UPDATE: Affiliate Window change to the affiliate payment system - LIVE TODAY

[Kirsty_Lena]

Tweet

Affiliate Window has for the last 3+ years managed to add an additional level of protection to all of our affiliates by guaranteeing to payout on ALL validated confirmed commissions regardless of whether a company tries to claw back or becomes insolvent. This has seen us swallow some significant losses on behalf of our affiliates but allowed us to act as the financial buffer between partners easing the cash flow problems that can arise from upfront affiliate marketing costs.

More recently a proportion (and I do qualify only a proportion) of this risk has been handled by credit insurance. However, as market conditions have changed and the credit worthiness of merchants comes under scrutiny the amount of cover being offered for certain partners means we have to align our payment model with other competitor networks. This means we can no longer guarantee payment of commissions when we are unlikely to receive payment ourselves. Each merchant’s scenario will be monitored independently and where there is plenty of headroom we will continue to pay ahead of receiving payment from the merchant. Where the levels of commission and invoices owed exceed the credit insurance threshold for a merchant we reserve the right to withhold payment until we have secured payment from the merchant.

We understand this is not an ideal scenario for affiliates but we hope you can see that our previous stance in this current climate means absorbing a level of risk that is simply not feasible. Rather than seeing this as a penalty move against affiliates I would ask you all to appreciate that for the last few years we have paid out many hundreds of thousands of pounds in commissions that we have never received.
It’s been a difficult choice but one that ensures a greater share of risk between all parties. We will of course endeavour to tighten up all invoicing processes from the merchant/agency side to ensure their payments are swift and where possible ahead of time.

These are uncertain times for many businesses and I hope the need for this change is clear. There will always be the few who will now question the financial security of the network, Affiliate Window remains in the strongest of financial positions and any quality credit check will confirm this but changes are required when the payment solution offered ultimately creates a greater exposure to risk for the business. We are merely doing what many other networks have done since the beginning. I would hope to see this change as a temporary measure and welcome a time when we can all feel more comfortable about the market.

<strong>To avoid any doubt:</strong>

<em>If a merchant validates commission and has settled all invoices within their agreed payment period and are within their credit insurance threshold then AWin will pay commission to the affiliate as normal.</em>

<em>If the merchant validates commission and has not settled outstanding invoices within their agreed payment period and are close to or over their credit insurance threshold then AWin will not release commission until payment is secured.</em>

<em>If any merchant becomes insolvent AWin can no longer guarantee payment for any validated commission unless payment is processed from the merchant.</em>

<em>Once commissions are validated and paid to affiliates they cannot be clawed back, this still remains the case.</em>

As always we remain open to your feedback and will continually assess our system to ensure parity for all parties.

Whilst effective immediately this will not affect any affiliates until the scheduled 4th January 2009 payment run.

Kind Regards,
Mark Walters,
<a href="mailto:mark.walters@affiliatewindow.com">Mar k.Walters@affiliatewindow.com</a>

[Mogga]

Will you be letting affiliates know which merchants aren't paying up ASAP?

Will there be a merchant finance ranking?

[Spency]

As above, how much notice will we get that there might be a problem?

To take Ebags as an unreleated example, say you knew they were having problems X amount of time before they went bust, how and when would you let us know there were issues.

Will you tell us as soon as you have concerns?

[8601cam]

Hi all,

I have just posted a reply to comments on our blog and thought it pertinent to post it here too:

Transactions that have been validated but remain unpaid will be visible within the AWin interface. However the intricacies of displaying when a payment by a merchant became due or highlighting credit ranking using a traffic light system are not possible for the simple reason that there are too many variables.

Firstly a merchant’s credit insurance position is based on factors that fall outside of our control and can fluctuate positively and negatively on a short term basis. It is a combination of this position and the exposure threshold to affiliates and the network that determines whether an affiliate payment will be made and not just the merchant’s invoice position which may also be influenced by historical payment patterns.

