10 Reasons Why So Many Affiliate Networks Are Shutting Down This Year?

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Most Affiliates working from long back would know Mundo Media and Peerfly. They were topmost affiliate networks in the industry in the MThink Best CPA Networks Category.

But, It came as a shock to a lot of people that those biggies in the industries crumbled. Mundo Media in debt of $26 million dollars and had to shut down operations due to various reasons. Peerfly has to shut down and said that – PeerFly will be discontinuing normal operations on Wednesday, July 31st, 2019 and will be closing the PeerFly Affiliate Network and said – the particular model that PeerFly was built on no longer represents the most efficient or cost-effective method for generating new sales and leads for advertisers

And I’m hearing from various sources that Above All Offers which seems to be shown as at 7th position for MThink Best CPA Network for 2019 would be crumbling as well. (Correct me if I’m wrong, but few reliable sources told me so)

So, what is causing these massive shutdowns of Affiliate networks?

We run our own affiliate network as well at a small scale and have seen all the trends and how Affiliate network gets affected by issues and how these big networks go down.

Let me explain you few of the reasons why this is happening.

  1. Bearing Losses: First and foremost are the advertisers with who affiliate networks deal with and if advertiser run away with money and doesn’t pay the affiliate network, the affiliate network to keep the company afloat has to bear the loss and keep on going otherwise the affiliates running multiple offers stop their traffic to other advertisers, within the Affiliate network, who are paying to the affiliate networks. When I was an advertiser with Mundo media back in 2015-16, they used to take payment in advance but I suppose with big advertisers they were dealing in agreements to get paid after verification of traffic which advertisers manipulate a number of times.
  2. Leads Returns and Time Period: I would share my experience with the Education Offers which we were running with an advertiser where the returns on the leads were so complicated and agreements were written in a way not to understand in a proper way and we were dealing in Net-30 with the publishers on it. But advertiser returns came after we paid the affiliates and it was small scale but still a loss at our end and then we asked about proper format of returns cycle and I will show below how their returns of leads worked. So, agreements are very important plus understanding the return procedures and explaining the same to the affiliates as well.

  3. Trending Verticals: Always keep up with the trending verticals, the networks who just stick to old verticals and don’t change with time are bound to cease to exist. We moved altogether from the Education offers after understanding the volatility of the education vertical.
  4. Publisher Verification/Traffic Verification: Another major reason why affiliate Networks fail is to work with any affiliate without verifying them. It’s better to work with a smaller group of trusted publishers than to work with a lot of publishers who you don’t know what kind of traffic they might be sending to your advertiser’s offers. A good example of that is MaxBounty, who is very stringent about the publishers’ approval process and do a thorough investigation about the publishers and need strong referrals. But still, there are underlying problems like those kinds of publisher accounts being sold in the open market. So, screening is important and a thorough and time to time investigation of traffic are also good to have as a safety measure.
  5. Salary & Commissions: Big Staff and Salary and commission to Affiliate Managers – These expenses also make a considerable dent to the overall growth of the Affiliate network where the staff has to be paid well and affiliate managers, advertiser managers are paid anywhere from 5-20% of profits made from the business.
  6. Scrubbing/Hiding Conversions: Affiliate networks who scrub/hide the conversions – This is a very bad practice which is predominant in the industry and the publisher do know what they are spending, tracking it properly and I have seen myself as a publisher speaking with the customer saying that they have paid for a CPA conversion offer but it didn’t show up in the Affiliate network as a conversion which was a clear sign of scrubbing and then after fighting with them the Affiliate network had to pay those scrubbed/hidden conversions. And these things give a bad reputation to the whole network, and it is bound to happen that good publishers won’t be sending their traffic to these Affiliate networks who scrub. So, be good and play fair always.
  7. Non-Proactiveness in Monitoring Traffic: Also, Fraudulent traffic from publishers unmonitored and sent to advertisers will deteriorate the relationship with them for the Affiliate network who will also start scrubbing at their end. And it is again detrimental to both affiliate network and publisher.
  8. Understanding Publishers’ Need: Proactively listening to the publishers offers need is very important as well, if you are not able to provide those to them as an Affiliate network – then those affiliates go to different affiliate networks. So, As an affiliate network, you should have a good team of researchers and negotiators who can get the offers at a good price from the rest of the crowd.
  9. Competition: It plays an important role as well. I have seen how Mobvista used to beat the hell out of all the affiliate networks by paying more than what is there in the market for a particular offer payout due to their truckloads of money. Which was a well-planned strategy to go to an IPO later as well. So being competitive in this industry with payouts plays an important role. Publishers do research about your authenticity, payout you are giving, the payment schedules, etc.,
  10. Direct Approach to Advertisers: Most advanced and veteran publishers nowadays are advanced enough to search for direct advertisers and deal with them directly without the Affiliate Networks required as mediators and taking away % of commission publisher can save going direct. Though it has their own pros and cons but still worth doing it.

Let me know your thought about all this and let me know if I didn’t add any valuable point in here.

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