Comments on: The End of Affiliate Marketing or the Rebirth of CPC? http://www.revenews.com/search-engine-marketing/the-end-of-affiliate-marketing-or-the-rebirth-of-cpc/ Discussion of Online Marketing, SEM, Social Media, Mobile and Video, Micro-Content, and Affiliate Marketing Thu, 09 Feb 2012 21:59:00 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: David Lewis http://www.revenews.com/search-engine-marketing/the-end-of-affiliate-marketing-or-the-rebirth-of-cpc/#comment-22006 David Lewis Wed, 01 Jul 2009 14:00:21 +0000 http://www.revenews.com/?p=4075#comment-22006 As for CPC, I would think that Shopzilla's model helps ease that. In addition, I sure that Google Affiliate Network can get help from Google AdWords/AdSense on fraud protection for CPC. As for CPC, I would think that Shopzilla's model helps ease that. In addition, I sure that Google Affiliate Network can get help from Google AdWords/AdSense on fraud protection for CPC.

]]> By: David Lewis http://www.revenews.com/search-engine-marketing/the-end-of-affiliate-marketing-or-the-rebirth-of-cpc/#comment-22005 David Lewis Wed, 01 Jul 2009 13:12:48 +0000 http://www.revenews.com/?p=4075#comment-22005 It is short-term if you look at the next decade. The pain that we will feel and the potential destruction of an industry are not short-term. The problem is that very few people in DC are interested in fixing this problem. Why? There is no money for Congress to control once this is fixed. Other people get to decide how to spend this new-found revenue. Personally, I think that I have sent Sen. Boxer, Sen. Feinstein and Rep. Waxman to DC to represent the interests of California and my district. I'm not so sure of that based on the way the California caucus does not work together. There also appears to be a disconnect between the State legislature and our representatives in DC. Shouldn't they be working together? Overstock's letter to terminated affiliates echoed Amazon's letter to our state officials that the nexus provisions are illegal and they will not tolerate this illegal action. It doesn't matter if you think that sales / use tax should be collected on Internet sales. We still have the rule of law and must abide by it. As for the budget stalemate, the Governor has stated all along that he will veto any budget that has a tax increase that is passed by anything less than a 2/3 majority. Again, it doesn't matter if you agree with him on not increasing taxes or if it makes sense to require a 2/3 vote. California is one of only 3 states to require that and the Governor is upholding the will of the people. The real test for him will be if some Republicans jump ship and there is a tax increase with a 2/3 vote. I think that he will sign the bill in that case. I just hope that the #advertisingtax has been removed by that point. It is short-term if you look at the next decade. The pain that we will feel and the potential destruction of an industry are not short-term.

The problem is that very few people in DC are interested in fixing this problem. Why? There is no money for Congress to control once this is fixed. Other people get to decide how to spend this new-found revenue.

Personally, I think that I have sent Sen. Boxer, Sen. Feinstein and Rep. Waxman to DC to represent the interests of California and my district. I'm not so sure of that based on the way the California caucus does not work together.

There also appears to be a disconnect between the State legislature and our representatives in DC. Shouldn't they be working together?

Overstock's letter to terminated affiliates echoed Amazon's letter to our state officials that the nexus provisions are illegal and they will not tolerate this illegal action. It doesn't matter if you think that sales / use tax should be collected on Internet sales. We still have the rule of law and must abide by it.

As for the budget stalemate, the Governor has stated all along that he will veto any budget that has a tax increase that is passed by anything less than a 2/3 majority. Again, it doesn't matter if you agree with him on not increasing taxes or if it makes sense to require a 2/3 vote. California is one of only 3 states to require that and the Governor is upholding the will of the people. The real test for him will be if some Republicans jump ship and there is a tax increase with a 2/3 vote. I think that he will sign the bill in that case.

I just hope that the #advertisingtax has been removed by that point.

