Commission Junction Bites The Bullet

Many of you know about the budget crisis that is going on in California. But no one is going to be affected more than affiliates once the latest tax bill gets approved. We all know what happened with Amazon and the state of New York. Commission Junction understands that there is a good chance this bill will go through. That’s why it has decided to let affiliates know about the impending doom:

As you may already know, there are proposed California bills that could require the collection of sales tax for online purchases similar to bills proposed in other states and that could resemble the law that recently passed in New York State. At this time, a hearing date for AB 178 has been set for April 13, 2009. As with all laws, if passed, these laws may or may not apply to you and your business.

Commission Junction is headquartered in California and impacted by the current California budget crisis. Nevertheless, we are opposed to the recently proposed legislation and are working with a lobbyist and other groups in hopes that we can influence the rejection of the bills’ passage. Rest assured, we recognize that our industry and many of our clients may be impacted by these bills.

The application of the bills is dependent on particular business and factual circumstances, and Commission Junction is not in a position to provide legal and tax advice regarding the bills. However, we encourage you to perform the appropriate due diligence as it relates to your business. You may be contacted by advertisers in the Commission Junction network as they perform their due diligence.

The culprit here is Nancy Skinner. She believes this bill will bring the much needed revenue to help California avoid bankruptcy:

During this unprecedented fiscal crisis we cannot afford to lose sales tax revenue from out-of-state companies when our own local businesses are struggling to keep their doors open.

So what can affiliates expect if and when this bill gets through? Simple:

• Expect a few merchants to get out of the market. The very same thing happened in New York, and I suspect this will happen here as well.
• Expect decrease in commissions. That’s right. Companies can’t afford to pay you the same amount of money if they are getting taxed through their nose.
• Affiliates to lose more battles across the country. I was optimistic a few months ago but not anymore. The country is in trouble, and I am sure there are a lot of states that want to close this “loophole.”
• Expect more Internet regulations. As the country struggles economically, you can expect more taxes and more regulations for the Internet industry. It’s sad to say, but right now the Internet industry looks extremely attractive to the tax masters.

Did I miss anything? Yes. The end of the world. OK, that’s not going to happen. But the way we are taxing the living and the dead, who knows.

The Truth About Commission Junction’s Network Information

If you have used Commission Junction, you have probably seen the network EPC numbers that they show you to illustrate the effectiveness of their affiliate programs. For instance, the below program is getting a very high network earning grade from Commission Junction.

Here is how the Network Earnings rating is calculated:

Network Earnings: The advertiser’s network earnings rating shows how the advertiser rates with other advertisers in the network based on the volume of commissions paid. Advertisers are ranked in an “apples to apples” comparison with all advertisers by taking each advertiser’s total commissions (regardless of currency), and then converting that total (if necessary) to US dollars. After each advertiser’s commission total amount has made this conversion to a common currency (USD), the rating is established. The advertiser’s EPC is then converted back to your functional currency (provided it differs from USD).

In essence, you can say that CJ’s network earnings ranking is sort of similar to gravity numbers provided to you by Clickbank (though there are some major differences). Now here is the thing. But these numbers have proven to be not effective when it comes to choosing the right affiliate program. You can log on to CJ and find the program with the highest rating and highest 3-month or 7-day EPC. That doesn’t mean you are going to make a ton of cash.

Using a bar instead of real number for network earnings simply makes the result look less accurate. In addition, unless CJ is comparing affiliate programs “apples to apples” in niches, you are not going to get real useful information from this information. The EPC numbers are also averages really. If you have a master affiliate who’s bringing 2000 sales a month for a program, then average EPC could be overstated.

The data provided by Commission Junction can be used to spot trends, but you shouldn’t make a judgement on affiliate programs by using these information only. At the end of the day, you should be always testing to increase your revenue. Your own data are the only numbers that matter at the end of the day.