[posnet]

It's always interesting to note the waves of sponsors flow through youtube/podcasts. Raid, Nordvpn, recently Incogni. I wonder if the ad spend actually pays off for them, or if it's just VC dollars being shoveled into the furnaces.

[aimazon]

If they’re high margin businesses that can lock in customers it can work out for them. That’s why VPN sponsors do so well: very high margins and the deals they advertise are typically multi-year upfront payments so the signups immediately repay the advertising cost.

The worst examples are low-margin businesses that have high churn, e.g: food subscription boxes. Hello Fresh etc have extremely high churn so they’re paying advertisers orders of magnitude more than they make per sale. That’s why they’ve moved from “free trial” offers to things like “free desert for the lifetime of your subscription” to spread the cost of the offer over the lifetime of the subscription (but even that doesn’t make the model profitable).

Rule of thumb: when advertising via influencers (YouTube, podcasts etc.) assume you will receive a single payment from each customer before they churn. If the first (and only) payment the customer makes doesn’t cover the advertising cost (and operating costs) it’s a very bad idea. Free trials are the worst option because it’ll go from 1 payment to 0 payments.

[arrowsmith]

If VPNs have such big margins then why doesn't a competitor undercut them all on price?

[h0l0cube]

Because it’s mostly brand recognition that lends security products an aura of trustworthiness, and that involved a high ad spend with an advantage towards established brands.

[aoanevdus]

There are cheap and even free VPNs. If your ad can convert customers who aren’t going to comparison shop, you don’t need to be offering the lowest price.

[throw5959]

Show me a free vpn that isnt banned everywhere on the internet

[debian3]

Cloudflare warp.

[throw5959]

Tried it, Facebook gives me captcha on every request.

[stevoski]

Many of the brand-name VPNs are owned by the same parent company. They were gobbled up one by one.

[mentalgear]

care to provide which one / details ?

[dngray]

Funnily enough Windscribe did an article on this:

- https://kumu.io/Windscribe/vpn-relationships

- https://windscribe.com/vpnmap

The main two that parent poster would be talking about would be "Kape Technologies" and "Ziff Davis VPNs".

We also did an article in 2019 https://www.privacyguides.org/articles/2019/11/20/the-troubl...

They do a lot of astro-turfing with "review websites" that aren't actually independent at all.

[kirb]

Any idea why there hasn’t been much if any enforcement from the FTC and co about the sketchy VPN review blogs? Seems like especially Lina Khan’s FTC would be interested to find a way, because giving the impression of an independent review and then adding a little “actually we’re extremely biased” disclaimer somewhere doesn’t seem like it should be acceptable. They might be offshore, but they do plenty of business with US creators.

[Ylpertnodi]

Mullvad very rarely (if ever) get mentioned on vpn review sites. So I've used them for the last several years.

[bluehatbrit]

I think GP was probably exaggerating but there are far fewer owning companies than actual vpns. This article does a decent job of showing it https://vpnpro.com/blog/hidden-vpn-owners-unveiled-97-vpns-2... but may be a bit out of date now (Oct 24). I believe it, or a similar one, made the rounds on HN a year or so ago.

[dngray]

That website is owned by a VPN company iirc, specifically NordVPN or at least they astroturf for them. Note that on the side there is 1 & 2 VPNs and they're NordVPN and Surfshark which have the same parent relationship as they merged. That's the thing though it makes it look like there's more than one as opposed to just slapping a NordVPN ad there. Illusion of choice.

And no they're not exaggerating, have a look at the two companies I mentioned and how many "brands" they own.

[franga2000]

Few people decide between "security products" based on price, they do it mainly based on reputation. Buying that reputation through ads is expensive, so you can't go too low in price. Also, there are super low-cost VPNs out there, but they're a separate market segment and we don't usually hear about them because they don't have the money to advertise in large media outlets.

[__alexs]

They do? E.g. PIA is 1/3rd the price of Nord.

[dngray]

PIA is just one of the Kape brands. Nord Security owns the Nord, Surfshark and a bunch of others.

[__alexs]

What does that have to do with pricing competition? Clearly VPNs do compete on price, just the low cost brands aren't blowing money on ad spend.

