Yeap, (Most) CPA Networks are Raping You

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Have you ever played Texas hold’em and ever wonder whose wallet you think you can pillage & plunder?

If you have been in a poker game for a while, and you still don’t know who the patsy is, you’re the patsy.

 

Likewise, if you are dealing with a CPA network, there is a HIGH probability that they are probably bitch slapping you without you even knowing it.

 

Let me explain.

Anyone… and i mean.. ANYONE can start a CPA affiliate network.

All you need is a dinky little VPS, buy yourself some shitty off the shelf affiliate tracking software, sign up for zillion affiliate offers, then go promote the shit out of your CPA network (hoping that affiliates would actually sign up).

And of course, how does the network make money?

Simple: pay less than what the network is getting paid or skim off the top.

 

For example, let’s say a CPA network promotes some dating offer where you are paid $8-12 per lead. All that the network has to do is pay out LESS than $8 per lead and pocket the difference. OR just shave leads (i.e. not “record” the conversions).

Or if you are REALLY evil, do BOTH.

Let me explain. I use to belong to a CPA affiliate network that came highly referred from a friend .. so i joined.

First thing I noticed.. the affiliate manager sucked ASS. He didn’t know ANYTHING… only thing he did was that I should be running more traffic. -_-

Sidenote: Let’s not delude ourselves, ladies and gentlemen. These affiliate managers are sales people.. their job is to crack the whip and get you to run traffic, not be your friend who’s supposed to give a shit if you’re making money or not. Remember.. you’re doing HIM/HER a favor running their offer so technically they should be kissing YOUR ass. So if your affiliate manager is acting high & almighty, remember to give him/her a friendly reminder:

Ok, i digress.

Anywho, when I joined.. everything was hunky dorry… The offers I was running weren’t hugely profitable, but i ran then for sake of collecting data.

One day.. i woke up realizing that CPA network is nothing but a middleman.. and started wondering what it would be like to go direct with the merchant.

 

So after a quick google search, I called up a merchant whose offer I was running through the network to see if I could go direct, and surprisingly they picked up.

Of course we chit chat about life.. then we get down to business.

And one of the things I talk about? “Is XYZ CPA network shaving my leads”

Answer? Yeap. A LOT.

 

Here’s what I found out. For duration of 2 weeks, my sub-affilaite ID registered on their end:

- for one offer, 171 leads vs. 158 on my affiliate network

- for second offer  51 vs. 29 on on my affiliate network

On top of that, the pay out from the CPA network was barely HALF of what I am now getting direct from the merchant.

So you’re probably thinking.. oh, this is a shady network.

Well, let’s say that i’ve been running with a few.. and i did some investigative work on all of them the past couple of months and I have yet to find one that I can say for certain are “favorable” for affiliates.

Now, does this make sense? As the affiliate, you are taking the risk of buying the traffic, creating the ads, optimizing the traffic/conversions…  yet the middle man above you tells you takes a cut of your profits AND even shaves (i.e. STEALING) your hard earned dollars.

Of course, if you ask about this to your affiliate network through your affiliate manager, what’s their typical response?

“Oh that’s not my department”

“I’ll ask my manager”

“That’s how things are done in the affiliate marketing industry.”

Which of course means..

“I have no backbone to admit to the fact that we are stealing from you but I have to say some BS to make you think that you actually mean anything to us.”

 

So am I bitter from this? Of course. But am I gonna get bent out of shape? Nope.

Lesson learned: let buyer beware.

On top of that, if possible, go DIRECT with the merchant even if the payment terms might not be all that great.  Besides, if you’re delivering quality volume, most merchants are willing to be more flexible on payment terms. As the wise saying goes… you have not because you ask not. So freakin’ ASK!

If you go direct with the merchant, is there a ZERO chance of lead shaving? Nope.. as the conversion pixel fires on THEIR property, you have no control over this. Of course, there’s lead scrubbing that you can’t avoid (whether direct or through CPA network), but now at least you don’t have an issue of ADDITIONAL party trying to skim top of your work.

