Commission payment policies are still a significant concern for affiliate marketers, according to EntroPay’s annual survey conducted at the ad:tech and A4U Expo events in September and October 2009.
The research reveals that 34 percent of affiliates are not happy with how quickly they receive their commissions compared to 71 percent of merchants and networks who are satisfied with the speed that they pay out commissions.
The administrative costs of payments are also a sore point as 32 percent of merchants are not happy with the costs associated with their payments processes. The cost of making international payments can be as high as £25 per transaction.
Failure to tackle these issues is a major obstacle preventing the affiliate marketing industry from achieving its potential in 2010.
The research also highlights key concerns for the industry in 2010. In line with the 2008 results, decreasing marketing budgets are the main issue. However 26 percent of respondents also feel that developing an industry standard for making and receiving payments will be a significant challenge over the next 12 months, a 10 percent increase on the 2008 results.
This concern was particularly acute for intermediaries, such as affiliate networks and agencies, who have to deal with multiple merchants and provide various payment options to affiliates.
On the research, Alex Mifsud, CEO of EntroPay comments: “Affiliate marketing already represents a huge chunk of all online sales, and this is set to expand further over the next year.
“Current processes for paying affiliate commissions are an obstacle to the international growth of the industry. Of all affiliate networks and agencies surveyed, just under half recognised that the biggest challenge to the industry will be developing an industry standard for making and receiving payments.”
Mifsud added, “The evolution in social networking and blogging has led to an increase in micro-affiliates who find it difficult to meet payment thresholds imposed by merchants and can therefore miss out on regular payments.
“At the other end of the scale, the larger affiliates have considerable costs associated with generating the traffic that they convert into commissionable sales. When affiliates get paid infrequently, cash flow becomes an obstacle to sales and in turn growth. Speed of payment is therefore a crucial part of increasing brand loyalty and ultimately helps drive sales back to the merchant’s site.
Mifsud continued, “This year’s results highlight a clear need to introduce a global standard for payments, ensuring rapid and efficient global payments regardless of how small each transaction is. A standard global payment process means merchants and affiliate networks can increase the speed of payments particularly across borders.
“Preferably, payments should be issued in a variety of currencies to allow affiliates claim in whatever currency suits them best and save on foreign exchange fees. We believe that prepaid open-loop cards – those that operate with the international card networks such as Visa and MasterCard – offer a cost effective, simple and secure way to pay affiliates quickly and efficiently, overcoming currency conversion and administrative issues across the world.”
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