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Comment by epoxyhockey | Hacker News Reader

I was expecting to read about click fraud, but it was just a newbie's experience with running an affiliate program.

Kogan had some wild expectation that the majority of affiliate traffic would be first-time visitors to his site. When he uses google analytics to estimate that only 1.6% of referrals were new customers, he trashes affiliate marketing as a business.

Unfortunately, he spent no time thinking about how to optimize his campaign to reward affiliates for first-time customers, among other things.

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To his credit, he'd already established that changing commissions from 10% to 5% to 1% made almost no difference to the affiliate schemes behaviour. It seems reasonable to assume that "optimising his campaign to reward affiliates" for any particular behaviour is unlikely to be worthwhile, if 50% and 90% reductions in payouts dosn't motivate them to change anything...

Perhaps an "experienced affiliate marketing user" might get different results, but if you're suggesting that a business who'll mislead you and rip you off happily unless you're a sophisticated-enough user of their service deserves a "trashing" any less than used car salesmen deserve their reputation – I think you're wrong. If _you_ come to me knowing your proposal involves you taking 10% commission on sales - where 98.4% of those sales were mine already, I'd call you out as a thief.

If someone chooses to learn the affiliate marketing business through trial and error, more power to them, and I hope they have a lot of cash to burn. There is a lot more to affiliate marketing than giving X% commission for referrals. As I eluded to in my first comment, it is common to pay near 0% commission for return customers and a hefty % for first-time customers. This is a basic scheme that wasn't even attempted before trashing the industry.

I am sure that Kogan has been in business long enough to know not to take what a low-level sales person preaches as fact. Just like Kogan, the sales person also didn't seem to have a clue about affiliate marketing. And, why should he if he can sign new clients who will drop $40K out of the gate?

Thanks for the good reply.

A question though, from someone who's inexperienced but very cynical about affiliate marketing – it that sort of option/complexity; to offer very low commissions for return visitors but large commissions for first-timers, actually available through the sort of "affiliate networks" you'd find by searching online?

Yes, you define exactly what kind of referrals you want to pay for and for how much.

While you raise some important points, but I think the key complaint was that the author felt scammed by the 20% commission they were paying the affiliate program vendor for sales they would already have made. While these programs may have potential benefits, a 20% commission probably does not reflect the value provided to Kogan.

That's the author's problem for not understanding how affiliates work and setting up a commission structure to work for his particular site.

> it was just a newbie's experience with running an affiliate program

No, quoting actual sales volumes, conducting experiments with different commission rates, and measuring and reporting on new customer traffic take this from a newbie's anecdote to a useful, insightful article.

I don't think it's that insightful. The thing to learn is to have your own discount code page/site and that info is in the comments here.

Yeah, he seems to be painting a very broad picture based on an affiliate system that captures referrals at the wrong point in time.

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