Ruslan Kogan is the founder and CEO of Kogan. After CES 2013 in Vegas, I stayed on after the show finished for a few days. I was shocked to see the number of shysters involved in this growing trend. Affiliate scam I don’t use that term lightly.
A while ago, one of the marketing consultants at my company, Kogan, came to me and advised that we should get involved with affiliate networks to expand our digital marketing reach. Where do these affiliates get their traffic from? How will they drive traffic to Kogan. He couldn’t really answer the questions, but I agreed to run a small trial. Based on our results, that marketing consultant is no longer with us.
To get started with affiliate marketing, we signed up with one of the world’s biggest affiliate networks and agreed to pay a 10 percent commission for their sites that drive sales and conversion to Kogan. 200,000 of sales to the Kogan website. We were then able to generate a list of sites that drove the sales to Kogan. I had not heard of a single website on the list. Where are these guys getting their traffic from?
I asked the marketing consultant again. I decided to apply simple commercial market fundamentals to the situation. 200,000 of product a week for you. What if you raised their commission to 20 percent? You’d assume they would work harder because they get more reward wouldn’t you? So I asked the Marketing Consultant to lower the commission we pay to the affiliate network to 5 percent.
200,000 of sales through them in a week. I then asked him to lower the commission to 1 percent. Whatever these affiliate sites were doing to drive sales to Kogan. I then got the marketing consultant to lower the commission we pay to half the sites on the network to zero percent. Amazingly, they still kept driving sales. The funny thing was that we rarely have any publicly available discount codes active on our site.