overhead expenses.

I'm assuming by the 'tail' you mean the longevity of a customer rebilling? If so that is very correct...

Marc we definitely agree on what you just said about your own traffic is a seperate issue all together. You don't take from Peter to pay Paul : ))

[Alex From San Diego]

Here:

($3,523.35) ($125,700.40)

The jump was 5 times 100 sales up to this point. and here it is 2k over the $35 spot.

Related issue if you guys make 1.87 on pop ups why do you cut $5 off my commsion when I opt out of them? This must help the PPS model. Those of us who don't use pop ups subsidize the other guys.

Thanks slapass...even math minors make errors....even though I love numbers, I guess that is why I didn't major in it...

[slapass]

Related issue if you guys make 1.87 on pop ups why do you cut $5 off my commsion when I opt out of them? This must help the PPS model. Those of us who don't use pop ups subsidize the other guys.

Any response to this? Also the $ made on the consoles is going down thanks to browser upgrades. Not too horrible on the $35 dropping to $30 but Silvercash and some others can just make you puke to get 4 sales in a day and not break a hundred.

[slapass]

Also notice how the $40 per trial is now green after 6 months. Pretty nuts!

[Wolfy]

threads like these.. I thought they were gone. thanks to everyone, can we see more like this? I come here to learn, and today I have learnt. Actualy I have refined some earlier beliefs through the experience and wisdom of others, but just the same.

[Rui]

great thread

[andrej_NDC]

Also the $ made on the consoles is going down thanks to browser upgrades.

no matter if you use google pop-up blocker, SP2 or whatever, the new pop codes work also with them, go to my join page and test it

[bigdog]

This is where investing heavily in very good domains pays off. If you have a really good short domain, your www income can take that additional income (that I have listed at 20%) to 25-30% This makes profits SOAR!

I can't stress enough, less that 1/2 of the battle is having the spreadsheet and creating those variables, the biggest part is executing on those variables...

And I agree, GREAT thread!

very good point about domains, there are some sites that have great content but shitty domains that a surfer would proably won't remember

[Wolfy]

no matter if you use google pop-up blocker, SP2 or whatever, the new pop codes work also with them, go to my join page and test it

DAMMIT (kind of).

Anyway - I'm running Firefox, XP, all the updates - I went to test your popups and I got nothign. nada. Not even the usual "Firefox has blocked a popup on this page".

I assume yoru sites are nextdoorblowjob, nextdoorebony, etc? I went all the way to the secure form, not one popup. I know there are popups that get around my system, but yours aint it.

[andrej_NDC]

DAMMIT (kind of).

Anyway - I'm running Firefox, XP, all the updates - I went to test your popups and I got nothign. nada. Not even the usual "Firefox has blocked a popup on this page".

I assume yoru sites are nextdoorblowjob, nextdoorebony, etc? I went all the way to the secure form, not one popup. I know there are popups that get around my system, but yours aint it.

when you go to this join page
http://www.hotmomnextdoor.com/join.htm
let it load and then close, dont you get any pop-up?
I dont think its working with firefox(surfers dont use it anyway), but it works in IE, no matter what system do you use.

[Wolfy]

when you go to this join page
http://www.hotmomnextdoor.com/join.htm
let it load and then close, dont you get any pop-up?
I dont think its working with firefox(surfers dont use it anyway), but it works in IE, no matter what system do you use.

Nope, nothing at all for Firefox.

I opened it in IE and nothing either, untill I closed it - then it opened a new tab in Firefox.

The "surfers don't use firefox" theory is disintegrating daily, btw.

[andrej_NDC]

I opened it in IE and nothing either, untill I closed it - then it opened a new tab in Firefox.

its an exit pop-up, when the surfers clicks the join link, nothing happens, only if he dont and go away, he get the pop offer

The "surfers don't use firefox" theory is disintegrating daily, btw.

according my stats around 1% of my surfers use FireFox and I bet, many of them are webmasters who check the sites

[Tuga]

Lightspeed is a great program and they pay me $30.66 per sale according to my stats remote. That is a 60% split. But I get nothing on upsales, crosssales, pop ups (most have my code) or emails. $35 on a PPS is certainly doable for them as I assume they are making bank now.