I agree that publishers have the power to leverage merchants to pay quicker but overall this is something that we hope will not be necessary as merchants are made aware of the consequences of late payment. Pre-payment is of course another potential route but we must appreciate that in such times, merchants who are under financial pressure are unlikely to defer to such a method and it is these very merchants that cause the concern.

If a merchant defaults on payment of an invoice then both affiliates and the network are affected. I can see no situation where a merchant would merely pay the network fees alone as this is directly related to confirmed commissions. Invoices are either paid or unpaid there is no halfway house.

The idea of withholding affiliate commission is in part to create an early warning system for both the merchant and affiliates. Traditionally it is the network that has mitigated this risk but the penalty was costly, the new process will highlight any commission withheld and allow you to identify the merchant. If you choose to cease promoting this merchant based on this fact then you are at liberty to do so. However if you choose to continue promoting then you, like us will appreciate the balance or risk versus reward.

As a network we have a vested interest in only working with solid and dependable merchant partners, however in today’s economic climate this has become a difficult task to determine. Therefore we are offering as much clarity as we have on the merchant position without making rash or ill informed decisions.

We will be reviewing the new processes on an ongoing basis and will assess the benefits of revisions for all parties concerned.

Mogga, over time and with greater visibility on merchants payment records under this new system, we are thinking of implementing an AWin Index element to reflect the payment record for merchants. We are hoping this will not be required but only time will tell.

Kind Regards

Mark

[dave1167]

I wonder how much it would cost for an affiliate to take out personal credit insurance against a merchant not paying, it may alleviate some of the risk?

for large PPC users might be worth investigating...

[buspassjohn]

It was withdrawal of invoice credit insurance tha brought down Woolworths and will also bring down hundreds of Merchants in the coming months, removing the umbrella when it starts raining is going to affect all retail businesses in this country, large and small.

We all have to try and limit our own exposure and risk.

[SpongeBob]

Fair enough - we're likely to enter a period where a lot of big brand names go under and it's probably not reasonable to expect an affiliate network to cover the costs of all of them. So I suppose it's a good warning to those that either rely mainly on one merchant or spend a lot on PPC.

It's quite possible that a few big names are waiting until January, after their busy period, to fold. There are also others on the brink - naming no names, I know one I promote on Affiliate Window that has called Ernst & Young in to help with their situation and the press is saying that they're possibly getting ready to act as administrators.

[MattSweet]

I can't see a problem with this stance, as in the current climate it's unreasonable to expect one network to subsidise loads of failing businesses...

I also agree with those above - its vital to insure yourself as much as possible against the risk and not rely solely on networks and agencies to absorb this.

The agency I used to work for - naming no names, although if you look hard enough.. - preferred the use of prepaid commissions to protect affiliates. Where this wasn't negotiated, the deal would only be signed if adequate credit insurance could be obtained.

Obviously networks have a lot more merchants, with many smaller ones who may not fulfill insurance criteria - mogga's suggestion of a finance ranking is good if there's no issue with privacy etc

[adamski]

Further to our recent announcement regarding changes to the Affiliate Window payment system, we can confirm that these changes have gone live today.

Whilst the majority of affiliate commissions will continue to be paid without delay, some commissions will be withheld until Affiliate Window receives payment from the merchant. This will be done in cases when a merchant has passed their credit limit and/or exceded their payment terms.

All merchants will now be graded with a traffic light system to give affiliates visibility on which merchants are operating under restricted payment terms.

Traffic Light System

The traffic light system will operate as follows:-

Green – This merchant has an up to date payment record and no payment restrictions. Affiliates will be paid for all merchant commissions regardless of when the merchant pays Affiliate Window.

Amber – This merchant is set to restricted invoice terms. Affiliates will be paid for merchant commissions only when payment for the corresponding invoice has been received by Affiliate Window.

