Recession Hits Affiliate Marketing as DGM Enters Administration
Posted under: Just after a month after being the co-sponsor for the A4UAwards, DGM have announced that they have gone into administration. The news comes on the same day that Affiliate Window announced a merger with Zanox, thus highlighting the varying fortunes of the two networks who have been part of UK Affiliate Marketing for a considerable amount of time.
Given the economic climate it’s perhaps not a surprise that a network has hit this point. Even so, it’s a sad day for affiliate marketing and for those who have been involved with DGM and it’s previous incarnations of UKAffiliates. For many affiliates, including ourselves, it used to be their number one earner and despite a few issues around the “Pro” era there’s always been affiliate affection towards the network.
In fairness the road has always been uphill for DGM since they moved from DGM2 to the ill fated DGMPro. In essence this has been the albatross attached to the millstone that’s been round their neck, whilst a (Cheeky)monkey played on their back. The affiliate system wasn’t the most user friendly and whilst DGM tried to sort things out, Awin and Buy.at emerged like Seb Coe used to do having sat behind Steve Ovett for 700m and leg it to the finishing line to grab the gold.
After a management buyout – at least on the surface it looked like New DGM were moving forward. They introduced new innovative ideas, like the mobile and broadband comparison units as well as travel maps. New clients, including The National Trust, were appearing too and with the merger of Buy.at/Awin there was opportunity for them to continue that climb and establish themselves as a network of choice for affiliates.
Sadly, for whatever reasons, that climb has now been halted by the grim reaper of administration. The knock on effect to affiliates is as yet unknown. But, it’s a stark reminder to us all how the fall of one business to which we are somehow linked can have an impact on our own. Affiliates do need to make sure they have several eggs and several baskets!
DGM’s administration though has, as you’d expect, resulted in some lively and interesting discussions on Twitter about networks and their future.
Are the days of the affiliate network numbered? Will there be other casualties? Do networks need to adapt their business models? Will agencies take to the space and remove the need for networks?
Perhaps there are more questions to be asked – like were the clients won really ideal for affiliate marketing or more intriguingly are there the affiliates in situ willing or able to promote new wins, not just for DGM, but other networks who as yet haven’t been absorbed by Affiliate Window? Has affiliate marketing hit a critical point, where as a discussion ensuing on affiliates4u suggests, that it’s now simply voucher code marketing?
Who knows the answers to these questions and how these events will effect AM in the months to come?
In the meantime, let’s hope there’s minimal impact for those effected by this administration.
Am genuinely saddened by today’s news. Having spent three of my formative affiliate marketing years at the network it was truly visionary in some of the ideas.
Affiliate marketing owes a significant debt to the network for fostering a vast amount of talent still working within the industry today.
I obviously feel for the employees but have no doubt they’re well placed to move into other online roles.
On the voucher code subject – I don’t want to detract from my above sentiments but it’s a massively overcooked subject and vouchers account for a relatively small percentage of sales across the industry so lets not lose perspective of the huge variety of activity (more now than ever before) that affiliate marketing offers.
It is sad, but not a total suprise.
There are some rock solid networks out there, just look beyond the glitz.
I can only echo the sentiments of the other commenters by saying very sad to see DGM go under. Sincerely hope all DGM staff find themselves back in work very soon and remain in the industry.
I think all networks are being squeezed at the moment while they struggle to justify the 30% override on which their business models were built. Networks really need to go beyond just a tracking solution and provide a service merchants really see value in. Otherwise overrides will continue to get squeezed, more merchants will build their own platforms, and more networks will disappear which will be to the detriment of the industry.
My concern is that there will be a number of brands that use DGM and may become concerned about the viability of the affiliate channel.
These companies may stop affiliate marketing all together and, may even start negative publicity for the industry as a whole.
I hope networks build on the their strengths as agencies enter the market. I personally find agencies provide an inferior service, increase my work load, are less efficient and they don’t have the technical knowledge to resolve issues.
Well Tracesmart (one of the merchants) have emailed me to say they will honour all commissions, I wonder if 192.com will follow suit? lets hope so.