Nice way to look at it, and I found out that I'm making $34.98 per sale with them. And that should go up over time, that's why when Steve offered me PPS I kindly said no thanks

[Alex From San Diego]

Overall, I would say this was a very informative thread and gave some of us a perspective from both sides. Thanks Marc for your participation. I learned addiitonal information that I might not have been exposed to without your participation.

I wish we could have more threads like this. There was no bashing and I can actually say it was positive and productive.

Thanks to all who participated. : ))

[slapass]

Nice way to look at it, and I found out that I'm making $34.98 per sale with them. And that should go up over time, that's why when Steve offered me PPS I kindly said no thanks

Yep this thread sort of proves that they can pay $35 PPS just some of them are choosing not too. And those that drop the $ amount $5 for no pop ups are getting me even more.

Silvercash has a great site, Tranny Trouble. But I push the traffic I set aside for that site to someone who pays me more. Conversion is off by 50% but I more then make up for that with the higher payout.

It is all numbers and where we make the most and where they make the most.

[Theo]

So MarcDe what went wrong and the old ARS sites as you had said became unprofitable and you removed them including the cheap trial payouts from the program? Currently there are like 100 sponsors doing the exactly same payouts, with much smaller volume and never run it to the same unprofitability problems, never reduce payouts, never tweak exits, upsales etc. Don't tell me they are more capable. Can someone just add 10-15 new sites and expect these variables to still work at the same rates?

For the record if there are some sponsors that fairly credit sales (no more than 5 in my mind now) ARS has to be one of them; but that's a very rare exception.

[bigdog]

So MarcDe what went wrong and the old ARS sites as you had said became unprofitable and you removed them including the cheap trial payouts from the program? Currently there are like 100 sponsors doing the exactly same payouts, with much smaller volume and never run it to the same unprofitability problems, never reduce payouts, never tweak exits, upsales etc. Don't tell me they are more capable. Can someone just add 10-15 new sites and expect these variables to still work at the same rates?

For the record if there are some sponsors that fairly credit sales (no more than 5 in my mind now) ARS has to be one of them; but that's a very rare exception.

good question

[Marc De]

So MarcDe what went wrong and the old ARS sites as you had said became unprofitable and you removed them including the cheap trial payouts from the program? Currently there are like 100 sponsors doing the exactly same payouts, with much smaller volume and never run it to the same unprofitability problems, never reduce payouts, never tweak exits, upsales etc. Don't tell me they are more capable. Can someone just add 10-15 new sites and expect these variables to still work at the same rates?

For the record if there are some sponsors that fairly credit sales (no more than 5 in my mind now) ARS has to be one of them; but that's a very rare exception.

Because of some decisions that were made in previous years, those sites were in chargeback trouble. The high level of chargebacks caused many issues with those sites ability to process, including the use of x sells. We felt that many changes would be FORCED upon this industry, unfortunately that never came to be. With the drastic change it allowed us to do some other things, including have a closer relationship with our content site operators. Storm Media is our new partner and my sister owns the company and that helps tremendously. It also allowed us to avoid the HUGE iBill problem that would have more than likely bankrupted our company (or been close). In the end, it was a VERY tough decision, but in the end it was most definitely the right decision. ARS still does great volume and still makes money and that will allow us to do the things we are working on doing!

In the next few months you will see an ARS that is bigger and MORE capable than any previous ARS and that will be in a large part due to our new relationship.

BTW, I appreciate your comment on our honesty. That is absolutely key for us! We know we'd be nowhere without our webmasters, therefore they are our most valuable asset and we take care of them!

[Snake Doctor]

Related issue if you guys make 1.87 on pop ups why do you cut $5 off my commsion when I opt out of them? This must help the PPS model. Those of us who don't use pop ups subsidize the other guys.

You're assuming everyone makes 1.87 per sale on pop ups....my guess is alot of programs make way more than that.
It all depends on how aggressive your console chain is.

[Snake Doctor]

Because of some decisions that were made in previous years, those sites were in chargeback trouble. The high level of chargebacks caused many issues with those sites ability to process, including the use of x sells. We felt that many changes would be FORCED upon this industry, unfortunately that never came to be. With the drastic change it allowed us to do some other things, including have a closer relationship with our content site operators. Storm Media is our new partner and my sister owns the company and that helps tremendously. It also allowed us to avoid the HUGE iBill problem that would have more than likely bankrupted our company (or been close). In the end, it was a VERY tough decision, but in the end it was most definitely the right decision. ARS still does great volume and still makes money and that will allow us to do the things we are working on doing!

