In 2000 – 2001 and 2008 there were two events that affected the affiliate channel: the .com bubble burst and a recession.
During these time periods, companies went out of business or filed for bankruptcy, and many affiliates did not get paid.
JEBCommerce has spoken with advertisers who have laid off 100% of their retail employees and 90% of their corporate staff, meaning there are only a handful of people running the entire company, as well as those packing and shipping products.
There is a train coming down the affiliate marketing tracks that all players in the channel must be ready for: advertisers not being able to pay their affiliate commissions.
Our industry has always operated on trust. Talking about affiliate payments is vital to continued growth, sustainability and our ability to lead the country through this economy.
Here is how each partner can help with the upcoming challenges of affiliate program missed payments:
Affiliate Agencies
Agencies, communicate with your clients. You are the proxy for your client.
Make sure you know what hasn’t been paid and when it will be. Affiliate managers – do not brush this off – it is your responsibility to know where everyone stands and help facilitate a rebound.
Affiliate Partners
Affiliates, there is no way around this, it sucks. You aren’t the only one not getting paid. We feel your pain.
Please understand that when these decisions are made, it’s not personal. Many of these companies are just trying to get through and keep people employed.
Look at your exposure, what advertisers are having trouble paying their bills?
Reach out to see if there is anything you can do to drive more revenue and discuss the situation. Trust is the heartbeat of affiliate marketing.
Advertisers Missing Payments
A mistake many advertisers make is looking at their affiliate program as this one single thing.
Within that single program are many, many partnerships made possible through the network. Right now, you should be looking at your affiliates as individuals.
If you are struggling or falling behind, find out exactly where you stand. What bills are outstanding to the network and what affiliates are missing payments?
Then, meet with your finance team to find out when these will get paid. Once you know when invoices will be paid, you will know whether to contact affiliates or not.
Communicate with affiliates about delayed invoices and missed payments over the phone, not through e-mails or newsletters. Have these conversations as quickly as you can, with as many partners as you can.
This is just like calling anyone right now – to push a payment with landlords, utilities etc. People are open to discussions because although we aren’t all in the same boat, we are in the same storm.
One of your first calls should be to the affiliate network. Let them know your finance team is working diligently to get missed payments up to date. One of the biggest threats is your program getting turned off for non-payment.
If your affiliate program is turned off, affiliates will stop promoting your products and your recovery will take even longer.
Your main priority should be getting these bills taken care of, and if they are delayed, communicate with everyone expecting a check.
If you don’t know where to start, go to calendly.com/jamiebirch to set up 15 minutes or a half hour with me (Jamie Birch.) We can talk about your strategy to make sure your program stays open and your affiliates get paid.
Affiliate Networks
Networks, you already see missed payments happening in your data. There are certain sectors hit much harder than others. I implore you to come up with a solution to give them more time.
I understand giving them more time means affiliates don’t get paid, but networks need to be leaders during this. What is the solution?
Certain advertisers and categories of advertisers are struggling during this difficult time and they want to survive. A mass shut off of programs, won’t help affiliates, advertisers, networks or the economy.
All members of the affiliate channel must come together to make a recovery as easy as possible.
“I hope this was informative and I didn’t frighten too many people. I am looking forward to talking to many of you over the next couple of weeks! I hope you are healthy, safe and optimistic. If you need anything, let me know!”
Get help navigating a tough economy by emailing Jamie or scheduling a call.
Video: Upcoming Challenge of Affiliate Program Payments.
Transcript of “Upcoming Challenge of Affiliate Program Payments” video:
Hey, this is Jamie Birch with JEBCommerce!
I have been mulling over something that may be coming down the road that I wanted to share. In 2000, 2001 and 2008 there were two events that affected the affiliate channel — the .com bubble burst and a recession. During these time periods, you saw many companies go out of business or go through bankruptcy, and many affiliates not get paid. I think we have something similar coming down the road. I was speaking to an advertiser last week who has laid off 100% of their retail employees and 90% of their corporate staff, meaning there are a handful of people running the entire company, as well as those packing and shipping products. I also saw this morning that J. Crew filed for bankruptcy. They aren’t the only ones that will be probably be doing that.
