Up until 2008 the barrier of entry to running an affiliate network was pretty high.  The only network platforms that were worth their salt were Direct Track and HitPath - very expensive and cumbersome the setup.  Only a few groups were able to put together viable campaigns, and they sat back and enjoyed to rewards of being the only players in the game.  The acai boom hit and they made it big – reaping in millions a week from total rip off sites that no longer exist.  Oh yes indeed, life was easy – and the networks became what Harvard Professor Swami noted Rich, Fat, and Lazy.

Along came HasOffers, a disruptive technology that empowered hungry entreprenuers to own their own network.  All of a sudden thousands of networks started popping up across the board, many of which were owned by publishers themselves that were tired of late payments, lower payments, and unresponsive affiliate managers.  The cost to enter HasOffers is free – a huge benefit to all entreprenuers that are willing to put in the leg work upfront that non-capital intense starters must do.  Ingenious – get everyone on board, their time committed, and then open up other areas of the platform for a cost.  Easy Installation, All The Bells and Whistles of their competitors, and Inexpensive!!!

Kaboom!  Right off the bat all of the rich-fat-lazy networks started firing off negative remarks about HasOffers, attempting to blaspheme their way out of extinction.  It would only work for so long because HasOffers fired back by tightening up their platform.  Every week additions and upgrades were made.  HasOffers did not make one insidious comment about their competitors, they simply ignored their comments and focused on building a strong business.

Quickly the affiliate network industry became oversaturated with players.  Every week a new network was created running biz up, health, lead gen, email submit, bla bla bla.  Each network did their best to recruit new publishers, saying the same old bullshit: “Highest Payments, Weekly Wires, Exclusives.”   I mean come on, get original or go home.

These networks ate away bit by bit from the dinosaurs like Copeac and Neverblue, earning a slow and steady stream of profit.  The problem is that these networks are all alike, thus do not create value for the publisher.  Why would a publisher want to run traffic with a no-name network that is doing the same thing as everyone else? 

The businesses (hence not networks) that are doing well these days are those that have niches and provide extreme value to the publisher.  Here’s an example of 2 that are diversified and focused on a niche:

1.  The Mailers Network is run on HasOffers and is an Email Only Affiliate Network.  AWESOME CONCEPT!!!  For mailers that are looking for offers that are ready to go for a drop, this is the ultimate solution.   No need to worry about whether the offer allows mail, the value is created because mailers can quickly choose an offer and drop.

2.  Health Converter – yes this is coming from one of the prinicipals of Health Converter so straight up it’s biased.  HC was premised on creating a solution for publishers, advertisers, and networks.  We are the hub for the top health and beauty offers on the net.  No longer do publishers have to jump from one network to the next to run these offers.  Instead, they can hop on HC and find 20+ Acai, 28 teeth offers, etc. 

If you’re starting a network be original, don’t copy someone else’s idea.  ClickBank rocks it because they do all digital products.  Create a value-added business like this and your sure to succeed.  Try to become just another network and you’ll find yourself extinct before you’re even born.

Yesterday I engaged in a heated conversation with the owner of a well known affiliate network, whom we’ll refer to as Chubby.  Our discussion quickly turned into Chubby making  threats to blog about Health Converter in an adverse manner.  What was this all over – a small dispute of around $15,000 or so that Chubby believes Health Converter owed him.  The $15,000 was traffic that Chubby sent to one of our offers through one of his “trusted million dollar a month publishers.”  So why isn’t Health Converter going to pay it: IT WAS FRAUD!

One of our campaigns was running on his network, hit around $35,000 in 3 days, and after our call center returned the first 100 leads we contacted Chubby.  The first alarm was when Chubby adamently stated “We do not have issues with fraud at all, it is something that never happens over here.”  What a joke!  Every single network in the world has dealt with it and continues to deal with it on a daily basis.  The largest networks in the world run traffic to our offers - CX Digital, Azoogle, CJ – and they have all had issues with fraudulant traffic and have all dealt with it professionally: kicking the publisher that ran the bad traffic out of their network and refunding the money.  Instead, Chubby, who runs a dinky network on an archaic software platform, threatened to “air out the dirty laundry” across his blog and network of criminals if I didn’t pay his entire bill.  What was Chubby thinking?  This is certainly not indicative of a professional, let alone a legitimate business.  

So I decided to do some independent research on Chubby and discovered that he is a true narcissist.  Unlike legitimate networks, that build their business around their people, this egotistical asshole spends countless hours blogging about himself and what an amazing super affiliate he is.  In fact, Chubby just moved to a metropolitan area from Kansas 2 years ago to start his very own affiliate network.  Prior to running a network he worked as a mechanic in a garage.   All of a sudden Chubby had an epiphany – if he added offers to an affiliate software platform and discovered ways to send 70% legitimate traffic he could increase his ROI by 30% by sending blackhat traffic (stolen and virtual credit cards).  Chubby inadvertantly consulted with a gentleman by the name of Tyler Allen to build out this blackhat system.  (Incidentally, Tyler  would later start CPAWatchdog.com, a whistleblowing organization that sparked an official FBI probe into Chubby’s organization.)  Tyler would eventually reject Chubby’s overture to partner up on this system. 

In the mean time, Tyler recorded and documented the myriad of late night conversations on how Chubby was employing this blackhat system to skim millions of dollars in small sums from advertisers.  The idea behind this system was to keep the advertiser just so far in the profit margin that it made sense to keep running with Chubby, all the while increading Chubby’s ROI by 30% or so.  It was all working great until Chubby ran it on Health Converter. 

It reminds me of the story of the bully that walked around the playground beating up smaller kids, to just one day meet his match and get his ass beat in front of all the bitter kids that he once triumphed over.  Yep, that’s Health Converter here – we stepped in and have embarrassed the bully in front of everyone.  We’ve sent detailed reports of the fraud to the FBI, FTC, and the AG in Chubby’s state.  Pretty soon you will hear of stories about the first network getting its doors kicked in by the government, followed by several co-consprirators. 

At the end of the day we took the high road and paid Chubby’s organization for the legitimate leads that were sent.  We cut off all other ties and will likely meet with Chubby again in court when we testify as a witness in a case being brought forward on him.

The moral of the story is do not get bullied into paying for fraudulant leads.  Take a stand against affiliate and network fraud.  This industry is fraught with organized criminals like Chubby, that feel that they can blog their way out of anything.  The bottom line is that they can’t, and in the end they will reap what they sow.