In the next few months you will see an ARS that is bigger and MORE capable than any previous ARS and that will be in a large part due to our new relationship.

BTW, I appreciate your comment on our honesty. That is absolutely key for us! We know we'd be nowhere without our webmasters, therefore they are our most valuable asset and we take care of them!

That was my guess, that the Global sites were in chargeback trouble and wouldn't be able to process.

BYOT was a great idea and made for great sales numbers...unfortunately it was just impossible for anyone to put together a back end to support it.

[slapass]

Because of some decisions that were made in previous years, those sites were in chargeback trouble. The high level of chargebacks caused many issues with those sites ability to process, including the use of x sells. We felt that many changes would be FORCED upon this industry, unfortunately that never came to be. With the drastic change it allowed us to do some other things, including have a closer relationship with our content site operators. Storm Media is our new partner and my sister owns the company and that helps tremendously. It also allowed us to avoid the HUGE iBill problem that would have more than likely bankrupted our company (or been close). In the end, it was a VERY tough decision, but in the end it was most definitely the right decision. ARS still does great volume and still makes money and that will allow us to do the things we are working on doing!

In the next few months you will see an ARS that is bigger and MORE capable than any previous ARS and that will be in a large part due to our new relationship.

BTW, I appreciate your comment on our honesty. That is absolutely key for us! We know we'd be nowhere without our webmasters, therefore they are our most valuable asset and we take care of them!

Was part of this due to content? Not picking on the sites but i had heard they were not super strong on the content. Your sites now look a lot better on the tours and seem to have more content. Again just an observation from outside the sites.

[Far-L]

When we ended the marketing relationship we had with another company that was running the affiliate program for Homegrown we had to start from zero. We decided the most fiscally responsible move for us was to wait and see how our own traffic numbers looked for a few months before we offered any sort of affiliate program.

Once we saw what was economically sound for us we decided on a pay per active signup. We paid $30 on a $34.95 monthly sign up from a $4.95 trial which was not a popular move with our prior program's affiliates that were once used to getting between $40 to $45 in the old program with pps on a free trial.

However, those that actually moved over found that they were making more money with the new program because suddenly there were far fewer chargebacks and credits.

Interesting to note, we didn't have any aggressive xsells going and we completely lost our mail list so we were mostly devoid of upsells other than our hard goods. For that reason, we had to look at the sustainability of launching a program based on our site sales / retention alone.

The most important number to look at is how much money do you earn, everything else is interesting for the sake of analysis to add predictability and improve averages but only that bottom line number tells you whether you are right or wrong.

[DTK]

I agree but we all know that threads like this are a anomoly around here....LOL

Something to look forward to a couple times a year ;-)

Great thread

[xNetworx]

My program does $35 PPS/$20 per trial... In the early stages, I ran the numbers and the sites retained members long enough and converted trials at a rate where a profit would be had on the $35 PPS/$20 trial model. We did not offer PPS until we were sure that our sites had the trial conversion and retention rate to profit from PPS on the inital charges and rebills alone. We give the surfer what they want and what they are lead to expect from the tours (lots of fully downloadable high res videos). Therefore, chargebacks are nearly insignificant and rebills are there (its those damned returned checks that piss me off). On a side note, for those who don't know, I hear cc processors are easy on check acceptance becuase they profit from each returned check. Anyways, I feel its risky for a new program to come out with PPS until they have tested the site with revshare first. You would have to be extremely confident in your site(s) to offer PPs right off the bat. PPS is the way to go if you have lots of quality content, a solid plan to generate revenue from the members/ex-members/email addys in your system, and a history of good retention.

[Theo]

Marc De, thanks for the response

[Nathan]

First of all, very nice thread.. loving it..

There is one thing I would like Marc to actually comment on, since I am unsure about that...

You talk about www sales which help boost profits. What EXACTLY do you count in those? Sales that are coming from people seeing an affiliate banner and typing in the url? Or sales that simply come from non-affiliates? Meaning traffic you generate yourself?

If it is the later, which I bet it is since I see no way of meassuring the first, then is it not lieing to yourself if you include those in your calculations?

Of course, SOME of those sales will be sales from people checking banners, but most of them will be totally non-referrered, no?