[dngray]

Or maybe just different marketing strategy eg Nord costs more to begin with, and then they use "promo" deals with offer huge discounts resulting in a normal price again.

[wkat4242]

Sometimes they even screw the influencers out of their income lol: https://www.newsweek.com/honey-coupon-browser-extension-mrbe...

Also mentioned in the post's link by the way.

But also TikTok was probably a net negative for him as they lured viewers away from YouTube.

I never watch MrBeast and I always block ads and sponsors (sponsorblock) anyway so I didn't really notice any of these things. It's really nice not being overwhelmed with comercialism.

[pests]

LegalEagle and Wendover Productions have brought a class action against Honey/Paypal.

[aimazon]

I can't even begin to understand how they think this will succeed. The defence so many influencers employ when advertisers turn out to be doing shady things is "You can't hold me responsible! It's not my fault, how can I know what my advertisers are doing?" but as soon as an advertiser does something that harms the influencer, it's a problem?

Honey's business model has always been obvious to anyone with any understanding of affiliate marketing, their innovation was that they created a browser extension: that's it. Coupon code websites were doing exactly the same thing for decades before, retailmenot being the one we're probably all familiar with from the early 2000s.

The claim that these influencers have lost affiliate commissions because Honey's method is true but it's also true that these influencers are losing affiliate commissions to one another. Amazon is the preferred e-commerce platform for affiliate marketing because they are extremely generous with how they attribute: if you click an Amazon affiliate marketing link and then make any purchase in the next 30 days the affiliate will get paid regardless of whether they were advertising the product you bought or not. And guess how Amazon attributes? Last click!

If Influencer A includes an affiliate link for "Expensive Camera" and Influencer B includes an affiliate link for "Cheap Toy" and you click on "Expensive Camera" then click on "Cheap Toy" and then buy the expensive camera, Influencer B is getting paid for that purchase expensive camera purchase, despite Influencer A influencing you to buy it.

Affiliate marketing is adversarial, it's a fight for attribution at the expense of everyone else. Holding Honey to a different standard isn't going to work for them. Wilful ignorance of how a company operates isn't a defence against being harmed by them, it's embarrassing.

[ageitgey]

> Holding Honey to a different standard isn't going to work for them.

I think the perceived difference is that influencer A or B got someone to click a link to a store while Honey used a browser extension to reset the affiliate attribution when the user was already at the store on the checkout page about to click to purchase. They didn't drive the user to the store. That's a big difference.

[_fjg8]

Cart abandonment is a big problem in ecommerce, reducing cart abandonment is an entire field of business.

https://www.shopify.com/blog/shopping-cart-abandonment

"According to Baymard Institute, 70.19% of online shopping carts are abandoned. Think about that. For every 100 potential customers, 70 of them will leave without purchasing. How much would your revenues increase if you were capturing those sales instead of losing them?"

Honey provides value to merchants because it reduces cart abandonment: it's easy for Honey to argue that without Honey these sales would not have completed and therefore Honey deserves the commission on the sale.

Even in cases where Honey didn't find a discount, Honey can argue that by searching for coupons on behalf of the user the user gains confidence that the price they're paying is the best price and that's why they complete their purchase.

[aimazon]

My prediction for the response from Honey:

* Affiliate marketing attribution is understood to be imperfect, the best effort nature of it is priced in to the commissions

* Affiliate marketing uses multiple attribution strategies with varying trade-offs including coupon codes (e.g: "use code INFLUENCER at checkout for a 10% discount") vs. links ("click the link in my description") because of the imperfect nature

* Affiliate marketing is adversarial, all of these influencers have "stolen" attribution from each other

As Honey will have no problem proving:

* The advertisers (e.g: NordVPN) understand that affiliate marketing attribution is not an exact science, that n sales driven by an influencer does not translate to n affiliate commissions, and that the amount they offer to influencers per sale accounts for that

* The agencies that work on behalf of influencers to negotiate deals with advertisers understand the challenges of attribution and have negotiated based on this imperfect art of attribution

* The agencies/influencers/advertisers choose whether to engage in affiliate marketing by weighing up the benefits of being paid per sale vs. being paid per video or views

* There will be pages and pages and pages of emails within these influencer agencies where discussions have taken place on the choice to use affiliate marketing based on the audience of a video, e.g: link based affiliate marketing is less effective for an audience that watches videos on TV, vs. an audience primarily watching the video on a computer

* Honey was not receiving an equivalent rate to what the influencers were receiving, the influencers would not have earned their per sale commission x the number of sales if Honey had not captured the attribution (which demonstrates that this is all priced in)

Maybe PayPal will settle but given the harm this drama has caused to the Honey business, I doubt they have any intention of doing so.

