Posts Tagged ‘management’

Your Business is Under Attack

Tuesday, November 20th, 2012
Wow, affiliates, you can’t catch a break!

Hurricane Sandy isn’t the only storm to roll through these past few weeks and impact our industry.  You and your business are under attack from the forces of nature within the insurance industry.  This isn’t the first time it’s happened, and it won’t be the last.  Are you prepared to weather this most recent storm and come out stronger on the other side?

The Storm
In recent weeks a number of large buyers in our industry have been in the headlines, making changes that could severely impact your business if you aren’t ready for their next moves.  Keep reading to find out how and what you can do about it.

  • After months of downward trending results, high agent attrition, and carrier complaints BankRate announced they are launching quality initiatives – cutting more than 500,000 leads/month and promising change to their shareholders.
  • When presenting their most recent quarterly results, Quinstreet, parent company of SureHits and Insurance.com, announced that similar trends within the insurance space contributed to them falling short on their earnings expectations. They are expecting flat revenue and margin performance in auto insurance for Q2 2013 with limited visibility to when they will return to growth.
This ‘move for margin’ might be what Wall Street wants to hear - but what does it mean for you now, and what the hell should you do next?

What History Tells Us
Bankrate and Quinstreet have to deliver on 2 points:

  • Increase the quality of their traffic to retain thier agents and buyers
  • Deliver growth to their shareholders and revive stock price
History shows us that all too often companies resort to trying to control supply in order to accomplish these two initiatives.  The theory being they will have the ability to more closely monitor quality while simultaneously increasing their margin by eliminating the middleman.  Also, down stream they will ultimately be able to force better pricing from their buyers.

So, how does one gain control of supply?  By eliminating competition, reducing subsidization of the marketplace, and increasing direct to site traffic – it’s a strategy that is fundamental to business.  The history books tell us that buyers, especially when they are in a position of strength and market domination, look to this strategy. Often times at the expense of their partners.  Don’t believe me?

  • In 2009 Insurance.com made the decision to all but abandon their B2B and affiliate channel, instead focusing on building their brand and increasing their direct to site traffic.  Their first move was to increase payouts and sign exclusive deals with their top partners to clear competition.   The pay increase was short lived, soon after they cut partner payouts to increase their own margin and limit affiliate growth.  They thought affiliates were so dependent on them that you’d accept it, they were wrong.
  • In 2010, Quinstreet tried to increase its consumer presence by acquiring a number of premier websites including Insurance.com and Carinsurance.com. They have struggled significantly since adopting this strategy; their auto insurance vertical has posted year over year declines in revenue of 15% or more each year since.
  • Now, during the November 1, 2012 shareholder meeting, Bankrate stated, “As previously mentioned, the year over year margin increase is primarily a result of trimming the ratio of affiliate leads compared to traffic to our destination sites in insurance through direct, organic and marketing activity.” They go on to say “we are concentrated on driving consumer adoption directly to our sites.” If we’ve learned anything from history we know there will be fallout from this strategy and you need to protect yourself.
These are attempts to eliminate you, the affiliate!

Your Next Move
Be prepared!  What to expect in the market over the next few months:

  • Large buyers in the space will likely increase your payouts in the short term as they look to build your loyalty and dependence. Make      no mistake, the increased payouts are not sustainable.  It’s a short-term play to grab traffic, and they will soon cut payouts as they need to take more margin to re-coup earnings lost from cutting volume.
  • They may dangle the carrot of greater riches in return for exclusive rights to your traffic. This may seem like a good thing, and it could be.  Just make sure you negotiate a quick out if the relationship or pricing goes sideways, and the ability to send up to 25% of your traffic elsewhere for testing.  Don’t let your business become dependent on someone else, you need diversity.
  • If neither of the above work, there will be threats of losing their partnership altogether if you don’t give them what they want.
Don’t be fooled by these tactics, hold your ground – you have more power than you think. If they could, they would have already eliminated you altogether.  They rely on you.  Evaluate your business, determine your risks and look at new ways to diversify.  You may find that a solid, diversified foundation with maximized conversion and a lower return rate coupled with more feedback and guidance could put you in a better position to grow. Partner with people who are transparent and have your best interest in mind.  Play for the long term, don’t fold under pressure or agree to things that will limit your success.

