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Old 09-25-2003   #1
Mike AI
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Lensman first told me about his $10 porn project in Miami. It sounded like a good idea.... I figured he was going to do some type of cross-sales so he can charge a surfer $10, and be able to pay out $25 to webmasters.

The guy from Epoch went on GFY praising him for his new "business mode and innovation", and these are the people who KNOW the numbers...

However, I wonder what kind of long term risk there is in having pre-checked cross-sales for HIGHER prices then the initial sales of the sites. Wasn't a few programs doing something similair - with $1 porn sites, then cross saling people with 2 pre-checked boxsfor $34.95

IF Epoch says the chargebacks are lower - that must be the case, but logically it does not make sense to me. I know with propert notification, blah blah blah....

Just still seems like the same old scams this industry has been built on....
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Old 09-25-2003   #2
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I dunno,maybe retention is for ever, so it becomes a pure banking exercise of paying $25 now,to get 80 over 8 mths. I dunno.

I too would have thought a $10 join with a 34.95 crosssale would get ugly.
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Old 09-25-2003   #3
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Quote:
Originally posted by Nickatilynx@Sep 25 2003, 11:05 AM
I dunno,maybe retention is for ever, so it becomes a pure banking exercise of paying $25 now,to get 80 over 8 mths. I dunno.

I too would have thought a $10 join with a 34.95 crosssale would get ugly.

This is what I figured as well....

I dunno....
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Old 09-25-2003   #4
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Actually the program you're talking about has two pre-checked boxes, each for $1 for four days, each of which then go to about $20 if not cancelled after the four days. They also stand out nicely and are in bold and come before the submit button.

All in all, for those who approve of prechecked joins, that's light years away from the *cough* "free" AVS model with the Times Roman Italic at -1 in light grey on white found about five inches below the submit button to an instant $40 join.
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Old 09-25-2003   #5
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I think the idea of a $10 join is decent, but the $40 cross sell kills things.

My concern is this. Lets take Lens program for example. Say you send traffic to the 10$ ebony site with a $25 payout, and also traffic to his $40 per trial ebony site.

Do we really think that the conversions are going to be 2x better on the $10 site to justify the lower payout of $25 (of course the $25 payout is inflated by the $40 cross sell)? I do not think so, I think they would be about the same, or even better on the site with a trial of $3-4. Surfers are not economists. From my perspective of sending out traffic, the $10 sites are not a good solution, unless my #'s are very wrong.
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Old 09-25-2003   #6
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Quote:
Originally posted by Dravyk@Sep 25 2003, 11:52 AM
Actually the program you're talking about has two pre-checked boxes, each for $1 for four days, each of which then go to about $20 if not cancelled after the four days. They also stand out nicely and are in bold and come before the submit button.

All in all, for those who approve of prechecked joins, that's light years away from the *cough* "free" AVS model with the Times Roman Italic at -1 in light grey on white found about five inches below the submit button to an instant $40 join.

Drav it may be better, but it still does not feel right to have cross sales cost 4xs as much as the original site being joined.

It probably works.... but not sure if a $25 payout would be worth it. I would be interested in seeing real numbers.... but I know I will not. But I suspect higher payouts might be in order with 2 prefilled cross sales.
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Old 09-25-2003   #7
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Some are thinking that the $10.00 joins and all that will help keep the cb's down and hopefully under 1%, as you are pushing more joins, etc.
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Old 09-25-2003   #8
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Originally posted by sextoyking@Sep 25 2003, 12:35 PM
Some are thinking that the $10.00 joins and all that will help keep the cb's down and hopefully under 1%, as you are pushing more joins, etc.
Todd THIS makes sense ONLY if there were NO cross-sales. But Lensmans new programs has 2 PRE-CHECKED cross-sales on it.

From what I understand, cross-sales tend to lead to chargebacks.

A guy goes in to join a site, seeing $10 everywhere - next thing he knows he is getting tagged for $50 a month on 3 seperate charges on his credit card?

