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‘Price Pressure’ in Affiliate Marketing Cuts Deeper into Tradedoubler Margins

‘Price Pressure’ in Affiliate Marketing Cuts Deeper into Tradedoubler Margins

Affiliate network Tradedoubler has once again cited ‘price pressure’ within affiliate marketing as the reason for its shrinking margins in 2015.

An up-to-date progress report leaves the company indicating a gross margin of 20.5% between January - September this year, lower than the 22.1% in 2014, potentially due to greater competition for advertiser programmes among networks and software providers. 

Other readings showed Tradedoubler’s net sales hitting SEK 378 million (£28 million) in Q3 of this year (July - September), down 10.8% from the SEK 424 million (£32 million) in 2014, while gross profit from that activity slipped 13.1% to SEK 79 million (£5 million) during the same period.

The readings will be of particular interest to Reworld Media S.A., the French-based media company whose acquiring of over 8 million Tradedoubler shares in March saw it become the affiliate network’s largest shareholder, upping its overall stake to 19.1%.

Familiar trends

Along with murmurs of heightened competition in the affiliate channel, Q3 also brought news of staff changes at Tradedoubler, as Mike Weiler was placed in charge of business across Germany and Austria. 

Neither market was cited during CEO Matthias Stadelmeyer’s Q3 review, in which Sweden and Poland were viewed as delivering particularly “good results” while France and Switzerland proved more challenging.

“During the third quarter, gross profit in our core business, performance marketing – excluding the effects of the loss of one larger international customer – decreased roughly in line with the year-on-year trend of the previous quarter,” Stadelmeyer added. 

“However, the development within different markets varied considerably due to underlying market trends and our own performance.”

A statement released by the CEO earlier this year pointed to positive developments for the group across the UK, Germany and Spain along with Sweden and Poland, with France progressing at a much slower pace.

New releases 

In an effort which could improve its business across Europe, Tradedoubler has been busy on the technology front. The network is enhancing its toolset with a view to better supplementing its core performance marketing business and offering clients a more in-depth view of their campaigns. 

In Q2, Stadelmeyer promised new product launches during the second half of 2015 to glean “smarter” results from performance marketing activity.

Delivery in this sense came in the form of a new cookieless tracking tool and User Journey Reporting: an option baked into its ADAPT service which brings an improvement in result tracking.

The company is backing both tools to improve results going forward. 

Richard Towey

Richard Towey

Richard serves as head of content at PerformanceIN. After many years spent covering developments from the automotive, sports, travel and finance sectors, he eventually turned his full attention to reporting on stories from the fast-evolving world of digital marketing. Richard now heads up the editorial team at PerformanceIN: the performance marketing industry's leading publication.  

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