I don’t think a lot of affiliates that play primarily with traditional affiliate networks fully realize how big of a hit some CPA networks have taken over the past few months, due to the crack down on continuity (rebill) offers by the FTC and the Credit Card Merchant companies.

I’ve gotten to experience the trickle down effect personally in my business, even though I don’t do much in the CPA space. Recently a small CPA network, a previous client, could not afford to pay me and when I tried for the umteenth time to collect, they finally told me they were $250,000 in the hole and are going out of business. Yet they continue to accept new affiliates. Will THEY be paid???

Another previous client who is a HUGE brand and has been playing the continuity game longer than almost anyone else (except maybe Columbia House) – well I’ve been trying to collect since September and they are not out of business yet, but are desperately trying to get an infusion of capital to pay their debts. Meanwhile they continue to HEAVILY promote their offers on TONS of CPA networks and I have a big concern some affiliates could end up not getting paid, if the company does not resolve it’s financial problems soon. I already know of one network who is suing to try to get their money.

Like Pace said in his article below, I’m not going to play the name game, as tempting as that is. I do want to share with you however, his thoughts as he has a lot more inside info in the CPA space than I do. If you do business with any CPA companies, heed his warning and do credit checks.

Affiliate Marketing Dirty Little Secret

Several major companies that had seen huge profits over the previous quarter were now faced with not being paid by multiple companies. I’ve heard that some of the major affiliate networks suddenly were owed as much as $15-20 million – much of it they could never collect because it was from companies that were basically non-existent, with no assets, no guarantees.

Here’s the dirty secret, no one is talking about. It’s now April, four months after all of this happened — most companies only have 60-90 days cash flow (some less). Companies that had announced in 2010 great expansion, possibly going public, perhaps buying other companies are faced with the real dilemma that they have a huge loss that they can no longer afford.

Credit right now to affiliate companies should be given sparingly. Consider who you do business with, how they made their money and more importantly if they can really pay. A company in a good position will often stick with what they are doing best, focus on their company growth – a company with a bad position will be out there looking for ways to save themselves from being shut down.

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