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…
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.
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.
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.
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.
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.
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.
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.
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.