Today’s major industry news comes from Russia. The country’s largest and most popular search engine Yandex (which is by far more popular than Google there) is transforming its product-search service Yandex.Market to encompass a Cost-Per-Action (CPA) model.
Until today Yandex.Market was operating solely on Cost-Per-Click (CPC) basis. The new CPA model is already available for trial (via this link). It is open for Russian and Ukrainian stores which have been active on Yandex.Market for at least 3 months, and have a rating of no less than 3 stars. Yandex charges a flat rate 1% commission which is tied to the order value and remains the same regardless of the product/merchant category. The model is expected to roll out fully in November of this year.
I believe this to be an important development for Russia’s affiliate marketing. Yandex.Market currently contains products from over 13,000 online merchants; and is visited by some 17 million visitors a month. Adding the CPA model to the CPC one, they will facilitate merchant education on the very concept of Cost-Per-Action remuneration, which great for the industry.
While some do deem this move to be in direct competition with affiliates (it may be said that Yandex is, essentially, becoming a super affiliate themselves) and/or affiliate networks (by allowing merchants to establish direct CPA relationships with Yandex), I think there are more pros in this than there are cons.
Besides the above-quoted educational element, there are a few other points to emphasize:
1. Yandex will charge 1% commission. This low and comfortable level of CPA payouts coupled with Yandex.Market’s tremendous client base may make the idea of performance-based remuneration appealing to audiences wider than ever before.
2. Participating merchants will have to pay Yandex the 1% on all placed orders. The key difference between this setup and how affiliate networks operate is that while networks encourage merchants to pay higher commissions, they primarily charge them for fulfilled orders only. However, once Yandex’s CPA model sells merchants on the idea of performance marketing, the move from being charged for placed orders vs fulfilled orders shall be a much easier (than selling the idea of CPA marketing from scratch). So, there is benefit to affiliate networks here as well.
3. Yandex.Market focuses on product search. The developments on the market of tangible goods are always exemplary of the real state of e-commerce. Coincidentally or not, earlier this month, Russia’s product– and data feed-focused affiliate network GdeSlon raised financing from local investment companies Altair Capital and IMI.vc, and a couple of angel investors [source]. Now with Yandex.Market tapping into the CPA opportunity, we are set to see substantial progress on the market of physical goods.
While in my last year’s post on the state of affiliate marketing in Russia I quoted some encouraging numbers (showing how in the past 9 years the Russian affiliate marketing industry has grown 27-fold), the industry has made some very promising steps since then. In my opinion, this latest development with Yandex.Market means that affiliate marketing in Russia is on the verge of going mainstream. I would love to hear your thoughts on it all, which you may post using the “Comments” are below.
BIG news and well done Yandex! Hope the low CPA% rates catches on 🙂
I’m guessing once more and more merchants jump in they’ll do what G did and let the merchants bid against each other…
—
Just so you know, a lot of us read your blog on daily/weekly basis – we just don’t comment unless we have something worth noting to say 😉
Thanks for your comment (and kind words), Kush. Yes, I also hope that the low CPA rate attracts good crowds of advertisers to this (it should be no-brainer for most). I’ll be interesting to see how this develops, and what impact it ends up having on Russian affiliate marketing landscape overall.
On the one hand, Yandex is trying to develop more and more services to add more and more value to Russian internet market (I bet, you would do the same, seeing scary Google behind the border).
But on the other hand if Yandex implements some super-effective own product search, integrated into main search it takes a risk to make context ads less effective for online merchants and affiliates. And it’s definitely not what they want to do. Context ad is 90% of their revenue.
Pingback: Marketing Day: October 9, 2013
Great news!
However I’m curious if they end up as GAE or not – since in terms of main income sources they are quate similar to Google.
Anton, “as GAN” you mean?
You are right – I ment GAN.
Yandex’s above-described situation is different. Google (acquired and) became and affiliate network [which, yes, they closed earlier this year]. Yandex, however, is going to act in an affiliate publisher role more than anything else.
Well that’s interesting what will happen next, we will see it soon. As far as I know not all retailers are happy with this changes. Main interesting point that there is no tracking on remote domains – Yandex will count orders placed directly on Yandex.Market service.
A little bird told me that some 100 online stores have already switched to Yandex’s new, CPA, model.
Unlike earlier suggested by some of my Russian colleagues, per Yandex’s rules “комиссия за заказ взимается только после того, как магазин согласовал состав заказа с покупателем и подготовил заказ к доставке” (“order commissions are charged only after the store confirms the order with the customer and gets it ready for shipment”).
Feedback from online retailers is so ambiguous here in Russia.
Some retailers blame Yandex for forcing them to start price wars. Their reason is: they can not compete with quality of service, bonuses, etc if Yandex does most on it’s side. The only way to attract customer is low price.