We have a train coming down the tracks at us that we need to be ready for, and that train is advertisers not being able to pay their affiliate commissions. If you’re an affiliate, you’re thinking not again. You may be thinking the affiliate channel is a great avenue currently because sales happen before the invoice and cost occurs. It provides it’s own budget in a way and I don’t disagree with this. The reality is on the advertiser side, that organization operates similar to yours (the affiliate) and most likely, your home.
When this situation started, JEB looked at every expenditure to evaluate and ask: do we need this, can we do it ourselves or can we renegotiate terms to get through this and then rebound? You have probably done the same. You look at money coming in and ask “what do we need to keep the wheels moving and survive?” There are advertisers right now scrambling to make sure their organizations see the rebound. Because of that, you will see affiliates not get paid – especially in the travel space. They are holding onto any budget they can and they should – businesses should do everything they can to be healthy.
If you’re an affiliate, look at your exposure. What advertisers are having trouble paying their bills? How is your relationship with each of them? Reach out to see if there is anything you can do to drive more revenue and discuss the situation. Trust is the basis of affiliate marketing.
If you’re an advertiser, you must communicate. A mistake many advertisers make is looking at their affiliate program as this one single thing. But, within that program are all these individual partnerships made possible through the network. During this time, look at your affiliates as individuals. If you have 50 key partners driving revenue for you, would you just make decisions about who/what gets paid without talking to those partners first?
If you are an advertiser who is struggling or behind, find out exactly where you stand. What bills are outstanding to the network or to affiliates? Then, meet with your finance team to find out when these will get paid. Once you know when invoices will be paid, you will know whether you need to contact affiliates or not. If you need to communicate with affiliates about delayed invoices, have these conversations over the phone, not through e-mails or newsletters. Have these conversations as quickly as you can, with as many partners as you can. This is just like calling anyone right now – to push a payment with landlords, utilities etc. People are open to discussions because although we aren’t all in the same boat, we are in the same storm.
Figure out where you are and communicate! One of your first calls should be to the network. You need to let them know where you stand. One of the biggest threats is your program getting turned off for non-payment. If it’s turned off, the affiliates will stop promoting your products and your recovery will last longer. Your main priority should be that these bills get taken care of, and if they are delayed, communicate with everyone expecting a check.
Networks – you already see this happening in your data. There are certain sectors hit much harder than others. I implore you to come up with a solution to give them more time. I understand giving them more time means affiliates don’t get paid, but networks need to be leaders during this. What is the solution? Certain advertisers and categories of advertisers are having a difficult time and they want to survive. We as an industry can come together and make this recovery as easy as possible.
Agencies – communicate with your clients. You are the proxy for your client. Make sure you know what hasn’t been paid and when it will be. Affiliate managers – don’t brush it off, you need to know where you stand. Networks – you can lead in this. We don’t need a mass shut off of programs, as it won’t help affiliates, advertisers, networks or the economy. Affiliates – there is no way around this, it sucks. You aren’t the only one not getting paid. We feel your pain. Please understand that when these decisions are made, it’s not personal. Many of these companies are just trying to get through and keep people employed.
Communication in all of these relationships is key. Trust is built on this, and that is what this industry has always operated on. I hope I explained this clearly and we start talking about this as an industry. It is vital to your growth, to your sustainability and our ability as an industry to help lead the country economically through this – I believe we can.
If you are an advertiser watching this and don’t know where to start, go to calendly.com/jamiebirch to set up 15 minutes or a half hour with me. We can talk about your strategy to make sure you program stays open and your affiliates get paid.
If you are an affiliate or network and you need help navigating this, you can use the same link. You can also e-mail me. I hope this was informative and I didn’t frighten too many people. I am looking forward to talking to many of you over the next couple of weeks! I hope you are healthy, safe and optimistic. If you need anything, let me know!