Explore Your Solutions
Remember, you aren’t alone and you do have options.  Tell us what you need, we will help you diversify and solidify your business.

  • Do you need help fulfilling extra legs of a lead?
  • Are there buyer relationships you need help obtaining?
  • Is there a technology solution you need access to?
We believe in you and it has always been our philosophy to do whatever we can to help your business succeed.  Let us help you navigate this storm, call us today and tell us how we can help you. Don’t let anybody control your future but you!

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Preparing for 2012 – What Are You Trying to Achieve in the New Year?

Wednesday, September 21st, 2011

What are your goals for your business?  When we talk to affiliates, the number one response we hear is ‘to make money’.  But what does that really mean?  Do you want to make money at any cost, regardless of consumer experience or your control over the offer?  Is one dollar in profit enough or do you want to put your child through college?  Are you willing to work 100 hours a week or is this a secondary income source? Before you can start preparing for 2012, you first need to define what you are preparing for.

Therefore, this first newsletter in our ‘Preparing for 2012’ series focuses on helping you determine what you want to achieve in the New Year.  Even if you have set your goals, now is a good time to take a step back and consider whether they are still relevant and pointing you in the direction you’d like to head. In addition, do they follow the S.M.A.R.T formula – specific, measurable, achievable, realistic and time-targeted?

To help get you started, below are some key areas you will want to think about, as it applies to your business.

Volume vs. Margin
Are you solving for volume or for margin? Are you willing to sacrifice one for the other?  Knowing the answer to this question will help you determine what kind of offers and marketing efforts are right for you.

Understand Your Key Performance Metrics
Do you have a list of key performance metrics?  If so, do you monitor them regularly? Here are a few you might want to consider:

  • Revenue or Profit per Visitor
  • Conversion
  • Growth Rate

Do the Math
Don’t assume because the payout is higher or conversion is better, a program is better for your business.  Take the time to do the math.

Below is an example of how a $8.00 per lead offer can actually make you more money than an $11.00 per lead offer, based on 100 clicks to your site.

Offer A
Payout: $8.00/lead
Conversion: 35%
100 clicks X 35% = 35 leads
35 leads X $8.00 = $280
$280 / 100 clicks = EPC of $2.80

Offer B
Payout: $11.00/lead
Conversion: 20%
100 clicks X 20% = 20 leads
20 leads X $11.00 = $220
$220 / 100 = EPC of $2.20

As you can see, lead payout isn’t always the best measure of success.  Even though Offer B has a significantly higher payout, because conversion is lower it nets you a lower payout per click. Tie everything back to clicks or visitors, to ensure you are making an apple to apples comparison.

Defining Success
How do you determine success?  Do you have a growth goal?  A margin goal?  A volume goal?  Whether you’re talking about percentages or absolute numbers, know what you are trying to achieve.

Evaluate and Test
Evaluate if your current offers are in line with the goals you have defined. And ask what additional things you can be doing to further improve performance.

  • Have you A/B tested other offers to ensure you are earning the highest EPC?
  • Are you sourcing your traffic and measuring results on a granular level?
  • Are you making the most of your existing traffic through incremental revenue sources?

Talk to your Account Manager
Think you have your goals? Or are you still lost?  Either way, talk with your Account Manager.  Not only can we help you set a course for your business, but the more we know about your objectives, the more help we can be to you as new opportunities and offers become available.

Watch for our October newsletter, where we’ll help you determine if your current offers are best suited to meet your goals by discussing the pros and cons of different models such as click vs lead or revenue share vs flat fee payout.