OF course if Lens is sending the cross-sales to someone else - I guess its their problem not his with CBs.
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Old 09-25-2003   #9
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My question - and it really is a question, not a smart-ass comment disguised as one - is this really new?
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Old 09-25-2003   #10
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Originally posted by PornoDoggy@Sep 25 2003, 12:44 PM
My question - and it really is a question, not a smart-ass comment disguised as one - is this really new?
No it is not. That is why I put "innovention" in parenthesis.

I have seen the $1 porn sites, that had huge, pre-checked cross sales built in and was paying out $25 per signup.
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Old 09-25-2003   #11
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Mike,

I was thinking kinda the same thing re: cross sells

The thinking is probably, more signups on the 10.00 program to help the '#'s" with your other programs. cb's on one hand, sales over here cheaper, keep under 1%, etc.
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Old 09-25-2003   #12
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Lensman IS on to something.

Lowering price points is not an attempt to decrease ratios by increasing sales it
is a method to decrease the number of inbound chargebacks thus reducing ratios.

Lower price points equal fewer chargebacks.


Sites priced at 39.95 are going to chargeback at nearly twice the rate of
those priced at under 25.00, this is a fact.

With the New VISA thresholds coming up in October those who are not yet compliant may
want to consider lowering pricing in order to become compliant.

Clay
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Old 09-25-2003   #13
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Quote:
Originally posted by Epoch@Sep 25 2003, 01:20 PM
Lensman IS on to something.

Lowering price points is not an attempt to decrease ratios by increasing sales it
is a method to decrease the number of inbound chargebacks thus reducing ratios.

Lower price points equal fewer chargebacks.


Sites priced at 39.95 are going to chargeback at nearly twice the rate of
those priced at under 25.00, this is a fact.

With the New VISA thresholds coming up in October those who are not yet compliant may
want to consider lowering pricing in order to become compliant.

Clay
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Clay, I understand this, but what about the pre-checked cross sale....


Quote:
Click here to signup for a 5 day trial Membership to Crazy College Chicks - Five Day Trial Membership for $1.00. After 5 days, Membership renews automatically at $38.26 every 1 month.

$1.00 going to $38.26 monthly pre-checked seems to go against your whole point of lower sales prices.

How has the Shark fishing been?

I have the photos online if you want them - drop me an e-mail.
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Old 09-25-2003   #14
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Quote:
Originally posted by Mike AI@Sep 25 2003, 11:13 AM
Clay, I understand this, but what about the pre-checked cross sale....


Quote:
Click here to signup for a 5 day trial Membership to Crazy College Chicks - Five Day Trial Membership for $1.00. After 5 days, Membership renews automatically at $38.26 every 1 month.

$1.00 going to $38.26 monthly pre-checked seems to go against your whole point of lower sales prices.

How has the Shark fishing been?

I have the photos online if you want them - drop me an e-mail.

The cross sales go to other companies, so the related chargebacks are their problem. There are some who can manage the risk associated with the cross sales...and some that cannot. Those that cannot manage the risk but continue to accept them will not be around for the show in January.

**

I actually started Kart Racing this year which took time away from the sharks.


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Old 09-25-2003   #15
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Quote:
Originally posted by Epoch+Sep 25 2003, 02:22 PM-->
QUOTE (Epoch @ Sep 25 2003, 02:22 PM)
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Old 09-25-2003   #16
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Originally posted by Mike AI@Sep 25 2003, 11:30 AM
Smart move on Len's part then!

Kart racing huh? Sounds like fun!

I sent you an e-mail with link to photos....
Nothing like doing 80 mph a few inchess off the ground!

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Old 09-25-2003   #17
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Quote:
Originally posted by Epoch+Sep 25 2003, 02:33 PM-->
QUOTE (Epoch @ Sep 25 2003, 02:33 PM)
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Old 09-25-2003   #18
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Hmmm. I would think cross-selling to your own other sites where you have full control made more sense then sending to others, no?

If you're sending your problems elsewhere and elsewhere are sending you their problems, seems like business as usual and nice way to help eliminate your partner, er, um, competition.
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Old 09-25-2003   #19
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hmmmmm this may possibly be the stupiest thought I have ever had.

But I thought I'd run it past you peeps.....

