Why are CPA Networks Going out of Business?Written by Pace Lattin
January 28, 2012 # 12:30 pm # Marketing Insights, Specials # 14 Comments
With last weeks announcement that COPEAC, one of the first CPA networks in existence, was shutting down, people started talking a lot more about the issues in the industry. We received dozens of emails and comments asking why CPA Networks are shutting down – several affiliates mentioned that they have now more than once had a CPA Network shut down, owing them thousands of dollars. One person wrote on WarriorForum that they were now owed from three networks, including COPEAC, EliteClicks Media and another network I never heard of. All of them shut down suddenly, owing them money.
People have been asking me now what networks they can trust, especially when a large company like COPEAC goes out of business. What should they do? It’s hard to say, but perhaps there are a few reasons that CPA Networks go out of business and things you can look for:
1) Not a real company. There are more than a few CPA networks being run, that don’t actually exist in reality outside of a website. What happens is that some guy registers with HasOffers, sets up a “network” and starts paying out via his paypal account. There are even reports of some networks being run out of cheap slum apartments.Do a little research on the company, find if it’s even “real.”
2) No management experience. On top of the above, just because you can register a corporation and set up a website, doesn’t mean you can make a network. A lot of affiliates after they start making money, think they can create a real company, get offers, bill people, pay out people. Running a company that does more than a few dollars requires experience, training and more importantly, smarts.
3) Poor Cash Planning. Advertisers pay late, period. It’s a constant in our industry, and if you are an affiliate, you may not know that many networks are paying you before they get paid. So many networks start up, have a kick-ass, one-hit wonder offer, bill tons of money to the advertiser and then have to wait months to get paid. Since they started from scratch, have no backing, they can’t pay their affiliates, their server bills, their rent, their telephone and so on.
4) Only Brokering Offers. This doesn’t work. Taking offers from another network and trying to push it to affiliates at a cheaper price is a poor model. It generally mean the network doesn’t know what is really going on, and when something goes wrong, they have no way to address it. In fact, there are more than a few networks out there that are jumping from one network to another, trying to get offers after being kicked off of all the other networks. Some even hire people out of china to try to cheat networks to get their offers .
5) Wrong Priorities. If your network owner just started his company, and all you see is photos of him partying and hanging out with strippers, that is a good way to know he is going to go out of business. When a company starts, that is when you stop bad habits and get to focusing on business. Most companies go out of business within the first 12 months, so if someone is taking all the money they are making and wasting it, not investing into their company, they are idiots. Next time you see a photo from the owner of a new CPA Network, with his new luxury car, bragging about how much he spent on his trip,how much he spent on champagne, realize that is probably coming out of your future commissions.
6) Lack of Ethics. This goes back to many of the points before. Frankly, making money at all cost shouldn’t be the goal. Tons of companies in the industry have gone out of business after being sued to oblivion by enforcement agencies and through class-action lawsuits. All those Acai floggers, the networks that supported them are facing severe financial penalties and in some cases, criminal charges for fraud.