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MAM Welcomes Harold Dahringer as CFO

Wednesday, September 21st, 2011

I am very excited to be joining Moss Affiliate Marketing!  Paul has gathered an extremely talented and dedicated team, many of which I’ve been lucky enough to work with in the past.  My role at MAM is to develop and lead the financial and accounting functions for the company, as well as help out wherever I’m needed.  Luckily, my background is fairly diverse. I’ve worked for CPA firms, public companies, and fam-2privately-held companies in a variety of roles within the finance function.  I learned the affiliate marketing industry from the time I spent leading the accounting and finance department at Insurance.com.

I’m based out of the Cleveland area where I live with my wife and two children.  I may live in Ohio, but I am die-hard Pennsylvania sports fan (We Are…Penn State!). I look forward to meeting all of our partners, and I can be reached at hdahringer@mossaffiliatemarketing.com.

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The Keys to Increase Pricing – Hold Your Provider, Yourself, and Your Consumer Accountable

Wednesday, July 20th, 2011

Life is pretty funny.  Starting this summer series I worried it would cause me to lose business or potentially isolate myself from others in the industry, but it has done the exact opposite.  People are coming out of the woodwork, agreeing with the need for change in our industry and willing to make some of the sacrifices necessary to right this ship. If you are one of those who feels there’s nothing wrong with the industry, you are dead wrong. Proof you ask? The most expensive keyword in Google is the term ‘insurance’ and it costs $55 per CLICK. There are pure organic and paid search affiliates getting less than $10 per LEAD. Do the math- let’s fix it.

This final segment discusses what you need to do to start increasing pricing – hold your provider, yourself, and your consumer accountable.

Let’s begin with your consumer, because some of you may be scratching your heads on that one.  One of your goals is probably to increase throughput of quality leads to your pay point, implement the below tips to help acheive that goal.

  • Market in a way that gets the millions and millions of legitimate insurance consumers through the front door.  Consumers fill out lead forms for two reasons, tailor your marketing message and value proposition to meet these needs:
    • To find a better insurance policy than the one they currently have
    • To validate that their existing policy is the best one
  • Give consumers the best opportunity to enter valid data.  To borrow a phrase from the courts, don’t lead the witness.  Carriers and agents know that not everyone is going to switch policies, but they want the chance to show the consumer their most accurate and competitive rate based on their underwriting.  To do that they need correct consumer information.
    • Be cautious of which form fields you default.  Many are important rating variables for the carriers and should not be defaulted.  Ask your Account Manager for information regarding specific fields.
    • Tighten up validation on key fields like contact information, address and zip code.  Don’t let customers knowingly or unknowingly cheat!!

Next let’s talk about holding yourself accountable.  This can be hard because it’s always easier to point the finger at someone else.  If you go to the business section of any bookstore you will find hundreds of books about empowering yourself.  Why?  Entrepreneurs don’t start a business to be a slave to someone else’s dictatorship.  You have to get back to being your own boss – diversifying, empowering, dictating to others, creating wins.  You have a social responsibility to play within ethical and honest parameters, but those should be your ONLY parameters.  Get away from playing the victim and take charge of your business.  No more handcuffs, extricate your foregone conclusion mindset.  America wouldn’t be one of the most advanced nations in the world if our leaders (you) accepted the status quo.  I am as guilty of this as anyone, and when I changed my philosophy to shift industry paradigms rather than be a victim of our current industry state – work became fun again!  Life is too damn short for work not to be fun (and profitable).

Personally, I feel the above paradigm is the hardest to shift, but many of you may feel this next one is your biggest challenge. The battle is as old as time.  How to get what you want without biting the hand that feeds you?  I mean, shit, at the end of the day that is the real issue here.  Based on the comments you have flooded me with, we all know something is broken.  But why are so few actually doing something about it?

So, to do that, and really the crux of this 4th segment: Quit using your quality traffic to subsidize the industry and make the people buying cheaper, shittier traffic rich. YOU NEED TO GET YOUR TRAFFIC BIFURCATED FROM THE JUNK.  Separating the good quality traffic from the junk will increase conversion and limit dilution.  With conversions up it means the customer is getting what they want, more money flows in, so everyone wins.