Would there not be any sense in say the "A" class proggies acquiring small/medium affiliate program with say 2- 10000 recurring members operating at a CB ratio lower than say 0.70.In order to absorb them into the bigger group and thus bringing CB's down overall. Those on the cusp ,surely,would benefit.

Is there no way this is doable?

Reading posts here and elsewhere,it is only slowly dawning on me how bad a time some will have operating at the 1% level.

Am I way off track?
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Old 09-25-2003   #20
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Quote:
Originally posted by Nickatilynx@Sep 25 2003, 05:06 PM
hmmmmm this may possibly be the stupiest thought I have ever had.

But I thought I'd run it past you peeps.....

Would there not be any sense in say the "A" class proggies acquiring small/medium affiliate program with say 2- 10000 recurring members operating at a CB ratio lower than say 0.70.In order to absorb them into the bigger group and thus bringing CB's down overall. Those on the cusp ,surely,would benefit.

Is there no way this is doable?

Reading posts here and elsewhere,it is only slowly dawning on me how bad a time some will have operating at the 1% level.

Am I way off track?
If by "aquiring" do you mean purchasing the recurring members from someone? The only problem I could see is if VISA has a mechanism in place to prevent this from being done due to them wanting to prevent Company A from acting like they're really Company B.

Did that make sense?
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Old 09-25-2003   #21
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Are you talking about the first thing, or the second thing? A or B ?

:P
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Old 09-25-2003   #22
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The recurring,the websites and transferring the processing.

Thus the whole thing would be owned legitmately by Company "A".

But you are prolly right.

It was just an idea I threw up.

You smashed it down ;-))

I'll shut up, now
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Old 09-25-2003   #23
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Quote:
Originally posted by BradShaw@Sep 25 2003, 12:11 PM
I think the idea of a $10 join is decent, but the $40 cross sell kills things.

My concern is this. Lets take Lens program for example. Say you send traffic to the 10$ ebony site with a $25 payout, and also traffic to his $40 per trial ebony site.

Do we really think that the conversions are going to be 2x better on the $10 site to justify the lower payout of $25 (of course the $25 payout is inflated by the $40 cross sell)? I do not think so, I think they would be about the same, or even better on the site with a trial of $3-4. Surfers are not economists. From my perspective of sending out traffic, the $10 sites are not a good solution, unless my #'s are very wrong.
unless lens is simply trying to build up a big enough database of $10 recurring transactions to 'lower' existing chargebacks by 1st october ... by presenting it as a gimmick and getting the gfy kids involved he's guaranteed himself several thousand transactions at the lower rate of $10 - keeping processing after october 1st is priority for lots of us at the moment - i just wonder what happens on october 1st to the company buying the cross-sells & in turn, what happens to lenmans business model - i doubt there's going to be lots of companies jumping up to buy $30+ cross-sells off other paysite companies after october 1st ...

is the trick to 1% chargebacks processing a lot more smaller dollar value transactions? if so, how do we turn $30 or $40 per month into 3 or 4 (or as many as possible) transactions without sacrificing the dollar value?

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We are all so stuck in the concept of monthly billing, monthly updating, monthly payouts ... & our entire business models for our paysites are based on paying affiliates an acceptable amount - eventually the affiliates will have no choice but to take less money - unless lensman has deep enough pockets to pay $25 for $10 for ever ...
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Old 09-25-2003   #24
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Excellent post and points CJ!!
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Old 09-25-2003   #25
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Clay some numbers I would like to see are.... where the majority of the chargebacks come from.. are they from stolen cc numbers/bad affiliates or are they from legit customers who could not figure out how to cancel?

by eliminating bad resellers out of our affiliate program... it seems not only has our weekly fraud review dropped in time.. but also seems that our retention is on the rise and our cb ratio has dropped.. basically better to have 10 good transactions over paying out on 100 that 90 are bad....

right now our highest amount of CB's come from people sending us xsells...

maybe its just us.. but I would think that one would recognize that maybe its not the price point as much as it is the sneaky xsell??? 2 cents
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Old 09-25-2003   #26
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I'm buzzed...with beer in hand - horny and looking for porn...I see 10 dollars and sign up - then find 10 + 40 on my CC statement...I'm gonna chargeback...period

best of luck -
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Old 09-25-2003   #27
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Quote:
Originally posted by gregtx@Sep 25 2003, 02:20 PM
Clay some numbers I would like to see are.... where the majority of the chargebacks come from.. are they from stolen cc numbers/bad affiliates or are they from legit customers who could not figure out how to cancel?

