Affiliates Incandescent At DGM Collapse
The shock news that DGM UK was entered into administration without notice to affiliates came as a nasty and unpleasant unwanted Summer gift to affiliates. Many affiliates have lost thousands or tens of thousands of pounds with very little information forthcoming that they will receive any form of recompense for commissions earned.
Already this is causing a huge impact on cashflow for affiliates with a number suggesting that adspend in the vital 4th quarter may be affected. Other in the cashback sector are having to pass on the unpleasant news to their customers that the expected cashback they were to receive shall no longer be available or that they are dipping into emergency funds to pay consumers.
The discussions at Affiliates4U concerning this debacle are becoming heated and quite rightly so. Affiliates seem to be at the bottom of the food chain when it comes to payment protection. In addition, hundreds of retailers are now having to endure additional expenditure switching network programs or even taking affiliate marketing in-house.
The impact for retailers cannot be understated. Many successful affiliates and affiliate companies have potentially lost significant sums of money. Retailers looking for strong promotion by affiliates over the coming months could find that some affiliates they would usually rely on to generate vast numbers of sales for them, are restricted in what they can allocate in terms of resources for successful marketing campaigns.
What I find absolutely incredible is that networks generally have no mechanism in place to ensure protection of affiliate earnings. Some networks like Paid On Results do require that merchants Pre Pay on their accounts. Others like Affiliate Window operate a traffic light system which advises affiliates on which retailers to safely promote.
However no network to date separates the revenue allocated for affiliate commissions into escrow, separating these monies from their general expenditure. This means that there is no underlying guarantee of payment protection directly for affiliates. Reputable networks like Affiliate Window spend huge sums of money on credit insurance each year. This ensures that the network gets paid for all merchants in the event of merchant defaults and this goes some significant way to ensuring affiliates get paid. Yet what precise level of protection does ANY network provide to protect affiliates from network over exposure beyond the laudable activities of voluntarily provided information on merchant credit protection and an alert system on merchants behind with payments? There is no mechanism in place which states that affiliate earnings are ringfenced and will be paid even if the network folds.
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
No comments yet.
Leave a comment