Go direct and you’ll net more. Remember positive ROI is a good thing.. like this dude in the gangnam style video:

54 thoughts on “Yeap, (Most) CPA Networks are Raping You

  1. Steve

    So what do you do when the affiliate link on the merchant’s site goes to the application of the network that you are already running with? Screwed.

    1. Ron Swanson

      Read his Bio…… thats just a wikipedia page over some other Asian dude, I mean I get the fact they all look a like but c’mon man.

      1. Johnny Tran

        Ron Swanson, you’re so funny. Forget about the IM, comedian for sure in your future.

    2. Gregory

      Don’t have one just learning, but your ass is cool as hell. you are so down to earth. I love that about you

  2. Uncle

    Hey I would like to know is Why you don’t let everybody know the NAME of the company who is doing this? The affiliates need to be protected against this practice. BIG Time.

  3. Edgar

    Awesome post.. I like this author you have the balls to say what many wont.. and yes go direct and keep all 100 of your profits.. why share when your doing all the work.

    1. Taewoo Kim Post author

      thanks Edgar.

      Screw the middlemen. Go direct.

      You can’t avoid lead scrubbing (as it is done on the merchant side), but at least skimming off top/lead shaving can be avoided…

      Which, by the way, exactly WHY affiliates go direct.. then eventually start their own affiliate networks. But sadly, they perpetuate the evil… instead of becoming a solution, they just make it worse.

  4. Marius Eidimtas

    Dope post, Taewoo.

    “Well, let’s say that i’ve been running with a few.. and i did some investigative work on all of them the past couple of months and I have yet to find one that I can say for certain are “favorable” for affiliates.”

    Is it safe to assume this includes the top CPA networks with good reputations?

  5. Pingback: You’re Getting Screwed By Your CPA Network(s)

  6. Dr_Ngo

    I’ve generated millions the past few years with networks & going direct.

    There are some benefits of networks

    - They front the risk. A LOT of advertisers are shady. If they don’t pay, most of the time the affiliate networks will take the hit and get you paid.

    - Cashflow. Most of the time the direct advertisers pay once a month. Affiliate networks pay once a week in general. Not only does that help cashflow to keep campaigns going, but it lowers your risk.

    - A lot of advertisers don’t go direct with affiliates. It’s easier for them to work with one or two networks, than manage a bunch of affiliates. Working with a network allows them to focus on the sales funnels. If you’re generating $100 a day in rev, you’re not even on their radar.

    Going direct isn’t the holy grail. It’s situational and there are times when going with a network is better.

    1. Jonathan Volk

      I was gonna post a comment but don’t have to now. +1 to what Dr_Ngo said.

      It’s funny to me that people think taking less of a cut = getting raped. You have to pay for a service and it’s not all bad. I wouldn’t have been able to become a multi-million dollar affiliate without the affiliate network sending me 6 figure per week wires (while they were getting paid net 30).

      It was either that or get my extra 20% but not be able to grow as aggressively.

      Finally, I have also lost $xx,xxx by going direct and the companies either disappear off the map or go bankrupt. An affiliate network is (most likely) going to pay you regardless because the first time they don’t pay you, it can cause a huge backlash to the entire base of affiliates.

    2. The Angry Russian

      Another +1 for Dr Ngo

      This article is reckless and just link bait. There is no need to scare affiliates into doing things that frankly they can’t support with their tiny budgets and lack of business knowledge.

      I know my network has tons of enterprise affiliates who I who go direct, yet they still chose to run certain offers with us because you can test quickly, we offer weekly payouts, and the general support we pride ourselves on.

      1. john

        what do you guys expect from the shoemoney blog? his entire purpose to to rape newbs into buying his shitty products (shoemoney system!!) and feed them into the frank kern mike filsamie boilerroom sales paths.

        i have zero respect for shoemoney and his overhyped ego and ill-gotten reputation. Im sure they will delete this comment

  7. Eric

    This is a great report of some good research of the shaddy that is out there. Its this type of affiliate network that give everyone in affiliate world a bad name.

    Thanks for the inside scoop on this one though!

    Eric

  8. Pingback: Daily Marketing News | Yeap, (Most) CPA Networks are Raping You – ShoeMoney Internet …

  9. Nadeem | Azam Marketing

    Shoemoney, you are spot on.

