Affiliate Networks Assailed: Kogan Calls Out ‘Shysters’

Outspoken entrepreneur Ruslan Kogan has come out swinging, this time taking aim at affiliate networks after running one experimental campaign.

Ruslan Kogan, Founder and CEO of electronics pureplay Kogan, is well known for his ability to harness the power of PR and spin, but his latest outburst appears to go beyond attention seeking as the entrepreneur puts his axe to the grindstone.

A piece that recently appeared on VentureBeat, authored by Kogan, is written as a direct attack against the entire affiliate network industry.

The piece, entitled ‘The big, ugly affiliate marketing scam’ lambasts practitioners as “shysters” and claims to provide “damning proof that affiliate networks are little more than a scam” in the form of a few, not-quite censored screenshots of some Google Analytics pages.

Kogan’s thesis is essentially that he had been convinced to run an affiliate marketing campaign at the behest of a marketing consultant , whereby he later discovered that the campaign wasn’t giving him the kind of results originally expected.

What kind of discussion did Kogan have with the affiliate network in question about his expectations? What discussion has taken place since? None of this information is provided. Instead, Kogan appears hell bent on slinging mud at an entire industry for very little apparent reason (he openly admits he paid “all but nothing” for the campaign).

“Affiliate marketing as a channel has been in existence for over 15 years and has been successfully implemented on an ongoing basis by the world’s leading brands, including Amazon, eBay and Apple,” says John Matthews, General Manager of dgm Australia. “As with any marketing strategy, affiliate needs close alignment between agency, network and client in order to drive the best possible result.”

It’s not only dgm Australia that has leapt to the defence of affiliate marketing practices, as Kogan notes in his article, there are a rising number of practitioners in the space.

These practitioners, like Zane McIntyre, Co-Founder of CommissionFactory, highlight the fact that a coupon-based campaign has its own, inherent risks and benefits. As with any affiliate campaign, these factors need to be carefully balanced by the advertiser, not the network.

“Some believe (like Kogan) that there is no value in coupons, but one thing that experienced affiliate program managers and networks can certainly agree on is that it’s all about the approach,” McIntyre says. Coupons were originally created to increase the value of a cart by up selling (e.g. “Spend over $150.00 and receive five percent off”) and in turn, increase your average cart value.”

“Ruslan Kogan isn’t wrong,” says James Kitchener, Director and Founder at Jack Media, “but he is describing a very small sub-section of the affiliate space – the affiliate coupon industry doesn’t represent the sum total of what affiliate networks can achieve and they certainly have the capability of cannibalising sales commissions by the process he describes.”

The Kogan post then begs the question: was Kogan (or his marketing consultant) driving the coupon affiliate campaign? Or did the network ‘go rogue’ and decide its own strategy for driving traffic incorporating much-searched terms like Kogan vouchers and Kogan discount codes?

As Kitchener points out, culpability for these situations must ultimately lie at the junction between advertiser and affiliate network. In this case, it’s simply not clear who made the executive decision to optimise the campaign for a non-existant coupon strategy.

“An affiliate campaign’s success is a combination of the goals of the advertiser, conversion rates, calls to action, the publishers and many other factors,” Kitchener explains. “If Ruslan’s goals were not met, it is not necessarily the entire affiliate network model that is to blame, rather the individual campaign or affiliate network should be held accountable. It is our job as affiliate marketers and industry leaders to educate our advertisers and publishers to ensure the best results possible.”

Is Kogan’s affiliate experience reflective of the majority? I’m sure the affiliate marketers wouldn’t like to think so.

“A recent case study from Lenovo and dgm, published by Power Retail in their Special Report on affiliate marketing, shows exactly how clients should embrace affiliate to increase their ROI within the channel, whilst achieving client goals,” Matthews says. “As a company we are committed to the long term education of Australian merchants on how to utilise a channel that has been in existence for over 15 years.”

Ultimately, Kogan’s motives are particularly opaque in this case. VentureBeat? I’m tipping a capital raising in the works for Kogan. He’s certainly putting himself out there more on the speaker circuit of late.

Kogan has been approached for comment on the matter.

3 Comments

3 thoughts on “Affiliate Networks Assailed: Kogan Calls Out ‘Shysters’”

  1. Aaron says:

    The recent influx of Australian coupon sites has unfortunately taken the US route of creating generic link directories of deals rather than showcasing actual real coupons – this is part of the problem and Kogan is partly right on this issue.

    Offering a potential customer a unique code has massive advantages over the typical bargain link, not only can they use the code on whatever they would like, they are more inclined to buy more from your store – especially if the code is stackable.

    Commission factory hit the nail on the head – its all about offering the customer an incentive and a reason to shop here instead of there.

  2. Tom says:

    The statements below will explain to you *step-by-step* exactly (How & Why) – “Affiliate Coupon Sites” are stealing Affiliate commissions from righteous affiliates that are actually promoting the products/service in the righteous manner….

    …And What You can Do About it, if you are an affiliate?

    An affiliate can promote a product/service on their site that provides a ton of value, and have done a ton of research in building that page…

    And as far as coupon sites — nothing gets me more frustrated knowing that a customer could have spent a week on my site, reviewed all my products, decided to click my affiliate link to arrive at the MERCHANT sales page, then see the coupon field…. then decide to do a search in Google as: “PRODUCT-NAME” coupon — then for them to see 20% -to- 50% on that specific product Link, which they ALMOST DEFINITELY will click to arrive on an THEIR Merchant Sales Page with THEIR Affiliate LINK dropped…..

    And they provided ABSOLUTELY O VALUE — just buttons that state “click here” or “get deal” —
    only to be redirected with their new affiliate link to arrive on the same merchant page they were on, but with guess what? No 30% -to 50% off like they promised…. but they will still get my sale and **steal my commission**. But what do they care?! Most of these coupons sites only intention is to steal money from affiliates and to get paid undeserved commissions.

    And you notice that most of these Coupon Site Links in the “Googles SEO results” are not updated, and don’t give specifics as to what coupon codes they are getting.

    *** So What Can You Do? ***

    Contact your affiliate manager, and explain this situation to them, and tell them you need an “exclusive coupon code” which will at least impede people from navigating off my site to search for other coupons in Google that.. (most of the time), are not actually “Real Coupons”, and are not actually “providing any value”….

    And list that “Exclusive coupon code” on your the “Top Feature” section of your site. Most themes and wordpress have this feature. You can also build your coupons as an Image — and if using wordpress, it works good in conjunction with the plugin “Dynamic Widgets — which gives you full control on which pages your “Coupon widgets” will appear. And you can even set times for when coupons expire.

    I always ask for coupon codes that are not set to expire, it just makes it easier especially if you run a lot of wordpress site’s… You can just list it as “Today’s Coupon Special”.

    I Think this is a good method to go by. If anyone can communicate on this issue to explain more methods, or better methods, it be greatly appreciated.

    1. David Wilks says:

      Hi Tom,

      Great reply and it helps me understand why (as newbies) we are extremely disappointed with our foray into affiliate marketing.

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