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ASOS CEO Nick Robertson was at the centre of a firestorm six weeks ago when he labelled affiliates 'grubby'.

In this interview, his first since 'Grubbygate', Nick explains the reasons behind his decision to close down the ASOS affiliate programme. The etailer certainly doesn't seem to have been hampered by its decision...

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Can you throw some light on the issues you were having with your affiliate programme when you ditched it, and clarify what you meant by your comments in NMA?

The problems we were having were that we were paying commissions on sales we would have generated ourselves.

About a year and a half to two years ago, we took a view – and it was a very harsh view – that by culling our affiliate programme and paying no commissions on sales, we might dent our top line slightly but we would be considerably more profitable. We would re-invest that profit into brand marketing to drive top line sales, on which we would not be paying commission.

Let me put it into perspective. We had an affiliate programme and we had an affiliate manager that the affiliates loved. I’m hardly surprised, because we made those affiliates a bloody fortune. We had a 60 day cookie period and 12-15% commissions.

When you get bigger, you find that… your customers are travelling around the web and are picking up these cookies left, right and centre. We found we were paying commissions on sales to customers that would have come to us anyway. They might not have come straight away but they were familiar with ASOS, they knew ASOS, but they just had to click on some other sites and we would have to pay commissions on them.

We have been proved absolutely right – more than right. It hasn’t dented our top line sales at all. Look at the figures. Look at the top line growth of Figleaves, Firebox, Iwantoneofthose or NET-A-PORTER. These are sites that spend considerable amounts of money on affiliate marketing and we are outstripping the growth of all of them.

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Why didn’t you just reduce the cookie period?

Because we were still paying commissions. We did end up reducing it from 60 days to 30 days to one week, I think.

To be honest, what was happening was that it was taking so long to police it. You’d have affiliates who would ask to be involved in the programme and register one site, and then, funnily enough, just use the codes to open up a completely different site.

We would run a discount promotion with a magazine like Grazia, a tactical marketing initiative, and that discount would be widely used all over the internet. These were affiliates who we had told not to generate traffic on the back of discount codes.

It got to the point where it was a full time policing job just to stop the unethical and against-the-rules practices that these affiliates were employing. What happened was the bad affiliates tarnished the good affiliates and we just culled the lot. And we haven’t looked back. I’m not in any hurry to introduce a new affiliate programme.

I’d like someone to show me a site out there that’s growing not just in terms of top line sales but also in terms of profit [through affiliate marketing]. With some sites, it’s ridiculous. They have an average basket of £25 or so and are paying 15% affiliate commission – they are losing money on those sales so what is the point? They might as well not process those sales. It is costing you to get it out of the door. The only fashion retailer that makes a 15% return on sales is Next plc.

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Why do you feel the brand marketing you’ve been investing in has served you better, despite the fact that it isn’t as targeted or measurable?

The fashion industry is about image. That is the way of the world and you can’t get away from it. That’s why we spend millions upon millions of pounds promoting our brand image. Why is Topshop spending huge amounts of money with Kate Moss?

What was happening was the affiliates out there had no conception of that. My banners weren’t replaced. My products would be out of stock because they wouldn’t bother using the feeds. It was a horror story. Here was me trying to build a brand. It wasn’t all of them, but a lot of them. 

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What quality of traffic are you getting through magazine advertising?

Every metric about ASOS is going through the roof – not just customer numbers, but average basket size, profile, age, everything is going in the direction we want it to. Why? Because we spend a lot of money building the brand.

I’m not going to pay commissions to people when we would have got the genuine sales anyway. I have 2m [prospective] customers a month coming in. Where is the affiliate programme? Who is driving this traffic? They are coming direct.

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Are you actually going to re-launch the programme?

Right now, I have better uses of my marketing money. In the forseeable future, no. I’m struggling to come up with reasons why we would. The bigger we get, the more questionable it is. Seventy percent of our products are unique, so you can’t get them anywhere else.

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Do you regret using that kind of language though?

Yeah. It was aimed at the very unscrupulous ones. My apologies that it tarnished everyone. But without a doubt, there are some unsavoury characters in the affiliate world and we happened to deal with a lot of them. The programme just became unwieldy.

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What did you think of Shawn Collins’ video about you on Youtube?

(Laughs) That was actually quite amusing. That was the funniest thing. It was all the stuff describing them as Ratner-esque comments. Nobody was complaining about us or the products. We were complaining about the unethical business practices of a minority of affiliates.

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Finally, what can you say about the rumours you are going to be bought out?

We get speculation all the time about that. The fact is people don’t tend to buy retailers that are growing at 100% a year, because what price do you buy them at? I think it’s unlikely we will be bought out in the forseeable future.

