Why are CPA Networks Paying Late?Written by Pace Lattin
October 19, 2011 # 12:04 pm # Marketing Insights # 11 Comments
Recently I’ve heard that several, including possibly the largest, CPA Networks are starting to pay affiliate late. It seems to be a topic of conversation on several message boards, that several networks, to be unnamed aren’t paying their bills on the normal schedule required of them. Because of that many major affiliates who have been with these networks are starting to look elsewhere, only to find that other major networks are also paying late. Is this an issue of the networks having issues, or is it just part of a greater problem that needs to be addressed? I want to examine the issues that face the industry, and have a real conversation about what is happening.
The problems facing the industry are the same problems facing the entire economy. Even though our industry is growing, and more and more companies are looking to performance based marketing as a solution to their advertising needs, this doesn’t mean that we aren’t plagued by the same issues.
Here are some of the issues that CPA networks are facing:
1) Compliance Issues Costing Legal Bills. Some companies are facing enormous legal costs based on everything from FTC lawsuits to frivolous class action suits. As I pointed out in my article about the Essociate Affiliate Marketing Patent, the industry is also facing people who are trying to get a quick buck on the backs of hard working networks. All these things cost money, and while some networks can foot the bill, many of them find that they often the legal problems are costing them both cash flow and clients. Expect more and more networks to face legal bills and questions in the coming years as the FTC says “No more” to certain type of promotions.
2) Clients Paying CPA Networks Late. Simply put, CPA Networks, while making often tens of millions of dollars, are still often at the bottom of the totem pole when it comes to payments from major advertisers. This is an issue facing almost all media companies and small business in general. Larger companies trying to shore up their finances will often pay “whenever” to smaller companies, especially CPA networks, knowing that the networks can’t afford not to stop working with them. Since most CPA networks don’t report non-payments or late payments to credit companies like Dun & Bradstreet, they don’t have much leverage. In plain English, the larger companies are using ad networks as banks. Paying late, getting interest on their payments.
3) Poor Planning. You remember all those companies last year that were doing “amazing” throwing huge parties in Vegas? Most of those companies with all those promotions are gone (and some even started new companies right after, when their previous company went belly up.) Many of those had a few major clients, and didn’t have the experience to plan for the worse times. Any smart business person knows that you save when you are doing well, invest in other solutions and then immediately notice the time to cut back. It’s the same entire story of all dot-com bubble bursts!
What can you do if you are a CPA network or more importantly, an affiliate facing issues? Simply put, always plan ahead for anything. If you think that you are doing amazing, don’t spend all your money: save it, and look at other solutions. Putting all your eggs in one basket, because you have a great campaign that is making you “rich” is not the solution. Keep testing, invest in learning and even create partnerships.
Additionally, please try other networks. I can’t say this enough to get your attention. If you have an offer that is doing well, send traffic to another network with the same or similar offer. Getting payments from more than one source will ensure that you don’t find yourself in a bad spot. Nothing is worse than having one large client not paying your bill. If it’s one out of many clients, you can immediate switch where you are sending traffic, and only face a small loss.
Pay attention to what is going on in the industry.
Find a reliable source for feedback, such as our CPA Network Review System. This is an independent, user submitted system from real affiliates. Leave feedback, and read about others. Please note that many of the “review” sites out there are completely made to get you to sign up for networks, and the people get paid on those referrals. Don’t trust most of those sites, because they are paid to make good reviews and they delete bad reviews.
What companies are you having issues with, what are your perceptions?