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You have to wonder whether or not ASOS CEO Nick Robertson went on holiday for two weeks by accident, like Withnail of ‘I’ fame. Or did he strategically flee the masses of affiliates baying for his head on pike?
Labelling affiliates ‘grubby’ is looking like the UK internet industry's gaffe of the year so far, but something tells me it wasn’t just a throwaway statement. Crass and insensitive perhaps, and one hell of a generalisation, but presumably Nick has all kinds of reasons that will back up his choice of phrase.
What might these reasons be? Since Nick is on holiday (or in some affiliate-proof bunker) we’re not going to get any clarification anytime soon. But hey, ASOS is a public company, so let’s delve into the accounts for a brief waltz through its history with affiliates… it is rather revealing…
In 2004 it was looking as if affiliates were the toast of the ASOS offices. Just look at the percentage of total sales driven by the grubsters:
2004 statement: “We started to introduce ASOS to US and European affiliate networks (where another website promotes ASOS products in exchange for a small commission on products sold). Approximately 25–30% of our sales in the UK are generated through Affiliates.”
However, in 2005, something changed. Reading between the lines there seems to have been a couple of problems, seemingly to do with allocating commissions (multiple payouts for individual sales?) and also some brand issues (maybe a little brand name bidding on Google Adwords?).
2005 statement: “We completely overhauled our online affiliate programme in May 2005, reducing the cookie period (the time between a referred customer visiting ASOS and ASOS paying a commission on a sale) to 7 days from 60 days and fixing the majority of commissions at 10%. We also terminated all affiliate partners who were deemed to be misrepresenting ASOS or ASOS products.”
Now onto last year, where ASOS decided to move upmarket, with brand advertising in magazines, coupled with a “deliberate reduction” in affiliate activity. This makes me wonder about whether affiliate marketing commissions should be factored in as a cost of sale, or, paid from the marketing budget (although it is something of a moot point).
2006 statement: “Our investment in magazine advertising has increased which has in part been funded by our deliberate reduction in affiliate marketing activities. In our view this is necessary if we are to establish ASOS as the UK’s leading online fashion business.”
Based on this next soundbite (yep, the infamous one as reported by NMA), it sounds as if ASOS completely pulled its affiliate strategy last year. Nick Robertson said: “I'm not saying we couldn't do more in the online marketing space. Next year we'll reintroduce affiliate marketing, but as it should be. No silly commissions being paid to grubby little people in grubby studios growing income at our expense, getting in the way of genuine sales.”
The ‘genuine sales’ comment is the most telling of all. Has Nick grasped the concept of affiliate marketing? Since affiliates don’t typically do the selling, it is in fact ASOS which processes the sales. It has the power, not the affiliate. What constitutes a 'fake sale'?
Based on the above, here are a few questions I’d like to ask Nick:
How is ASOS measuring ‘genuine’ sales?
What are the costs of securing and processing those sales?
How do the costs of advertising in magazines stack up against affiliate commissions?
What calibre of customers do you lure via magazine ads, vs those channelled to you by affiliates?
How are you measuring the success of magazine ads?
On a scale of 1 to 10, how grubby are affiliates?
Is it wise for the CEO of a public company to damage sales channels?
At any rate, it remains something of a mess. This morning we’ve seen NMA’s Justin Pearse confirm that this wasn’t some sort of savage misquote, after being called out on various blogs. Clearly it wasn’t a misquote! It will have riled Justin to have to defend his publication in this manner. Editorial teams hate having that allegation thrown at them. We don’t print misquotes.
Jess Luthi, who helped set up ASOS fledgling affiliate strategy back in the day, said: “I’m not sure what troubles me more, the fact that it could have been Nick Robertson saying these things or the fact that New Media Age would publish something like this. If the former is true it could have been said out of ignorance but the latter is a bit more serious and I would question what New Media Age thought they would achieve by this.”
Well, the fact is that journalists like juicy quotes, scoops, and examples of highly paid executives making fools of themselves. But here’s another question: what would the folks at NMA have to gain by not publishing the quote? Nick said it, end of story, and it is a hole he needs to climb out of. Let’s not shoot the messenger.
And let’s not shoot Nick Robertson either. Clearly he has some explaining to do if he wants ASOS to emerge from all this as a viable choice for affiliates and super-affiliates.
Otherwise we will have to wait for next year's ASOS Annual Report to see whether his 'grubby' comment damages the business...