i cant remember the band that said this, but it applies nonetheless... when asked why they were self-producing and recording their own album and funding their own distribution instead of going through a record label.. the band said:

"Why split the money with anyone? We made this music, we wrote it all, we are the ones on tour, we arent splitting shit. We make every dollar from our shirt sales and albums. The way it should be"

cut out the middleman

Interesting trend. But there may be an opportunity there. By offering a vertically integrated solution, this host/process/design solution is offering a suite of services that other sponsors might love. It's a turnkey solution with sponsor backing and convention branding.

As mentioned above. This would result in a shakeout of other providers and mergers. Usually the problem with consolidation is that diversity and creativity might get eroded. Unless of course someone makes the argument that the services are pretty much fungible and indistinguishable from one another... Unfortunately this is not the reality, hosting companies VARY greatly from each other, same with design and processing.

i have never, and would never trust ANY sponsor to host ANYthing of mine.

ever.

What's a TGP again?:)

Tasty Gaping Pussy

Imagine ... this.

We move forward in time where the hosting companies are now hosting the sponsors and affiliates on one account and the hosting company is also the processor for all the transactions.

Where would the accountability be? People think sponsors are shaving now? The sonsors could be yelling about the processors shaving. After all they would have complete control.

Processor don't like affiliate 178563 so processor programs the server to send all sales for 178563 straight to another account owned by the processor himself.

Who would be able to prove such a thing?

The sponsor would never notice. The affiliate would never notice.

Better yet why even claim that sale happened at the sponsor level. The processor can keep that money themselves and just send a duplicate join letter with a duplicate join login.

Just when you think it can't happen ... think again.

I'll take two please

To me it seems the affiliates days are coming to a twilight. Well not all of the affiliates so to speak. Those that still have or can manage to throw around a great deal of traffic will still be in on everything yet more so like an advertising medium.

For those who will begin to attempt to set up and get into the business as an affiliate it will be much harder in the future. Unless you will be dealing with purely small time organizations who have no other way of gaining traffic.

Sponsors are accepting the fact that it is much cheaper and easier to use in house and outsourced labor to fill the job of the affiliate. It does not take much in the way of math skills to relize that 1 paid individual only needs to generate X number of sales per month to cover the employees cost.

Facts are affiliates:
Generally are responsible for a large portion of fraud.
Get anywhere from half of the membership price forever to 2-6 times its value one time.
Use up resources such as bandwidth, design, content, and human resources.
Very fickle and will jump from one sponsor to the next at the drop of a hat.
Often will saturate or overuse promotional content.
Most will rarely send in any meaningful amount of sales where as the majority already is in house traffic or a few select large affiliates.
Potentially a legal and tax nightmare.

I agree with all of this ...

This is what started the trend ...

Affiliate fraud caused the visa regulations which caused the shift in the way sponsors deal with affiliates.

So what can be done to correct this and keep the fraudulent affiliates out thus reducing the sposnors overhead liabilities?

What will we as affiliates allow sponsors to do to allow us to stay on as affiliates.

Some programs have already gone to background checks. This is good seeing as it would reduce their chances of being sued for underaged affiliates. Would affiliates allow this? No some whine and bitch they got a friggen postcard in the mail.

Myself? Sure do a background check on me. Make me sign up as an affiliate with a credit card at a minimum to make me accountable for what I do as an affiliate.

There is much more I can say ... however the whiners will now complain about freedoms being stripped away.

Here's another point of view....while I don't agree with it 100% its still a valid perspective.

Let's say I sell blue widgets. They sell for 39.95
I can sell these direct to the public and make a profit of $20 each.

OR

I can get Wal-Mart to sell them for me, but I only make $5 each. Wal-Mart keeps the rest.
Not to mention Wal-Mart is going to make me jump through all kinds of hoops to do business with them.
But $5 profit times the 1 million units Wal-Mart can sell is a much greater net profit at the end of the year than what I can sell on my own....even though selling on my own gives me a greater margin.

Right now most programs are fighting to get affiliates the same way vendors are fighting to get shelf space at wal-mart. I agree its become quite ridiculous what you have to offer people to get them to promote a program....and even then it doesn't help much because everyone else is making the same ridiculous offer.

It won't last forever though, it simply can't.

This is a good thread.

Thank you.

I decided to post it due to it being topic of conversation many times this week and over 4 times today.

If it all stays hush hush problems cannot be resolved. However when it is brought to light there can be resolution.

It's not only the affiliates getting hurt here the sponsors are targets also. It needs to be give and take on both sides. When both sides become profitable and fair everybody wins.

Bumpity bump.

This thread can't die!

wow, that is an excellent point...and yes, there should be

Why not? Suppliers will be fighting for a place in Walmart as long as Walmart has customers.

Why would any adult sponsor not be fighting for The Hun's traffic for as long as The Hun has customers?