I know that your model shows that you can make enough using your own cross sells and mailing already (of course with $4.95 trials and $39.95 rebills, thats almost 20% more than Alex's spreadsheet's numbers), but I have heard many people say in this and another board's thread about the same subject that people seem to count a lot on those "www sales"...

So, to come to my point finally ;) ... If you depend on www sales to break even on pay per signup, why even bother opening a program? You would make more with just your www sales in the first place...

[xxxjay]

Things are not what they used to be back in the Wild Wild West. I was at the Webmaster Access watching the "State of the Industry" panel (a very esteemed panel I might add - Lensman, Tony Morgan, Mike Price, Paycom, and CCBill) and they all echoed the same thing. Payouts will lower - nobody wants to do it because they will look like the odd man out, but it's just a matter of time before everyone has to.

Come on...think about it...$40 on a $2.95 join?

What's funny is sponsor can shave the fuck ot of you and nobody will bitch, but if they are honest and lower payouts - you get two pages of fuckers on GFY talking out of their ass.

If you run a good revshare program (like we do) the webmasters will make the same amount of money over time. Bangbros or Meatcash are perfect examples of this.

Programs having to beat the surfers to death to be able to keep up that $35 payout is bad for the business IMO. The times are changing - people don't sign up and stay for 3 months like they used to.

There will be changes with the current PPS system and webmasters are going to have to live with it.

Personally, I would rather see everything go to good clean revshare rather than having programs shave or fudge numbers to keep up with the Joneses.

[media]

This thread is REALLY good, thanks Marc De for your input and thanks to J And A for opening the discussion up..

[Far-L]

I think many of the big programs had to look toward internal traffic generation rather than external webmaster support once the suddenly huge amount of programs created so much choice for webmasters.

I have been reluctant to offer revshare for a number of reasons but the only reason we are considering offering it in the near future is because the quality and integrity of the traffic/webmaster seems higher. (Less people working for the quick buck and more willing to build an annuity...)

We listen to our surfers first and foremost. If we listened to the webmasters we would be paying 200% initial and 110% recurring for life... and I mean the life of the surfer not just the life of his membership.

[Drake]

Once we saw what was economically sound for us we decided on a pay per active signup. We paid $30 on a $34.95 monthly sign up from a $4.95 trial which was not a popular move with our prior program's affiliates that were once used to getting between $40 to $45 in the old program with pps on a free trial.

However, those that actually moved over found that they were making more money with the new program because suddenly there were far fewer chargebacks and credits.

Per your last paragraph. I always thought that PPS didn't take chargebacks/refunds out of the affiliate's pocket. As soon as the signup occurs they get their credit...whether that members charges back or not is something that the program has to deal with (eat the cost). Is this not how most PPS runs?

[Theo]

most don't

[Drake]

First of all, very nice thread.. loving it..

There is one thing I would like Marc to actually comment on, since I am unsure about that...

You talk about www sales which help boost profits. What EXACTLY do you count in those? Sales that are coming from people seeing an affiliate banner and typing in the url? Or sales that simply come from non-affiliates? Meaning traffic you generate yourself?

If it is the later, which I bet it is since I see no way of meassuring the first, then is it not lieing to yourself if you include those in your calculations?

Of course, SOME of those sales will be sales from people checking banners, but most of them will be totally non-referrered, no?

I know that your model shows that you can make enough using your own cross sells and mailing already (of course with $4.95 trials and $39.95 rebills, thats almost 20% more than Alex's spreadsheet's numbers), but I have heard many people say in this and another board's thread about the same subject that people seem to count a lot on those "www sales"...

So, to come to my point finally ;) ... If you depend on www sales to break even on pay per signup, why even bother opening a program? You would make more with just your www sales in the first place...

Very good questions Nathan

[bigdog]

Many sponsors complain and stuff, but they leave money on the table. I have signed up with many sponsor sites that never mail current or canceled members, what better traffic is there then surfers that have purchased a membership before

[Trax]

this thread is dying for a bump.

[Far-L]

Per your last paragraph. I always thought that PPS didn't take chargebacks/refunds out of the affiliate's pocket. As soon as the signup occurs they get their credit...whether that members charges back or not is something that the program has to deal with (eat the cost). Is this not how most PPS runs?

I don't know the ratio but I do know that not all PPS eat those costs.