Red – This merchant has severely restricted invoice terms and overdue payment with Affiliate Window. Affiliates will be paid for merchant commissions only when payment for the corresponding invoice, and the other outstanding invoices, has been received by Affiliate Window. The network would recommend affiliates do not promote merchants who are set to this status.

Payment History

All payment information will now be stored in the Payment History section of your account. This includes details of all self-billed invoices and information relating to your next payment.

Next Payment Amount:-

Is the amount that you are due to be paid in your next payment. This amount is fixed and once published in your account will not change.

Affiliates can only be paid for approved transactions and this amount will not contain transactions validated after the payment cut off period.

Payment Pending:-

Is the amount currently being held until Affiliate Window receive payment from the merchant. This amount will not include transactions that were validated after the payment cut off period.

Next Payment Date:-

The date when your next payment will be raised.

The figures for Next Payment Amount and Payment Pending are published figures that will be updated once a day overnight.

Although these changes are effective from today, affiliate payments will not be affected until the next payment run on 18th January 2009.

If you need any assistance, please do not hesitate to contact us.

Adam

[FictionNet]

I think Affiliate Window have done a really good job in communicating these changes to affiliates. The new terms are fair, I believe, and AW are to be congratulated for explaining things in a clear, non-BS manner to affiliates.

[Barry]

Another great initiative from AW, thanks Adam.

Ta

Baz

[confuscius]

A few questions given the fact that the 'majority' in my case is 60%!

If a merchant goes 'red' will their datafeed be suspended and also removed from Shop Window automatically?

Is there a comprehensive list of which Merchants fall within which colour group? To be blunt, I will probably only deal with 'green' merchants in future even though I am not a PPCer!

When or will the colour coding system be made visible on transaction reports such that we can see the merchant colour group without having to check every single line?

Just as we are informed about commission group changes then how will we be informed about Merchant colour changes or will we be informed?

My starter for 10!

PS Although not my area - how the heck are Cashback sites going to handle the new delays? That should be fun to explain!

[Barry]

Yes I agree, it would be great to see the merchants status in transactions reports as they are the only reports I look at too.

Ta

Baz

[adamski]

A few questions given the fact that the 'majority' in my case is 60%!

If a merchant goes 'red' will their datafeed be suspended and also removed from Shop Window automatically?

This is will happen but is a manual process for the time being.

Is there a comprehensive list of which Merchants fall within which colour group? To be blunt, I will probably only deal with 'green' merchants in future even though I am not a PPCer!

To see a list of merchants from each colour group, follow these instructions:

- Click on 'Current Merchants' under My Account on the right hand menu

- Using the editing facilities at the top of the screen, choose the 'Payment Status' drop down box and select the group you wish to see

- Click Generate Report

When or will the colour coding system be made visible on transaction reports such that we can see the merchant colour group without having to check every single line?

This seems a sensible suggestion. I will put it to the developers tomorrow to see if it is feasible.

Just as we are informed about commission group changes then how will we be informed about Merchant colour changes or will we be informed?

Currently there is no alert system but we hope to introduce one in the future.

PS Although not my area - how the heck are Cashback sites going to handle the new delays? That should be fun to explain!

We are encouraging cashback sites to use our API to best handle the new system. If there are any cashback affiliates who need assistance with this, please get in touch.

[buspassjohn]

What a completely stupid time to start such a rating system!

As a merchant that is heavily biased to Christmas sales, all our staff were working 12-15 hours a day, 7 days a week, in December trying to keep up with orders and deliveries, we then closed from Christmas Eve until yesterday for everyone to get over the sheer exhaustion.
It will now take at least a week to catch up with paperwork and payments, so AW promptly gives our account an amber light because we haven't worked over Christmas!, did they work over Christmas?

It's a pity they can't act so quickly when there are problems like last month when ours and many others were attacked via an AW affiliate, then the excuse was the person we emailed was 'on leave'.

If I were an affiliate, I wouldn't take much notice of this so called rating system, most merchants will simply ignore it and carry on running their businesses for themselves, not for AW.