Flat is the New Up

I received an email last night from one of our advertisers who is disappointed with the performance he’s seeing. Here’s an excerpt:

Subject: Nothing Changed

We provided you guys with an extra 4% commission, etc., with the promise of increased sales and more exposure. Currently we experienced more success on your platform last year at a lower commission. If the increases are not going to be there over last than we would like to return to our old commission structure as the new incentives we offered you guys do not appear to make a difference. Please advise.

With the higher commission, his products are actually receiving higher placement on our halloween costume site, Costumzee.com. The alternative is LESS traffic. So yeah, nothing changed. That’s a good thing.

I compared their numbers from last year to this year for September.

It is true, their EPC is pretty much the same, year over year, even with the increased commission. But that’s only part of the equation. We’re actually sending them MORE traffic than last year, about 35% more. Their conversion rate is about 23% lower. And there’s the tale of the tape. Who’s not performing?

I don’t do this to rake him over the coals. His expectations are off, and that’s partly my fault. I’m trying to fix that.

The bottom line is, this year is VERY different from last year.

Let’s look at a few National Retail Federation Headlines:

September 30, 2008: Halloween Celebrations Rise As Consumers Look To Escape Everyday Realities: “Total Halloween spending to reach $5.77 billion”

September 29, 2009: As Economy Impacts Halloween, Americans Get Creative: “Shoppers to Spend $56.31 on Holiday from $66.54 Last Year”

Halloween isn’t your bag? Well, it’s probably a pretty good indication of what we’re going to see with the Q4 holiday shopping season. So what are the lessons here?

Affiliates: Prepare for merchant disappointment and be ready to explain what’s happening with traffic on your end. You might want to reset expectations with your merchant partners up front, especially if you’re cutting deals to get higher commissions in return for top billing on your websites.

Merchants: According to sources like the NRF, we’re going to see lower spending this year at Halloween. Holiday surveys aren’t out yet, but it may be the same news. If you see only flat performance with even with better deals and efforts, don’t dismay. Flat is the new up.