    We have caught out so many merchants skimming leads over the years. It is blatant theft.

    Affiliate Managers have often told me that the companies they work at under-report leads to affiliates.

    In some cases it doesn’t happen deliberately, but advertisers turn a blind eye to tracking issues etc. as it’s in their (short-term) interest to do so, as it means they have to pay less commissions.

  10. Rico

    ahahaha no networks are favorable to their affiliates. Hate to break it to you but the affiliate does all of the work.

  11. john

    reckless article – how many newbs will get raked over the coals by shady merchants. what are you gonna do hire a lawyer?

  12. Jonathan

    Great post! This is what I like to see calling out people and businesses. It is so hard sometimes for people to be real these days it is sick

  13. Avery

    Hate being blind sided with my money. I cannot say that enough a lof of people take others for granted and I guess that is america but damn doesnt that suck when it bites you in the ass

  14. Kenneth

    Agree that networks should be nice to their affiliates and send them gifts i mean without affiliates their network would be shit right?

  15. David

    Sure if you pick some random CPA network no-one has ever heard of you might be more likely to get screwed but that can also be down to the shitty tracking platform they use. But agree the less layers between you and the merchant the less money you will get and possibly the higher chance that someone may skim off some sales. So many reasons to travel to events like Affiliate Summit to meet the networks in person so they can put a face to a name if you ever have an issue and believe you are being skimmed by the middleman…

    Outside of skimming depending on the merchant you may also be finding your cookie is getting over-written by anyone who is direct affiliate as there is usually a tier system they use when calculating who is entitled to the payment. Most larger retailers have several layers to their cookies so if you are at the bottom as a sub-affiliate you can accept that you may get left with nothing…

    I’ve always found a difference between the number of clicks I track and the number of clicks they register but have found most merchants are reputable enough to review “missing” sales and if it is a technical tracking issue they have reimbursed lost commissions. This is a key reason why you should be tracking your affiliate links properly but sometimes you just have to accept some people are scum and will rip off anyone, so test a few similar providers and see which converts better.

  16. ronhardy

    Please, keep up the awesome work and continue to post topics like this. I am really interested in reading post like this…..

  17. JDI

    This is a ridiculously irresponsible article. I find it hard to believe that you are a successful CPA marketer. You appear to be a failed CPA affiliate whining about the very companies that provided the opportunity for you to be in this industry.

    Your post shows an absolute lack of business knowledge.
    1- Most affiliates don’t have the cash flow nor operating capital to go direct to the vendor.
    2- To imply all Affiliate Networks are cheats because they markuup their products is ludicrous.
    3- Who vets the vendors? You can blindly believe all vendors are honest.
    4- Do you really believe that a vendor won’t scrub your leads? Your leads have to back out for the vendor and his ROI.

    As Mr. Volk and Mr. Ngo articulated, the Affiliate Networks serve a purpose in the marketplace and are entitled to their margins and markups. Affiliates, as business people have to decide whether the price we pay for their service is fair given where we are in the value chain.

    Mr. Kim, you would have better served your peers if you wrote a post on how to spot a weak network or conversely a good network.

    So, you think the Affiliate Networks are the problem? Let me posit that maybe the bitch slapping is done on the other end. Specifically, the RTB ad networks.

    My 2cent advice to new affiliates is stick with reputable networks and spend more time mastering traffic sources that converts for your offer and scaling that traffic. Until you can do that, worrying about going direct and how much the network is cheating (if at all) you is a waste of time.

  18. m

    This article is 100% bullshit. Yes I work for a network and run traffic. Scare tactics like networks are taking 40% margins or shaving leads is bullshit. If you are that worried about everyone taking your HARD EARNED money. Create your own offer. Why even go direct? Have you actually made any money on the internet? What are you going to do when you don’t get paid on time, when the offer caps or server goes down? How are you going to have a clue which offers convert and don’t? Are you just going to biz dev, sign io’s and switch to back offers instantaneously? What if you are the middleman and the network can just run their own traffic? And not ANYBODY can start an affiliate network. If it was THAT good of a gig, that profitable and lucrative and easy, why not just start your own network? An average sized network probably does 100k give or take a day in traffic.. You think just anybody can float that type of money? The only one getting raped are the idiots or noobs who give this shit blog any validity. Everyone only has 24hrs. in a day. Do what YOU do best and pay others who are the best at what they do. Optimizing your time is the way to make the most money. Worrying about some network that’s taking 40% margins is NOT. This is a highly competitive industry. Anything shady being done can be very quickly cross referenced by picking up the offer or similar offers elsewhere.

