DGM (Fuel) Clear off or Im off?
DGM (Fuel) Clear off or Im off?
The official words are “Merchant X have resigned”, Fuel gets rid of merchants they say just don’t convert and of no use to the network or affiliates. It is a brave move and should be praised, were it not for the fact that one merchant included in the resignation list paints a very different story and maintains his company decided to leave, this ex DGM client is trustworthy sooo what’s going on?. Redundancies have been announced and those that got their P45 seem to be finding their way back to their old friends at Affili.net. Another bit of proof that loyalty marketing is alive and well and not just confined to affiliates networks and merchants but reaches out to employees too. The Affiliate Networks are picking up the casualties and there are a few rich pickings to be had.
Good luck to all of them.Another Angle
DGM have always had a different way in managing their merchants. The merchant interaction with their affiliates in some, if not all cases, is limited in the extreme. The entire management of the affiliate program falls upon the DGM account managers. In essence, the account manager’s act as a middle man/woman, a go between the client and the affiliate partnerships, in a nutshell the network has total control. If we do the maths, I can only speculate that the ratio of account managers to Clients must be 1 account manager per three clients , anything more would be stretching it and anything above that, I would question if you can run an affective affiliate program based on such restrictions based on three way emails.
This Business Model Works?
This business model can and will work where by the clients products and or services are a) in demand, b) Niche c) (most important) converts. If you include salaries and overheads, in simplistic terms, the affiliate programs will have to work in order to justify DGM (fuel) costs. So they need to be very choosey who they are taking as clients. In addition they do not just need to factor in a) b) & c) but they need to have to have the kind of merchant reports that would supply total transparency and justification of their cost to their clients, note, DGM fall under the higher cost affiliate network.High Street Brands don’t always convert.In order to lift the profile of a company, many will adopt the approach of getting big names and or influential people into the network. As A PLC, a name rather then revenue can be just as important to help sell those shares. One would like to think that this works. Well it’s the catch 22 scenario at work here, there has to be a balance between revenue and a name that may not bring in revenue but may lift the profile. Some High Street Brands simply can’t get the whole online experience together, especially the ones who have the internal struggles of traditional marketing competing with internet marketing, unfortunately this is usually the large cooperates. AffiliatePogramAdvice.com adopt a policy of not working with big corporate giants unless they are 100% up to speed internet savvy and can turn things around quick smart.
The Nature of the beast
The problem affiliate networks face, regardless is that there will always be some merchants that simply don’t convert, it’s the nature of the beast. There are a number of variables that one could hone in on why some merchants don’t convert, one of the main reasons, from a professional perspective is, merchants lack of understanding about their own business in terms of the internet, in addition lack of customer analytics, interwoven with lack of technology, web analytics and not being able to interpret those statistics, competitor analysis and over all marketing initiatives or industry saturation, too thin on the ground and other variables that is required to propel the product and or service into the minds of the consumer. These are inclined to be small businesses by and large but we see this with some big high street brands as well, although they are inclined to be a lot fewer and it could be argued that most sales will have been driven through brand awareness rather then website functionality or any of the problems that the small businesses cant ignore to the same degree as the big boys. Affiliates are more likely to work with a big well known brand rather then the small, in some cases better converting merchants.
Separating “the wheat from the chaff”
Should be the priority of all Networks before allowing the merchant to join the affiliate network. “The chaff” stick out like sore thumbs and usually shout the loudest and are quick to finger point when their affiliate program flops, taking the sales pitch out of the equation for a moment. Some times we all need to be pulled back and remember affiliate marketing is the only form of advertising where you only ever pay for results. Equally, network sales men and women have targets to reach (should we mention bonuses that can be earned) and possibly some of the networks are ready to accept any one regardless for the sake of volume in hope that the % of converting merchants revenue will bring in enough to support the non-converting merchant. Where by there is a self managed program option in the affiliate network, this may not be too much of a cause for concern as the costs are low.Total Control
The majority of affiliate networks allow merchants to interact directly with their affiliates, in fact to my knowledge DGM is the only large UK network where by, this interaction is not permitted. Therefore strong long lasting merchant/affiliate relationships can not be forged. Communication is about making deals and building trust. Trust maybe a factor, do DGM not trust their merchants, or affiliates or both. Or by keeping the two separated, both are more reliant on the network, therefore the network become facilitators and therefore justifies the monthly admin costs or if the clients chooses to move away to a competitor network, their affiliate program will, literally, have to start from scratch as they only ever see their top performers as an url by contrast to most Affiliate Networks, Merchants are encouraged to communicate directly with their affiliates, in fact we are all agreed that merchants add credibility and knowledge about their products, their business model which affiliates have to learn about so they in turn can promote the merchant.What is the role of an Affiliate Network?
The question perhaps we should be asking, is do we or should we see affiliate networks as just software…an affiliate tracking solution provider and facilitators of commission allocations, or should we and do we expect some form of affiliate marketing consultancy? If the latter, affiliate marketing is only one aspect for getting new customer acquisitions and sales, leads and clicks. If the overall conversions for a company were not good, or the website has poor functionality or a combination of problems from the above paragraph, then surely affiliate marketing for a company with such problems, is a little like trying to keep the water in a rusty bucket full of holes from leaking out, you patch up one part of the bucket only to find it’s sprung another leak. Note: Having an Affiliate Program is some times not the right thing, some companies would be better spending the money on getting their products and services right. Or get a bit of education.
Conclusion
The DGM business model, I suspect, can not be sustained where by the % of non converting, non profit generating merchants has an impact on human resources and costs. Based on the above, telling their non converting clients to kindly take their leave, may not now be seen as such a bad move on their part based on their business model. I am not suggesting for one minute that this is THE REASON for the latest events at DGM, but there is a lot of speculation and I am simply adding to it. but perhaps, I see it from a different angle. I have friends in most of the networks and DGM is one of them. Whilst I find the latest shift a little baffling I hope the guys and girls remaining at DGM can turn things around. I think what ever the issues are with DGM (Fuel), they were a formidable force and one hopes they can be again, the industry does not need, nor will it rejoice, if this or any other UK Network goes bust, I am sure we are all agreed on the latter point.
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A few things have hit DGM recently (and not so recently). Firstly, Dialaphone leaving screwed them big time – they were making around £100 commission per phone (and not passing too much back to affiliates).
From memory, the unsuccessful DGM Pro release came at the same time as Dialaphone left the network.
Then of course there was all the redundancies – which meant many departments were not functioning very well at all.
More recently, the PPC landing page changes have hit them big style – around 25% of their business was made up of Arbitrage PPC.
Then of course there was talk of a sale, which has apparently now fallen though – shares yesterday went down by 15% down to an all time low.
Something is not right, and I’m afraid to say that unless a company comes and buys them soon I can see them going down the pan before too long.
More than anything I just feel sorry for the staff that are left there.