Tough times call for tough decisions. In tough times companies are forced to make difficult decisions. Sometimes the decisions can be impulsive and rash and can adversely affect the people concerned. Dropping commission of associates by a considerable amount is often insulting and can lead to bitter relations.

Examination of an incorrect decision

Corporate houses are prone to sudden and impulsive decisions, especially in times of crisis. When it comes to discounting costs then it is generally done from affairs not concerning day to day events.
In crisis situations the general aim is to increase the profit levels by reducing the commission of the partners.
A harsh decision is encouraged due to vague associate impact on the online strategy of a company. Generally tough to understand, very easy to undervalue, corporate advertisers tend to treat the channel lightly. Campaigns are also delivered to affiliates with expectations of last promotions which are sure to have been planned in advance. Many advertisers assume that partners will refrain from making personal decisions and execute decisions which are heaped upon them.

Actual problems

Best Buy reported that their profits dropped by 77% over successive years. Around 4,000 employees were offered several buyout packages to reduce costs. The company is taking drastic steps to make churn out more profit. Discounting commissions on popular selling items will not dismantle the company but sour relationships with affiliates.

The market is also for the affiliates

Best Buy executes their affiliate program with Commission Junction. According to reports, CJ affiliates grew by73% on Fridays and 395 on Mondays which are impressive statistics.
Sales were also well for Best Buy associate program. According to technical news by Yahoo, Wii is the most popular item. Laptops are also selling like hot cakes. Many businessmen sell both the above products like Amazon, Wal-Mart and others who are tough competitors of Best Buy.
If there is a dent of .25% to affiliates then it is obvious that an affiliate will transfer traffic to someone offering better commission.

Check your Gut

Due to their effective footprint, it is not expected of Best Buy to retrench their workers especially when you have 15,000 of them. They will not retrace their activities from advertisements on television or print media. The stores provide daily earnings for the 15,000 odd employers. If they are cutting out on their affiliates due to growing price sensitive market then they are automatically refraining from online CPM buys. This is typical behavior of corporate who are more comfortable with offline campaigns rather than online operations where you can see them in residual media placements.
Best Buy has decided to discount on the source of most effective return for advertiser’s revenue, the affiliate channel. It is generally hasty to cut on an effective revenue channel you generally do not understand in terms of high profitability on products which will sell on all grounds.
Affiliates are also sensitive in crisis situations. Partners with professional outlook will transfer their business to businessmen who are interested in harboring a partnership. Only time will testify whether a drop to .25% will actually effect Best Buys sales and partnership programs.

This entry was posted on Sunday, January 11th, 2009 at 11:19 pm and is filed under Internet Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.