    1. Anonymous

      Amen. I run a network with a few partners and this is the toughest job I have ever had I work more then 12 hours a day 7 days a week 5 am till 6 pm everyday. and I had to front my life savings to get started… Yes well over 50,000. So please believe that anyone can start their own network. you might get some crappy script but will be broke within a few months…happens every time. I am currently developing a script that will keep networks more accountable and help cut down on the skimming that sometimes happens. It is not as rampant as it used to be.

  19. Bradley

    CPA networks always treated me like shit, so i went direct. started kissing my ass like i was the fucking president because they realized they needed me. hah. jokes on them

  20. Big Mike

    This article is an absolute joke! While your heart was in the right place, it’s clear you know very little about this industry, that you purport to be an expert in.

    If the basic premise of your article were entirely true, then there wouldn’t be a single Performance/CPA Network left! Contrary to your belief Mr Kim, Networks serve a very valuable purpose. Now while i do acknowledge the barrier of entry into this industry as a network has been lowered greatly, the bottom tiered, brokered to death networks, NEVER last.

    Networks work to establish relationships with advertisers directly, while working with a collection of publishers, that would not have access to these advertisers otherwise, all while floating substantial amounts of money on a monthly basis. You make it sound as if going “direct’ is easy…how much volume can you deliver? can you work on Net 45 or Net 60 terms? Try getting weeklies from advertiser direct when you can’t deliver huge volume. Or what about when then advertiser that you working with “direct” stiffs you!

    Your first mistake is not doing your research, and working with a a reputable network. Don’t paint the whole industry with the same brush. How many networks do you think have been stiffed by some scammy advertiser but still paid their affiliates? That’s the kind of protection a network will offer you. Networks test and optimize offers internally, so that by the time you get it, they’ve raised the epc’s so that you have a better chance at a satisfactory ROI.

    I laugh at your story about the advertiser you went to directly…no reputable advertiser worth their weight would out a partner network like that! What you don’t talk about in your article is the rampant fraud traffic that affiliates generate in this space, that forces many networks to generate safeguards.

    Every network uses some kind of mitigation, it’s how they can combat against shitty traffic, and fraudulent leads. Are their scammy networks? Sure there are, just like there are scammy affiliates. You just sound like a noob affiliate, that found out something new that you didn’t like, and now your crying.

    Work on finding traffic sources, and offers that work for you, master those sources by testing small and scaling big. And when your truly big enough to go “direct”, cut out all the “middlemen” as you say, and run the offer yourself.

    CPA Networks are a very neccessary evil, and you were clearly misguided by trying to paint the whole industry with one brush, while trying to offer insight, which wasn’t all that insightful.

  21. Joe

    I think this author has it all wrong. There will be unscrupulous people in any business. You would be amazed at how much direct merchants screw their advertisers. They sometimes never want to pay for leads. this is a fact. CPA networks take the brunt if this and protect affiliates who don’t have the capital to front losses. this author is simply not telling the other side. also most networks that screw are ones that are either very large and don’t care about you or very small and very new and screw you sometimes out of ignorance. I say these things because I have direct experience. CPA networks are a good thing when the managers manage the networks properly. networks have to make a profit but this helps provide fraud control and many other tools that are given away to affiliates to help them make more money. if you find a AM that is available to talk everyday… Stick with them

  22. Shawna

    there are a lot of businesses I would like to work with but do not offer affiliate programs. So the only way to find them is go to a CPA network. Can you suggest other ways of looking form Affiliate programs or Online Merchants???

    Thanks..:)

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  26. Public Interest Law

    Excellent study … headline snappy … great factors, most of which I’ve learned on the way also (humility, sophistication, layoff the particular controversial things). May share with my own acquaintances at the office even as start blogging from your corporate and business standpoint. Many thanks!

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