I don't understand how some of you think that there won't be plenty of sponsors fighting for anyone who can provide them with good signups? It's called competition. When one sponsor lowers their payouts, someone else will up them to try to fuck the other guy and get his traffic - it happens every time.

this is a great thread.

bump. :thumbsup

what is this thing you call TGP?

the gap is defniitely getting smaller.Most programs I know are hiring traffic gurus in house

its true :Oh crap

what is this board for if sponsors dont want affiliates?

Well what I was pointing out was this.

Our current environment is similar to a sponsor offering a $75 per sign up weekend. You do a loss leader to try and get people to try out your program....and you make back the money later when some of the webmasters continue promoting you.

When you keep offering free this and free that and free the other..it cuts into your margins....yet payouts are still about the same.
Eventually something has to give because all of these freebies cut into the margin and you can only run a business at a loss for so long.

If it keeps going at this rate, some companies are going to fall by the wayside and the ones that are left standing won't have to give away anything because they'll be the only ones left.
Similar to the way wal-mart operates at a loss until they put all the other retailers in town out of business....then they can charge whatever they want.

:2 cents:

Good analysis. But one thing that is left out in that analysis is the POWER OF DIVERSITY.

Let me explain with a story:
Sponsor 1 and Sponsor 2

Sponsor 1 got all the major TGP / MGP players to his program and gave them all the goodies that they need. He corners the market on this by providing a fully VERTICALLY INTEGRATED PROGRAM.

Sponsor 2 has 10% TGP affiliates, 10% blog, 10% software, 10% search engine, 10% dbase swaps, etc etc He doesn't corner the market on any form of traffic. Nor does he have a vertically integrated program. He gives out the standard free content and other support goodies but no massive vertical integration.

Due to whatever reasons, TGP/MGP traffic DIES off (Please, Sleazy don't go ballistic, this is just a hypothetical :) ) Sponsor1 is fucked...since all his affiliate base, all his organization is so closely tied with that particular traffic source. So he has to recruit again etc etc.

Sponsor 2 on the other hand, moves on.

Why is this important... Sponsor 2 can use this temporary "paradigm shift" to own a LARGER SHARE of the affiliate market.


Conclusion--DIVERSITY is a good thing.

What do you guys think?

Diversity is the only way businesses are surviving anymore. :thumbsup

Bump for comments from the morning crew.

This is the reason why 90% of ppl are earning so crappy money from this biz, because they don't remember ages when webmasters needed to do all the work for themselves, pay high bills for bandwidth and buy content.

Here's what I just noticed.

Last year I set up a little tgp on an underused domain.
No biggie, didn't really promote it much either.

Filled it up with bunches of free hosted galleriies.

Went after some of the "lesser" known sponsors, mainly because they looked sorta cool and I hadn't seen these galleries like most of the others at that time.

Went back to that site just now and LOTS of the free hosted galleries that I had used now go nowhere. poof all gone.

Seems to me these smaller players couldn't "give away" all that FHG stuff like the bigger players can, or maybe they just failed, but I'm sure the FHG costs factored in somehow.

That's probably gonna take a toll on small to medium size sites that want to offer lots of FHGs.

Those with deeper pockets will survive I figure.

This isn't only hurting the little guys ... The big guys are feeling the pains already also. Sure they will survive but at what cost?

ppc,linklists,seo, blogs

Look at cooking for example.. We get gas and electric ovens and now we can cook a meal in just a couple of hours.

Then we get microwave ovens, and we stand there thinking "hurry up!" while we nuke an entire, PRE-cooked chicken for 6 minutes..

So, I think the analogy is true for us here as well.

wait till the first program owner decides to get rid of affiliates and rents an office, stocks it all the needed equipement and hires people he knows can produce. he knows what each guy costs him to have there and how much that employee must bring into the biz to be profitable. you don't put out, you get out, just like the real world.
the internet is growing up. the party is over.
I think everything will be done inhouse just like any other business.
1000 affiliates with less than 10 sending any real traffic or sales is not good.

Since you quoted me at the bottom of this post I shall respond.

You have based both of your above samples with sponsors keeping affiliates.
There is not a single thing that would stop a sponsor from building up each of your listed diverisfied traffic sources without the use of affiliates and with hired labor.
The sponsor would then not have to give out any free promo content, support goodies, and so on. The sponsor also would not have to concern themselves with payouts or keeping up with the jones's in relation to those. The sponsor could also skip rewards and other affiliate draws such as advertising for them and spend that money on other areas that directly bring in traffic or sales such as paid listings, adwords and the like.

Yes I understand what I am saying is some what controversial and would easily be dismissed by anyone on the affiliate side of this business. Though seriously if you are not a current major traffic pusher what can affiliates really offer a program with the capabilities of using hired labor?

I work hard at not working to hard.

Some people make free sites all day... They have built empires on them... $20,000 a month from them... I think of ways to build the empires in 1 day with some PHP and Mysql.

It would be interesting if sponsor would pay only like 25 per sale to those using their free hosting, free hosted galleires etc and $35 to those who don't use them.

call it streamlining, its much more honest. To the outsourcers : you get what you pay for, exchange rates nonwithstanding.