Major CPA Affiliate Networks Crashing and Burning - Here are some Reasons Why

[Linda Buquet]

I have not been following the CPA space too closely lately, but I guess lots of major CPA affiliate networks have gone under including <strong><a href="http://performinsider.com/2012/01/copeac-shutting-doors/">COPEAC</a></strong> and <strong><a href="http://performinsider.com/2012/04/adteractive-goes-under-no-one-will-be-paid/">Adteractive</a></strong> and <strong><a href="http://performinsider.com/2012/04/neverblue-files-for-bankruptcy/">Neverblue's parent company reportedly went bankrupt</a></strong> too.

And now, in the latest news, it sounds like <strong><a href="http://performinsider.com/2012/05/epic-may-file-bankruptcy-assetts-being-sold/">Epic Direct, formerly known as Azoogle</a></strong> is going down too. I did advertising for Azoogle for a couple years and they used to be one of the largest networks. COPEAC was pretty big too.

So what is shaking up the industry and causing all these problems? I think it's somewhat of a domino effect that can happen when you have chains of advertisers and networks all interconnected and pushing each other's offers. Then mix in a few big FTC lawsuits and fines, all the rebill problems, tightening up of merchant account terms and things start to fall apart. One starts hurting, can't pay the other and dominoes start to fall.

I've always had a problem with the CPA industry, because so much of it is spammy, scammy, get rich quick offers, incentive offers and freebies. And I've always had a serious problem with the ethics of those rebill offers!

<strong>HOWEVER in spite of not really liking the CPA side of our industry, I feel bad for all the CPA affiliates that are getting stiffed as these companies go under. </strong>

Pace Latin shares some thoughts about what is causing all these networks to go down. At the link below, he goes on to explain 4 of the major issues behind this industry-wide problem.

<strong><a href="http://performinsider.com/2012/05/epic-fails-who-is-next/">Epic Fails: Who is Next?</a></strong>

Affiliates should be very concerned. Many networks are paying out before they are paid, have little cash reserves and worse, do not have a long-term business plan on how to make money besides brokering offers.

This is obviously part of the CPA game, but it?s a very dangerous game for those companies that have a few core advertisers and affiliates that support them.

What are the major issues plaguing the industry that will cause problems?

What do you think?

Are you worried about other networks going down and not getting paid?

 

[seanicasia]

I guess that all the more emphasizes the need to not put all our eggs in one basket.

For any organization, not just CPA networks, to not manage their cashflow properly, it's bound to bite them back in the end.

 

[jcorkern]

I would imagine that the public is getting wise to re bill scams along with Google algo changes over the last couple of years from caffeine, panda, penguin and others. This may have have reduced their incomes and also contributing factors since most of the re bill CPA offers were heavily infested with spam sites. There has been little stability in these areas in natural search, dropping their steady flow of income.

Then there is the drop of the economy. Lots of potential factors on top of the already monumental issues mentioned in your post.

I tell people all the time that any business is only 30 days away from a crash if the right circumstances show up in relatively short order. They have had a couple of years of hits from all directions.

 

[FitGal]

I signed up with one of those networks when I first started. I was selling a health supplement (a site I still own today). I was very green.

Before I sold my first bottle of the health supplement, I happened across something in Google where I learned about the scams going on and I was in shock. It just never crossed my mind this was going on.

I quickly switched to a one off fee, quality product and did not work with the affiliate company selling the scammy goods. They called me and asked me why I did not have sales and I told them that the products they represented were scams with rebills. They knew what they were doing. They had to have as their offers were constantly changing to stay up with the companies as they got shut down and resurfaced again and again with different names.

I am not surprised that they went out of business, in fact I am glad to hear it. Unethical companies do not deserve to stay in business. As for affiliates not getting paid..that is just not right, but let's face it, many of them had to realize these companies were offering shoddy goods.

 

[renee_mcaffrey]

A lot of the spammy affiliate sites that were supporting the affiliate networks have lost most of their traffic due to recent algorithm changes by Google.

 

[Slips715]

I said the same thing on Pace's post, the CPA industry seems like a bubble similar to the housing mkt in 2007. Many companies make a ton of money and invest in the new short term expansion expecting the same returns. Since the market is kind of saturated right now, it is difficult to see the same results. The companies that expand conservatively and work with good merchants to put in time and effort in optimizing and converting their traffic will come out winners. The losers (like COPEAC) will continue to be scrubbed out.

 

[rustyshelton]

Things change on the Internet soooooo fast. What worked two years ago isn't working today. I see it all the time...

~Rusty

 

[dinariccs]

While it's terrible so many affiliates have been hit, it's great that the industry is reforming and taking a look at how to operate efficiently, legally, and morally. Sure, you're still going to have your make money from home and quick diet offers, but networks and affiliates are going to have to be more responsible for consumer and affiliate protection. Try to see the silver lining!

 

[jojoinla]

There's a perfect storm brewing with the aff. network's practices and the product. Sometimes, it's one or the other. Even worse when it's both. I always research aff. networks for B2B relations.