by eliminating bad resellers out of our affiliate program... it seems not only has our weekly fraud review dropped in time.. but also seems that our retention is on the rise and our cb ratio has dropped.. basically better to have 10 good transactions over paying out on 100 that 90 are bad....

right now our highest amount of CB's come from people sending us xsells...

maybe its just us.. but I would think that one would recognize that maybe its not the price point as much as it is the sneaky xsell??? 2 cents
If you look at the overall fraud in Partnership Programs (PP) vs. PPS you will see that the incidence is typically much lower. PPS programs usually have a much higher cbk rate than PP. The payout structure for PPS is obviously more appealing to fraudulent affiliates as they get paid prior to the onslaught of chargebacks. I believe that the difference in chargeback ratios between PPS and PP are attributable to bad affiliates who run a variety of scams in order to generate sales.

Sure friendly fraud plays a significant role in chargeback ratios but I don't think there is much difference in PPS vs. PP in regards to FF.

I urge all programs to look at their affiliate base and cut those affiliates which are causing problems which result in an increase in chargeback and credit ratios. If you have affiliates sending straight to your tour and your average chargeback ratio is 1% then there is no reason why an affiliates indvidual ratio should be much higher than 1%. If you have affiliates running at 2-3% chargebacks there is a pretty good chance that they are frauding you.

In regards to xsales, remember with xsales you are getting sales from the sending companies affiliates. If that company doesn't do a good job at eliminating fraud in their program then there is a good chance that you will be on the receiving end of fraudulent transactions.

Clay
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Old 09-25-2003   #28
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Originally posted by Epoch@Sep 25 2003, 05:57 PM
If you look at the overall fraud in Partnership Programs (PP) vs. PPS you will see that the incidence is typically much lower. PPS programs usually have a much higher cbk rate than PP. The payout structure for PPS is obviously more appealing to fraudulent affiliates as they get paid prior to the onslaught of chargebacks. I believe that the difference in chargeback ratios between PPS and PP are attributable to bad affiliates who run a variety of scams in order to generate sales.
Clay, I see the point you are making here but webmasters who use PPS programs don't just do so to be able to scam the program - sure the instance is higher, but many legitimate webmasters just want to make the most money possible as quickly as possible - because they can!! How can we blame the webmasters for their 'take take' attitude when we created it ourselves?

We have made webmasters expect $40 per signup - why would someone take $15-$30 (@ 50% recurring) over $40?

Relationships between affiliates and programs have gone 2 ways in the last 6 months - much better or much worse - try being a webmaster program dropping payouts and trying to explain why to affiliates when there are still programs paying $40 ... webmasters are going to hang on as long as possible and go for the higher paying programs.

Although it would be smart for reducing chargebacks to switch to partnership programs, you may as well just hand your webmasters to someone else & hope like hell they come back when the axe drops ... I don't think PPS programs are going anywhere, but hopefully there will be more folks being creative (like ars & others) with their payouts so we can move away from the rediculous $40+ per signup

The catch 22 - billing effects payouts and payouts effect billing - which one goes first?
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Old 09-25-2003   #29
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is the trick to 1% chargebacks processing a lot more smaller dollar value transactions? if so, how do we turn $30 or $40 per month into 3 or 4 (or as many as possible) transactions without sacrificing the dollar value?

