Overstock and LinkShare Part Ways: Insights into the Split

There are merchant programs that have been with certain affiliate networks for so long you think of them almost as growing old together. Today one of those relationships ended. After seven years Overstock.com and LinkShare have split.

Not since Barnes and Noble left BeFree in 2007 has there been such general reaction of surprise from the affiliate industry. Some affiliates in forums over on ABestWeb even made the comparison that Overstock and LinkShare went together like peanut butter and jelly. So after seven years what happened?

According to the press release (shortly after the appearance of this article LinkShare took down the copy of the announcement from its blog, due to that the link now goes to the Google cache of the page so we can show the release in its original format) by LinkShare the network was resigning the engagement with Overstock due to “mutual differences” that “could not be overcome” despite a long period of negotiations. The release itself doesn’t offer much else in the way of insight into why the relationship ended.

To shed some light on the situation I talked to Mark Kirschner, Chief Marketing Officer at LinkShare and Geoff Atkinson, Senior Vice President of Marketing at Overstock.

Laying Rumors to Rest

As with any breakup there are bound to be rumors in the community. Let’s lay those to rest. The split between LinkShare and Overstock was not due to:

  1. New York Amazon Tax Concerns: As Kirschner pointed out the New York Department of Taxation and Finance clarified that “…the location of the affiliate network service provider makes no difference in determining whether the seller is presumed to be a vendor under Tax Law section 1101(b)(8)(vi).”
  2. Pressure from OneCause Flap: While LinkShare sees OneCause as a completely separate entity to itself the fact that LinkShare’s parent company Rakuten owns this particular affiliate business has put a lot of pressure on LinkShare in affiliate forums. This again was not a point of contention.
  3. Diversification of Overstock’s Online Initiatives: As Overstock has grown, $255 million in revenue during Q4 of 2008, it has also diversified from traditional retail moving into such wide categories as automobile sales, real estate, and auctions. Each of these is diverse and arguably could be seen by a network as worthy of separate service fees. Atkinson stated that although such growth posed a variety of challenges it alone was not something that couldn’t have been overcome.

Reasons for the Split

According to Kirschner, LinkShare decided to move forward with the announcement when it became obvious to them that the differences between the two sides could not be satisfactorily bridged. He also said that the language of the press release, including the term “resigns”, was pretty common in traditional agency-client business and that LinkShare had decided it was time move on.

When asked how such a huge merchant leaving will impact LinkShare and its publishers, Kirschner responded that LinkShare is healthy and there is a large array of retailers, including many Inc 500 companies, in the network ready and willing to fill any gap.

While LinkShare’s press release states it was “clear to all involved” that the differences were insurmountable, the tone of the release reads like a preemptive move on LinkShare’s part. It certainly seems that way since no coordinated announcement occurred between the two companies. In fact Atkinson confided that the move caught Overstock by surprise. “We are just as shocked as the rest of the industry at the way the announcement was delivered,” he said.

On Overstock’s part, Atkinson says that Overstock was “getting the lay of the land” when it came to network options but implied that the process was simply a matter of due diligence.

Moving Forward

One of the big questions is how the transition will be handled. Both parties pledged to make the transition as smooth as possible for involved publishers. According to Atkinson Overstock is committed to insuring that its affiliate partners receive prompt and accurate payments during this transition. He says Overstock plans to release more details about exactly what form that transition will take early next week. Overstock affiliates who have questions or concerns are encouraged to email: affiliategroup@overstock.com

Of course the bigger question is what Overstock will now do with its affiliate program. Since Atkinson was quick to assure that Overstock was committed to its publishers, there seem to be only two options:

  1. Move to a New Affiliate Network: I once said that Zappos could move to a network as small as ShareASale and it wouldn’t matter because affiliates would follow the brand. The same goes for Overstock: where ever they move affiliates will most likely follow. The main option seems to be Commission Junction.
  2. What about Google you ask? Well I did take the time to contact Google and Commission Junction for this story. In almost a comic situation, as I was gathering information for this story I was contacted by a Google representative wanting to know if there was any indication where Overstock might move. Commission Junction had no comment.

  3. Bring the Program In-House: There are plenty of cases of merchants having a successful affiliate program managed in-house; Amazon is the most successful example of this. Despite their initial mishandling of the New York Amazon Tax law issue, Overstock has maintained a large array of excellent resources for its publishers. They even have a yearly conference of their own for top affiliates. It wouldn’t take much organization to bring the tracking services a network provides internally.

Traditionally the transition phase of a program lasts about thirty days. Hopefully both parties will keep their promises to keep that process smooth for the sake of the publishers involved. Here’s to the split going off without a messy divorce.

This is the type of story that is dynamic and evolving. As more events unfold and news is announced we will keep updating here.