]]> By: Kurt Lohse http://www.revenews.com/search-engine-marketing/the-end-of-affiliate-marketing-or-the-rebirth-of-cpc/#comment-22004 Kurt Lohse Wed, 01 Jul 2009 13:07:31 +0000 http://www.revenews.com/?p=4075#comment-22004 Oh, believe me, I get the benefits of Affiliate Marketing. But when politicians kill the best form of advertising yet invented, then the issue becomes a practical business decision. As a "risk adverse" advertiser, if you have a site that has been generating sales profitably for you for 8+ years through advertising, do you really want to cut off your nose despite your face? Just to prove a point? It would stand to reason that a payment model of some form that closely resembles the historical pattern of payments (whatever metric you feel next most comfortable with) is not that hard to imagine. Plenty of risk adverse advertisers seem ok with the search CPC model. Is this really that much different? Oh, believe me, I get the benefits of Affiliate Marketing. But when politicians kill the best form of advertising yet invented, then the issue becomes a practical business decision. As a "risk adverse" advertiser, if you have a site that has been generating sales profitably for you for 8+ years through advertising, do you really want to cut off your nose despite your face? Just to prove a point? It would stand to reason that a payment model of some form that closely resembles the historical pattern of payments (whatever metric you feel next most comfortable with) is not that hard to imagine. Plenty of risk adverse advertisers seem ok with the search CPC model. Is this really that much different?

]]> By: Angel Djambazov http://www.revenews.com/search-engine-marketing/the-end-of-affiliate-marketing-or-the-rebirth-of-cpc/#comment-22003 Angel Djambazov Wed, 01 Jul 2009 12:54:28 +0000 http://www.revenews.com/?p=4075#comment-22003 Merchants move to the affiliate model, in theory, because they are risk adverse. Paying on a transaction makes a lot sense and is an excellent way to control ROAS. It is one of the strengths of the model. Creating a CPC hybrid won't have a lot of appeal and I think will be a hard sell for the affiliate networks. Ultimately these shortsighted state bills will hurt businesses and not just in affiliate industry. I disagree that the nexus issue is short term only. It may be short term in focus, but it may well linger a while on the books before the larger tax issue online is solved. Merchants move to the affiliate model, in theory, because they are risk adverse. Paying on a transaction makes a lot sense and is an excellent way to control ROAS. It is one of the strengths of the model. Creating a CPC hybrid won't have a lot of appeal and I think will be a hard sell for the affiliate networks.

Ultimately these shortsighted state bills will hurt businesses and not just in affiliate industry.

I disagree that the nexus issue is short term only. It may be short term in focus, but it may well linger a while on the books before the larger tax issue online is solved.

]]> By: Kurt Lohse http://www.revenews.com/search-engine-marketing/the-end-of-affiliate-marketing-or-the-rebirth-of-cpc/#comment-22001 Kurt Lohse Wed, 01 Jul 2009 12:03:18 +0000 http://www.revenews.com/?p=4075#comment-22001 I am sure you received the notice from Overstock that they plan to drop all CA affiliates in 1 week in anticipation that Arnold won't veto the bill. From a practical standpoint, I am curious to see if Overstock and CJ will test converting CA affiliates to a CPC model as an option. If not, it will force us to look at straight ad agreements. I am sure you received the notice from Overstock that they plan to drop all CA affiliates in 1 week in anticipation that Arnold won't veto the bill. From a practical standpoint, I am curious to see if Overstock and CJ will test converting CA affiliates to a CPC model as an option. If not, it will force us to look at straight ad agreements.

]]> By: Pat Grady http://www.revenews.com/search-engine-marketing/the-end-of-affiliate-marketing-or-the-rebirth-of-cpc/#comment-22000 Pat Grady Wed, 01 Jul 2009 08:06:00 +0000 http://www.revenews.com/?p=4075#comment-22000 "Thus I propose the solution of switching to CPC, if not as a means of survival, as a way to show the futility of bills like AB178." I believe that CPC (versus CPA) has sufficient problems to cause grave, permanent damage to our industry. I don't see it as a means of survival nor being impactful on the state's mindset on this issue. I believe the nexus tax issue is short term only, because the larger tax issue (and loss of revenue), once solved, will make nexus (to us) completely moot. So like you, I was also trying to point out the futility of these bills. They do not solve or address the core issue, in fact, they create new problems for the states (and those affiliates, merchants and networks affected as well). "Thus I propose the solution of switching to CPC, if not as a means of survival, as a way to show the futility of bills like AB178."

I believe that CPC (versus CPA) has sufficient problems to cause grave, permanent damage to our industry. I don't see it as a means of survival nor being impactful on the state's mindset on this issue.

I believe the nexus tax issue is short term only, because the larger tax issue (and loss of revenue), once solved, will make nexus (to us) completely moot. So like you, I was also trying to point out the futility of these bills. They do not solve or address the core issue, in fact, they create new problems for the states (and those affiliates, merchants and networks affected as well).

