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Payouts Now 25% Off

Payouts Now 25% Off

July 22, 2010
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" Affiliates Are Finding Out That $50 PPS Is Not What It Used to Be. "

If you walk through any shopping mall, you’ll see plenty of store fronts with giant sale signs and discount offers posted in bright colors intended to catch your eye.

However, in the world of affiliate marketing the discounting is being done on the payout side of the equation and many companies are doing it very quietly in a variety of ways that allow them to continue promising big PPS amounts with the knowledge that a good percentage of those promised funds won’t actually find their way into affiliate pockets. Still, like lemmings chasing each other right off the cliff, some affiliates continue to run after the largest payout number printed in bold on a sponsor site while ignoring the more important details which can only be found in the fine print.

Some programs are increasing their minimum payouts for webmasters.

Where $50 had been the standard and some programs offered biweekly payouts without any minimum threshold at all, a quick survey of sponsor sites today will show you that many now require $100 or $200 minimums and some require thresholds as high as $300 or $500 to be met before any money is distributed to the webmaster.

For larger affiliates the higher minimums make little difference, but for affiliates who generate a few sales a month or affiliates who send their sales to many different programs rather than a small handful — the higher minimums can mean waiting a long while to reach the sales target, or sending a few joins and plenty of traffic without ever seeing a paycheck for your efforts. $50 pay per signup and a $300 minimum payout still means zero dollars for the first five sales sent by anyone who doesn’t reach the sixth sale.

Other programs have decided to reduce their payouts by increasing their fees dramatically. Some claim to be doing it in the wake of the WebmasterChecks fallout, but many were already raising fees before any news of that unfortunate situation occurred.

Notably, one site was blasted on industry message boards for increasing their Epassporte payout fees to $20 while claiming excessive bank fees as the cause. They continued to offer $35 PPS on the front page of their affiliate site in a large font, but the $20 fee in the fine print meant the payouts were somewhat smaller in reality. The company did yield to public pressure for now and has reduced it back down to $2 as of the time this article was written.

Another tactic being used to silently lower payouts is the combination of a lowered minimum payout and an increase in fees. For example, a program that offers a $25 minimum payout as the default setting but charges a $10 fee for a check can end up charging affiliates as much as 40 percent for the money they have earned as a check writing fee. An affiliate with two sales at $35 PPS in a single pay period from a program with these payout settings would end up actually earning only $30 PPS, or only $25 PPS with one sale in a pay period. All without changing the stated payout amounts on their sites.

An even shadier method of reducing payouts without plainly stating that a reduction is being put in place comes from creative exclusions written in the fine print. Two affiliate programs were recently exposed for having the identical language in the fifth item of their Terms and Conditions page stating: “5. Our PPS Program is available on a limited basis. The “Pay Per Sale” Payouts are reserved for Credit Card Joins made through our Private Merchant Accounts ONLY...” and the wording suggested that alternative billing via ACH check, PureVanilla, TrustCash, NetCash, Password By Phone, CCBill, SEGpay and any other thirdparty, prepaid or dialer billing would be excluded. A representative of one of the companies in question stated emphatically that the entire terms page was written by a rogue employee who is no longer with the company and that the company never intended to curtail payouts in this way. Still, it remains true that terms pages do not write themselves and someone writing that element of the page must have had some reason to segment the payout language in that manner.

To be fair, the notion of glossing over fees and underscoring the best possible deal is neither unique to the adult industry nor a new development. For years affiliate programs have written up to $50 PPS with the $50 PPS in gigantic letters and the up to innocuously beside the large graphic. Claims of shaving, underreporting sales, excluding legitimate sales, fraud by affiliates and against affiliates have been common since the inception of the affiliate model.

However, the compression of the adult industry due to factors including the credit crisis, proliferation of free porn, demise of previously accessible high risk banking institutions and consolidation of traffic in the hands of a small percentage of large stakeholders is bringing out a new era of more blatant and common cost cutting measures which few affiliates seem to have noticed yet.

Some affiliates are seeking refuge by seeking to promote only the programs that are processed by a third party, and recent statements by Visa regarding cross-sales between different merchants may work to the advantage of third-party billers (though the matter is far from settled at this time and different billing companies have expressed a variety of theories on whether or not programs using the same third party for processing can cross sell to each other).

Also working with a third party billing company does make the terms and conditions more uniform for affiliates promoting multiple sites.

Recently large program owners have been publicly predicting the end of the affiliate model entirely, and the closure of the WEGCash affiliate program does lend validity to that point of view. However, it seems unlikely that many program owners would just politely walk away from potential sales and traffic when the unethical option of skinning affiliates alive also exists.

If a program intends to close its doors and keep the millions of back-links, uncollected money from affiliates who failed to meet their payout thresholds, search engine rank position accrued in part thanks to the work of present and former affiliates and other benefits that live on long after the signup form is removed from a sponsor site. Why wouldn’t many just raise their payout thresholds to $5,000 or raise their fees and add new unscrupulous terms to the small print instead? In light of recent developments, are we really that far away from a program promising $50 PPS and attracting the traffic of naive webmasters while quietly requiring $10,000 minimum payouts and charging a $1,000 Epass processing fee as explained on the often unopened terms page?

Sponsors that have relied on large PPS promises are now deducting charge backs from payouts and taking other steps to shift some of the risk back toward the affiliates who send them traffic. In a normal business climate that might signal a trend toward revshare and away from the PPS model perhaps.

However, as the main reasons for sponsors to treat affiliates fairly seems to be dissolving quickly with greater reliance on in house traffic teams and ad buys rather than massive numbers of small fish — the risk that sponsors will brazenly disregard the ethos of the affiliate system without any care if they get called out for instituting lopsided payout structures and draconian terms grows larger every pay period.


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