Right now our industry is so convoluted we would be embarrassed if we took our case study to a Business 101 class, because the answer is so transparent even they can see it.

We are currently packaging leads with an actual value of less than $1.00 and selling them for $8.00.  We are also packaging leads with an actual value of $16.00+ and selling them for $8.00.  Some might think “So we have median pricing, is that such a bad thing?”  THE ANSWER IS A RESOUNDING “YES”! Not just yes, “HELL YES”.  Because, so many companies are stripping their margin out of this pricing, so the $8.00 median falls to $6.00.  And guess what?  Marketing to consumers who have intent to buy a policy costs more than $6.00.  Then, as those poorer quality leads infiltrate the market, $6.00 goes down to $4.00.  So the downward spiral begins and the carriers/agents get increasingly crappier traffic.  Also, when lead buyers don’t have to pay a premium for quality leads, they get fewer conversions.  Then there is no hope of pulling out of the death spiral unless changes are made.

You need to get your provider to separate your traffic from the masses and get rewarded for your customer’s intent.  Get your traffic right priced, PLEASE.  It is a process and a paradigm shift, but it will get our industry back to the pride lands we so desire to get back to.

Get your provider on the phone, not email, and ask them explicitly to set goals so that you have something to drive to. Then, hold them accountable.  If you deliver and they don’t, it’s time to move on.

Enjoy the rest of your summer.  Please email me if you have any additional subjects you would like me to address, you know I am a straight shooter.  Also, I will be in NYC for LeadsCon and Affiliate Summit.  If you want to catch up email me at pmoss@mossaffiliatemarketing.com or psmoss76@yahoo.com.

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Social Media & Incentivized Traffic – What it Means to You

Thursday, July 7th, 2011

The comments, questions, and inquiries keep coming so I will keep writing…

First, I hope you had a fantastic holiday weekend and that you have time in your summer schedule to get away from your computer to spend with family and friends.

My summer has been pretty exciting.  I have been on a whirlwind tour, working with industry leaders to move the insurance vertical in the right direction.  Right now our industry parallels a rip current.  On the surface everything looks normal as waves are crashing on the beach.  Similarly, lead pricing continues to crash.  But, beneath the surface the rip current is moving the other direction, just like behind the scenes our efforts to improve quality and pricing are beginning to take hold. Paradigm shifts take time, and this one is gaining momentum.

So, let’s discuss social media and incentivized traffic.  Initially, social media didn’t have a great impact on our industry.  It didn’t convert well, and it was better suited for branding rather than the conversion our industry requires.  But it was a cheap way to subsidize more expensive traffic like search and email.  Some affiliates would do a blend, like 80% search and 20% social media.  This was an affordable way to increase volume levels while keeping their overall quality and conversion higher.

Over time, as lead pricing started to drop, search and other more expensive traffic sources became prohibitive to affiliates.  Concurrently, lead buyers began compensating affiliates based on agent coverage and lead demographics rather than consumer intent. The combination of these two events gave the affiliate very little incentive to pay top dollar for quality sources.

What happened next is really what hurt our industry.  There were affiliates, who were not held accountable, that began sending disproportionate blends of traffic.  The 80/20 started slipping to 50/50.  And then FarmVille and MafiaWars came along, and the rest you could say is history.

Consumers were being incented in droves to fill out insurance lead forms for “points”.  I’ve even heard that some advertisements told the consumer “if they informed the agent they were calling for points, they wouldn’t receive their points.”   Many companies explicitly forbid this type of marketing behavior, but others turned a blind eye.  Some weren’t able to source traffic and couldn’t police it even if they wanted to.  So, social and incentivized traffic became a much more prevalent source than anyone wanted.  I know this because unfortunately we are all feeling the repercussions now, whether or not you were an active participant.