About Angel Djambazov

Born in Bulgaria, Angel Djambazov has spent his professional career in the fields of journalism and online marketing. In his journalistic career he worked as an editor on several newspapers and was the founding Editor-in-Chief of Wyoming Homes and Living Magazine. Later his career path led to online marketing where while working at OnlineShoes he earned the Affiliate Manager of the Year (2006) award at the Affiliate Summit, and In-house Manager of the Year (2006) award by ABestWeb.

For four years Angel served as OPM for Jones Soda for which he won his second Affiliate Manger of the Year (2009) award at Affiliate Summit.

Currently Angel serves as OPM for KEEN Footwear and MedicalRecords.com. His former clients include: Dell, Real Networks, Jones Soda, Intelius, Graphicly, Chrome Bags, Onlineshoes.com, Vitamin Angels, The Safecig, and Bag Borrow or Steal.

Angel is the Editor-in-Chief and Co-Publisher for ReveNews.com and ReveNews.org.

Angel lives north of Seattle, spending his free time reading up on obscure scientific references made by his wife MGX, while keeping up with a horde of cats and a library of books.

You can find Angel on Twitter @djambazov.

13 Responses to Overstock and LinkShare Part Ways: Insights into the Split

  1. Tim Mortensen says:

    My bet is they go in-house. With the way affiliate software is improving, and the fact that the vast majority of commisions are pumped by superaffiliates, affiliate networks are becoming irrelevant.

  2. Blair says:

    So what will this mean for those using Overstock banners, coupons etc? I assume as of right now those links are invalid and won't be credited towards an affiliate for a sale.

  3. Excellent question Blair.

    According to both parties it is "business as usual" during the term of the transition. Which means that links will track as they did prior to the split and affiliates will still get credit for those sales until the transition is complete.

  4. It did look like it "caught Overstock by surprise." In fact they are still displaying the LinkShare logo and sending prospective affiliates to their LinkShare sign up page. See: http://sendme.to/overstock_linkshare

    Have Overstock affiliates received any notification of this, or was the only way to find out about this was at LinkShare's blog, affiliate forums and Twitter?

  5. Blair says:

    Angel – Great to hear. I haven't promoted them as of yet but I'm sure some of their bigger affiliates will appreciate the fact that their existing campaigns won't have to be taken down during the transition.

    Thanks for the info.

  6. Pat Grady says:

    "With the way affiliate software is improving, and the fact that the vast majority of commisions are pumped by superaffiliates, affiliate networks are becoming irrelevant."

    We couldn't possibly disagree more on the reasons why, but ironically, the conclusion and outcome is exactly the same.

    Lil twist on the Morpheus quote… irony it seems, is not without a sense of humor.

  7. Mike Hyland says:

    Hopefully Overstock will step back and ponder what happened to the “value add” they so hansomly pay for every month for 7 years. I remember taking them off life support as they lay in the merchant dead pool with their old framed web site with buggy tracking and leaks galore. Had they not been pushed to compete transparently with TigerDirect at ABestWeb they’d never would have survived the LS Dot.com bubble bust.

    They should go Indy and follow my Safe Haven Network model to eliminate any questtion that 100% of the cookied referral sales aren’t tracked and reported. Eliminate worthless coupons destroying their Club-O and site wide posted promotions by cutting out the “place coupon code here” step during checkout. Why would Overstock need cart poaching affiliates canabilizing their own customer loyality sales with crapola incent affiliates like Onecause.

    Unless they go Indy I’ll write them off as ungrateful stupid merchandizers worhty of getting fleeced by any sleazebag greed driven BHO or couponer coming down the Info-Highway.

  8. Liz Tompkins says:

    I hate change.

    But if one had their druthers, I’d prefer they go in-house.

  9. “I’d prefer they go in-house.”

    They’re going CJ for those that haven’t gotten the email.

  10. […] on the top left to get updates by e-mail.LinkShare announced a couple weeks ago that they were parting ways from Overstock. After that news came out, there was speculation over the next network for Overstock, or whether […]

  11. […] There are merchant programs that have been with certain affiliate networks for so long you think of them almost as growing old together. Today one of those relationships ended. After seven years Overstock.com and LinkShare have split.Not since Barnes and Noble left BeFree in 2007 has there been such general reaction of surprise from the affiliate industry. Some affiliates in forums over on ABestWeb even made the comparison that Overstock and LinkShare went together like peanut butter and jelly. So after seven years what happened? by Angel Djambazov […]

  12. […] to friend 27Feb LinkShare announced a couple weeks ago that they were parting ways from Overstock. After that news came out, there was speculation over the next network for Overstock, or whether […]

  13. Abraham says:

    Two years have gone but Overstock “Join Now” link at http://www.overstock.com/aff_dataFeed.html still takes you to Linkshare.