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Old 09-25-2003   #30
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Dumb "I don't know nothin' bout no CC processing" question - doesn't VISA/MC etc charge per transaction? If so, how much extra would it cost to bill 4 times a month as opposed to once a month? Or am I grossly misinformed? (not MISFORMED!!).
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Old 09-25-2003   #31
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Old 09-25-2003   #32
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Originally posted by cj@Sep 25 2003, 08:02 PM
less than the cost of a $40 chargeback & potential loss of processing ;-)

the visa/mc fee is a % of dollar value ...
Ah! Sounds good then - thanks for the lesson!
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Old 09-25-2003   #33
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guess what!
i finally put ach check processing up to test yesterday on a low volume site and it works!

took us long enough but we got there eventually
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Old 09-25-2003   #34
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Originally posted by cj@Sep 25 2003, 08:09 PM


guess what!
i finally put ach check processing up to test yesterday on a low volume site and it works!

took us long enough but we got there eventually
Yipee!!!
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Old 09-25-2003   #35
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Old 09-25-2003   #36
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right now...any webmaster with half a brain aint gonna touch a revshare program unless they're awfully close to the folks that operate it. the only rebills I'll trust are to a couple avs companies. everything else is moved/being moved to PPS until visa gets through with it's purging.

i'm just a peon...but money is money...people speculating about how to meet the thresholds makes it real clear - get mine upfront. let the program owners/processors deal with this mess - they, and some of the shit they dealt with (cough "beast", "articistic/sometimes obvious KP"/violence) created it...I don't trust them anymore than they trust webmasters...and no one's gonna be selling homes/sports cars or cutting back on hookers to make sure I get my cash.

industry leaders & peons (like me) can posit opinions all they want...no one's gonna tell you they're fucked...they're gonna protect themselves.

I'll trust the wires and checks that clear.

best of luck -
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Old 09-25-2003   #37
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how much extra would it cost to bill 4 times a month as opposed to once a month? Or am I grossly misinformed?
No. You have a *GREAT* idea. The processors are scared of trying somthing that differs from their norm. Also, they get charged a per transaction fee. They say it's b/c of chargebacks/rf fears.. but in the end they'll take a really high risk 39.95 monthly charge, but not 4 1.00 2.00 or 5.00 charges. Trust me. I've asked and been rejected point blank like I was a newb asking for a cash advance. Oh well

I guess someday we'll all look back and understand why



Last edited by Hooper at Sep 25 2003, 08:10 PM
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Old 09-25-2003   #38
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Originally posted by Hooper@Sep 25 2003, 09:09 PM
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how much extra would it cost to bill 4 times a month as opposed to once a month? Or am I grossly misinformed?
No. You have a *GREAT* idea.
Erm, credit where credit's due - it was cj's idea. I'm just stepping in to play Devil's Advocate since Michael's over on GYI with a can of whoop ass. :P
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Old 09-25-2003   #39
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Originally posted by Lensman@Sep 25 2003, 04:53 PM

We never have more than one pre-checked x-sell, and we don't do free trials. The CB rates on that are low. We have done really well at managing the CB situation, and x-sells are part of the mix.

Customers know what they are signing up for, and they like being able to get a cheap trial to check out another site. Most cancel, but some stay.
....so the surfer knows what hes getting when you precheck a cross sale to another site?

Reminds me of that bogus $1 charge one of the processors used a few years back to try and sweeten the CB ratio...
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Old 09-25-2003   #40
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Bottom line here is pretty simple... Anything that leads to a surfer getting a charge they weren't expecting is bad. Period.
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Old 09-26-2003   #41
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The weekly billing model comment reminds me of discussion I had when
new rules first became apparent...

What came out of it finding best ways to leverage those members you know are 'good' by stimulating an increase in their total transaction #s. Switching from monthly to bi-weekly memberships on these individuals would give them 2x the power as new unproven member. Over time one could have same number of bad transactions as right now, but at 1/2 the penalty due to good transactions counting double while bad ones aren't.

Surfers (and webmasters alike) will do anything you ask if offered the right carrot at the right time...
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Old 09-26-2003   #42
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I see new membership prices as the first step to reduce the risk in this business, but there are several other steps to make, before we as an industry will be ahead of things... I dunno if people are ready for them, but I am certain that evolution will force us to make these steps - no matter how much we try to fight it.
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Old 09-26-2003   #43
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We used to run a $9.99 monthly membership on one of our site for about two months (no cross sales). The chargeback ratio was lower than with paid trials, the number of initial signups decreased about 20%, the retention was about the same. The profit was much lower and so we switched back to $2.95 / 3 day trials again.