The extreme rate at which this traffic infiltrated the industry caused high agent turn over, diminishing returns, lower conversion, and increased supply to decreased demand. Adam Smith would be slapping his forehead.  In this frenzy, folks lost sight of the fact that policy sales are what ultimately fund this industry.  Social and incent traffic is just a distracting noise that allows those with very little value to steal from the legitimate affiliates.

If it’s not obvious by now, I don’t believe social media or incentivized traffic to be sustainable sources.  At MAM we are in the game for the long haul rather than short term gains, and are working to extricate this traffic from reaching lead buyers. In the final Summer Series newsletter next week I will talk about how to manage your business against the trends of increasing social traffic. I will include what we are doing to ensure your quality traffic isn’t getting lumped in with other’s social traffic, allowing you to ultimately get paid what you deserve.

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The Advertiser Who Doesn’t Get it and Thinks You’re the Competition

Thursday, July 23rd, 2009

Ok- you know this scenario… you sign up for an affiliate program- and you may or may not get attention from their management team. You have some successes and you start to get better and bigger and then you get your fee reduced, completely ignored, or even worse- cut altogether. Whether or not this has happened to you- it is a reality in our business- and while I may not have perfect solution- I thought it would be a good idea to write about because it is prevalent.

I think first you need to get in the mindset of the advertiser… so go back to 13… it might take some of you a while longer… but go ahead and do it… 13… zits, lockers (and that little 3×5 mirror in lockers), pee-chees, your first cigarette puff, first kiss, raiders starter jacket, lemonheads, lord of the flies, piano lessons, ALF, chores, pre-algebra… etc. Your 13 might look a little different but you get the point. Ok- so now that your brain is back to 13 think of how you thought of your parents, teachers, or virtually any authority. They were a necessary evil- right!?! For instance- your parents wouldn’t let you stay home alone while they went away on vacation (so you were mad at them)- but you needed them to drive you around (so you needed them). They wouldn’t let you skateboard (so you were mad at them)- but they were your financial support (so you needed them). Same thing for teachers… they would call your parents (so you were mad at them)- but they also held the key to your grade which led to privileges (so you needed them).

At 13 you thought authorities were the bad guys. Many advertisers who don’t get it view you from the same perspective a 13 year old views authority. And because there is this internal conflict for them- the message gets conveyed to you in several different ways. Typically instead of getting both the good and the bad- they only give you the bad: “no trademark bidding”, keyword restrictions, no emailing, lacksidasical reporting, no feedback on performance from their perspective, little communication, no marketing help, etc.

These advertisers look at you as a necessary evil. And, if possible would do away with the affiliate program at their first chance. They feel like you cannibalize their traffic, drive up marketing costs, misrepresent their brand, and ultimately blur their brand and products.  However, you drive them traffic they rely on to grow the business and subsidize overhead, et al.

Unfortunately I don’t really have a solution for this dilemma… I have consulted for nearly 100 companies at this point- and once the mindset is in place it is nearly impossible to shift the paradigm.

On the other hand- some companies really get it- they understand you are an extension of their company and offer more coverage in a marketplace that they couldn’t otherwise achieve. They give you tools, feedback, top creative, deep links, etc. If you have a chance- always try to align yourself with these companies- as you will likely have more success and less risk that the carpet will be randomly pulled out from under you.

So, just as a kid views authority as a necessary evil- some advertisers view you the same. For the most part, as time went on kids realized that authority figures were just trying to help the best way they know how. Unfortunately, as it stands now, affiliates have to carry the brunt of this burden.

Affiliates- prove these idiots wrong. Show them that you aren’t evil. Play by their rules when necessary. Show them that they are much better with you than without you. The reality is that distribution models are the backbone of American business in the brick and mortar world- and are becoming the backbone of business in the online world. Keep in mind we are in the early stages of this commerce- and just like brick and mortar distributors (Walmart, Macys, Giant Eagle) are viewed as true partners to “advertisers” (Nike, Johnson & Johnson, Hershey) the online world will come around and affiliate marketing will be as accepted as the rule, not the exception.

I think I might start filing in Pee-Chees just for old time sake… are they still around?

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