]]> By: David Lewis http://www.revenews.com/search-engine-marketing/the-end-of-affiliate-marketing-or-the-rebirth-of-cpc/#comment-21996 David Lewis Tue, 30 Jun 2009 20:33:24 +0000 http://www.revenews.com/?p=4075#comment-21996 Brook, you are correct. I agree that affiliates are not salespeople. State legislators are trying to create a loophole by calling us salespeople. The main point here is that with terminations such as those sent by Overstock.com today to California and North Carolina affiliates, the states will see no new collection of sales tax but they will see a decrease in income tax collections. The debate about collecting sales tax is irrelevant today, especially to my business and, apparently to Overstock and Amazon who want to stick to the letter of Quill which states that only the US Congress can force collection of sales tax across state borders. Brook, you are correct. I agree that affiliates are not salespeople. State legislators are trying to create a loophole by calling us salespeople.

The main point here is that with terminations such as those sent by Overstock.com today to California and North Carolina affiliates, the states will see no new collection of sales tax but they will see a decrease in income tax collections.

The debate about collecting sales tax is irrelevant today, especially to my business and, apparently to Overstock and Amazon who want to stick to the letter of Quill which states that only the US Congress can force collection of sales tax across state borders.

]]> By: Brook Schaaf http://www.revenews.com/search-engine-marketing/the-end-of-affiliate-marketing-or-the-rebirth-of-cpc/#comment-21995 Brook Schaaf Tue, 30 Jun 2009 19:46:34 +0000 http://www.revenews.com/?p=4075#comment-21995 This is a fine point but I disagree that this is a loophole - that implies that it may violate the spirit of the law but does follow the letter of the law. By any reasonable interpretation, I feel that claiming affiliates are the same as salespeople is a violation of both, as found in the 1992 Quill decision. To Pat's point about credit card companies - a few people have mentioned this in the last few months but I haven't come across any defining cases. The larger tax issues are fairly complex. Right now our efforts should be focused on defeating tax nexus legislation because it discriminates against our type of advertising. This is a fine point but I disagree that this is a loophole – that implies that it may violate the spirit of the law but does follow the letter of the law.

By any reasonable interpretation, I feel that claiming affiliates are the same as salespeople is a violation of both, as found in the 1992 Quill decision.

To Pat's point about credit card companies – a few people have mentioned this in the last few months but I haven't come across any defining cases.

The larger tax issues are fairly complex. Right now our efforts should be focused on defeating tax nexus legislation because it discriminates against our type of advertising.

]]> By: David Lewis http://www.revenews.com/search-engine-marketing/the-end-of-affiliate-marketing-or-the-rebirth-of-cpc/#comment-21989 David Lewis Tue, 30 Jun 2009 14:15:03 +0000 http://www.revenews.com/?p=4075#comment-21989 Angel, that's a fight for another day. The problem with that is no one at the state level is willing to discuss a national solution. They view it as a non-starter as they've been through it before. The math on it from my perspective is that there are 43 states with sales tax. That's 86 votes in the Senate. California has the Speaker of the House and 20% of the votes needed to pass a bill in the House. When you add in NY, NC, RI, HI and other states considering nexus altering bills, that is enough for passage. But as I have found, we understand our world and not the world of politics and, as we have seen from these bills, politicians understand their world and not ours. Our worlds are supposed to remain disconnected except for when we pay taxes and create jobs, which we do superbly. Angel, that's a fight for another day. The problem with that is no one at the state level is willing to discuss a national solution. They view it as a non-starter as they've been through it before.

The math on it from my perspective is that there are 43 states with sales tax. That's 86 votes in the Senate. California has the Speaker of the House and 20% of the votes needed to pass a bill in the House. When you add in NY, NC, RI, HI and other states considering nexus altering bills, that is enough for passage.

But as I have found, we understand our world and not the world of politics and, as we have seen from these bills, politicians understand their world and not ours. Our worlds are supposed to remain disconnected except for when we pay taxes and create jobs, which we do superbly.

]]> By: Angel Djambazov http://www.revenews.com/search-engine-marketing/the-end-of-affiliate-marketing-or-the-rebirth-of-cpc/#comment-21988 Angel Djambazov Tue, 30 Jun 2009 14:03:38 +0000 http://www.revenews.com/?p=4075#comment-21988 Not that your point, David, about the ridiculous nature of the loophole and the shortsighted move on the part of various state legislators isn't well taken. But I also think lobbying for a national tax initiative that levels the playing field is a smart idea, especially if we can help shape the discussion now. Not that your point, David, about the ridiculous nature of the loophole and the shortsighted move on the part of various state legislators isn't well taken. But I also think lobbying for a national tax initiative that levels the playing field is a smart idea, especially if we can help shape the discussion now.

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