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Comments (8)

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James

I can understand some of Nicks comments about the negative reasons for the affiliate program (understand, not agree) but it's still fair to say that Affiliates helped build ASOS to where it is today - without their affiliate program in the early days they may not have the money to spend on their "brand building" advertisments and rather than trying to fix the probems they decided to destroy the program completely.

Not the best tactic I feel and it's fair to say that there are plenty of affiliate programs (despite what he thinks) that are driving a very positive ROI for merchants.

about 9 years ago

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hero

"I’d like someone to show me a site out there that’s growing not just in terms of top line sales but also in terms of profit [through affiliate marketing]. With some sites, it’s ridiculous. They have an average basket of £25 or so and are paying 15% affiliate commission – they are losing money on those sales so what is the point? They might as well not process those sales. It is costing you to get it out of the door"

It will cost you money to acquire a new customer, and it's very possible that you might lose money for their first order, but the long term value of that customer will balance this out. The fact that even the 7 day cookie didn't resolve the problem shows that the customers clearly weren't going directly to the site after their initial purchase - they had to be reconvinced by another channel (affiliates in particular, as that was their main sales channel). What does that say about their customer retention?

"we were paying commissions on sales we would have generated ourselves" - so why weren't those customers coming directly?

The fact that it's now the branding promos getting those customers in is just natural - if you replace one marketing channel with another, the effects will transfer from one to the other. It would be interesting to find out what their OAC is now with the money spent on branding.

about 9 years ago

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Nadeem (Azam.biz)

Nick's repeated negative comments about affiliate marketing will hurt the channel.

I'll second James' comments; without those 30%-odd of sales coming through the affiliate channel, ASOS.com might not have had the revenue to invest in the brand building advertising. Also affiliates built the brand - without earning a penny in CPM. On one of our sites we were giving ASOS.com xxx,xxx impressions a month and, with it being affiliate marketing, obviously there was no reward for showing the banners.

Nick has the right to express his opinions and it is, indeed, regretable that a small proportion of affiliates didn't operate within the guidelines. But it would be nice if he had one positive thing to say about affiliates and affiliate marketing, through which he made millions of pounds, to counterbalance his many derogatory remarks.

ASOS.com is still raking in money from shoppers affiliates introduced to them and only got paid a one-fee for.

[quote]we made those affiliates a bloody fortune[/quote]

So you're the next mother Theresa are you Nick? Affiliates were showing his banners on thousands of webpages without earning a penny and only got paid on a commission basis. No difference to double glazing salespeople. If the salespeople work their socks off and, as a result, do well, then the employer has no right to repeatedly make negative remarks about them.

Arrogant or what.

about 9 years ago

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Wouter

Nick,

I think you miss the point completely.

Ask around in the city. You will be surprised about the number of major investors that sit up and take notice when the affiliate manager YOU talk about announces another merchant she has taken on board to manage their affiliate program.

The only reason they do so is because they know that will be a profitable company worthwhile to invest in within the near future.

I would not be surprised if several of these investors are amongst your biggest share holders.

"We had an affiliate programme and we had an affiliate manager that the affiliates loved. I’m hardly surprised, because we made those affiliates a bloody fortune."

The reason the investors are so interested in everything this affiliate manager touches makes them a 'bloody fortune'. As this affiliate manager is not just affiliate marketing but does see the bigger picture which it appears you are blind for.

You still have never publicly said what the lifetime of your customer is. Why won't you comment on this as it is intricate to the profitability of the affiliate program and your company.

I have to agree with the statements of the posters above.

I think to be able to make these kind of statements you have to be able to back them up with the stats of the past when the aforementioned affiliate manager was still working on your affiliate program. In those days you did not have the technology in place (and I know as I did consultancy for your IT team) that they were not able to extract information directly related to your affiliate program from the CMS / order system as the affiliate ID was never attached to your customer. How can you calculate what the customer aquisition was costing you and what revenue was generated from these customers if you did not have something as simple as that?

Isn't hindsight a wonderful thing?

about 9 years ago

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Diane

They must be doing something right - and I suspect it's the constant changing stock with new  items displayed in a nice way.

Until the market decides they want to be unique and not follow celeb fashion there's going to be a strong sales future for this sector. Youth imitating celebs seems to be the way at the moment.

about 7 years ago

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blu ray ripper

This is very good news was well informed that the followers of the issue I am. Thanks...

over 6 years ago

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eva

I totally understand what he means, why would and should they lose money ,its all about profit, and obviously the affiliate companies had run its course, ASOS had got its name more public and basically didn't need ther help!!

over 6 years ago

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dvd copy software

This post is one of a kind. Sharing this is a great help for the readers in order for them to widen their knowledge about the subject. More power to the author.

over 5 years ago

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