So basically, if you are a paysite owner and you want to decrease your chargeback level, this $10 monthly memberships will work. But if you are an affiliate, stick with converting programs paying $35+ per paid trial, you will make more money. My CZK.
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Old 09-26-2003   #44
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Originally posted by Peaches+Sep 25 2003, 03:49 PM-->
QUOTE (Peaches @ Sep 25 2003, 03:49 PM)
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Old 09-26-2003   #45
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And the moral of the story is promote CHECKS MORE!

ACH Debit, baby!



Less returns

More cleared checks

Cheaper processing costs

Cross-sells and Loyalty programs

PPV and Pay per download applications
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Old 09-26-2003   #46
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Originally posted by gregtx+Sep 26 2003, 11:29 AM-->
« Previous Thread | Next Thread »

QUOTE (gregtx @ Sep 26 2003, 11:29 AM)
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Originally posted by -Peaches@Sep 25 2003, 03:49 PM
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Old 09-26-2003   #47
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I agree with you there simon.. and the logic is sound that more transactions = more opportunity to charge back... BUT.. and this is a huge but...

When somebody signs up with a paysite right now it is quite likely that they will see 3 or 4 39.95 charges on their cc anyways because of xsells... so while i would definitely say a weekly billing model wouldnt work if you were ALSO doing xsells..... but if you did no xsells i think it's a no brainer.

I mean, whos going to charge back more.. a customer who knowingly gets billed 7.00 a week for a membership they were aware of.. of a customer who gets billed 39.95 3 times for a monthly membership they didnt mean to let convert and 2 other sites (sometimes more) that they didnt necessarily even realize they were getting into.

Dont get me wrong.. i LOVE xsells.. just that the chargeback argument carries no weight when discussing weekly billing. It's all about the transaction fees.
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Old 09-26-2003   #48
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Hooper, I got the same extensive detailed response as you ...

>>>We will not do this.
>>>
>>>Clay

and something about reducing the cost of the trial (which is $4.95 for 3 days) to reduce chargebacks on the initial transaction ... ???

i swear sometimes i think certain processors only want a few select 'buddy' companies to stay in business ... finding answers is like extracting an ingrown toenail
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Old 09-26-2003   #49
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Originally posted by cj@Sep 26 2003, 04:52 PM
i swear sometimes i think certain processors only want a few select 'buddy' companies to stay in business ... finding answers is like extracting an ingrown toenail
... And links list owners won't allow you to serve your content from a single place or domain (which would make for a logical structure and less overhead) because they say then you might be hotlinking from someone, so freesite webmasters have to copy their images a hundred times over on their servers ...

... And TGP owners won't allow rotating sponsor banners (which would allow you to better check your CTRs and which sponsor and banner best pull for you) because they say you might put up a sponsor they don't like or allow, so if you want to compare sponsors you need to make HTML 1.0 pages and try to compare results over a few months (making that useless) ...

It's getting to the point where if it's logical, practical, remotely intelligent, can make you more money, increase your ROI, or be a more productive business model, then some group in control has banded together and decided you cannot do it!
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Old 09-26-2003   #50
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Originally posted by Mike AI@Sep 25 2003, 10:55 AM
However, I wonder what kind of long term risk there is in having pre-checked cross-sales for HIGHER prices then the initial sales of the sites. Wasn't a few programs doing something similair - with $1 porn sites, then cross saling people with 2 pre-checked boxsfor $34.95

IF Epoch says the chargebacks are lower - that must be the case, but logically it does not make sense to me. I know with propert notification, blah blah blah....

Just still seems like the same old scams this industry has been built on....
I agree with you. I think it will back-fire and in the long run create more chargebacks and kill what could have been a great concept of cross marketing. Leave to adult internet to do that.

Here’s what I want to know… is anyone building a plan for when MC/VISA ends rebilling for adult products?

If you notice we have a backlash effect in the industry. This has been proven so why not learn from mistakes past? If everyone is getting down to business basics then what about building brand and looking towards the future?

This is my Goddess forecast for 2004 – no pop-ups and consoles, more states adopting anti-spam laws and direct marketing with more rules. Tighter controls on content and domain names. Then MC/Visa pulls the NO REBILL out of their hat. Now what?

How do you keep your customers around and keep them in your web?


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