[whilenot-dev]

Disclaimer: I'm an active adblocker and avoid all social media besides HN, IANAL

> The defence so many influencers employ when advertisers turn out to be doing shady things is "You can't hold me responsible! It's not my fault, how can I know what my advertisers are doing?" but as soon as an advertiser does something that harms the influencer, it's a problem?

Yes, if the damage is directed towards you then that's a case for a defence.

Inluencers are just providing advertisement space like any other media platform (TV, websites etc.). So if a sponsor bought this advertisement space and turns out to be shady, why should influencers, TVs, websites etc. be held accountable? Hasn't their reputation been damaged as well? They usually just don't go after it because it's a tough case to quantify and any legal trouble can be exceedingly tiresome.

> If Influencer A includes an affiliate link for "Expensive Camera" and Influencer B includes an affiliate link for "Cheap Toy" and you click on "Expensive Camera" then click on "Cheap Toy" and then buy the expensive camera, Influencer B is getting paid for that purchase expensive camera purchase, despite Influencer A influencing you to buy it.

It's the last click, yes. There's a difference between [A] you actively clicking an affiliate button to land on a product page and [B] you being tricked into a last button click right before checkout with the (void) promise of free coupons. You stated it perfectly, yet you don't understand the difference?

As for "Expensive Camera - Cheap Toy": What get attributes how is a technical challenge and cookie domains seem to be the solution that gets picked by the affiliate stores. I think there could be a more fine-grained solution that wouldn't be so difficult to implement, agree, but it seems like there's no work being done in this space?

[imtringued]

Uhm no? If Honey was running a legitimate affiliate marketing scheme, they would be upfront about the fact that they get an affiliate commission and that you benefit from this arrangement, because they are giving you part of the affiliate commission as cashback. This in itself is a very honest way of running an affiliate marketing business.

Except Honey doesn't do that. Online shops pay Honey to ignore the best coupons, so that the customer will pay more than if they had looked for the coupons themselves. They run a cashback scheme that is no different than e.g. payback cards, but they deceptively fund it using affiliate marketing, meaning that the user is getting a pittance in savings in comparison to what honey gets.

[aimazon]

You're getting caught up in the social media hysteria. Honey's partnership with merchants to create Honey-specific coupons is relatively new, Honey was sold to PayPal long before they had any partnerships with merchants, Honey's value (as a business) and revenue comes from the pure affiliate marketing: getting attribution for sales. Honey has never hidden this: https://web.archive.org/web/20191121204313/https://help.join...

[Hikikomori]

They never made it clear that they always replaced others affiliate links, like the creators affiliates that also promoted honey, and also did it even when they didn't find any codes. And did this at checkout.

[progval]

Legal documents of the class action: https://www.courtlistener.com/docket/69503243/wendover-produ...

[dataflow]

If this ends up succeeding then (why) wouldn't it mean companies could sue ad-blocker creators?

[wkat4242]

Lol wendover productions, sounds like a spicy movie studio :) Never heard of that but I'm not so deep into YouTube.

[pr337h4m]

Pretty decent logistics channel, perhaps a tad too oversimplified imo

[ChocolateGod]

I'm surprised over the Honey blowback, how else did people think they made their money?

[Hikikomori]

It wasn't clear that they always replaced the affiliate any time someone clicked (did they even need to click before?) Honeys popup, even if they didn't find any deals. Then stores could partner with Honey and set it up so valid codes wouldn't be "found" by Honey or the store would allow them to find a 5% code even if a better one was available.

[mrweasel]

In hindsight it's obvious that something was going on, but you could say the same for a company like Uber. For some companies we think they make their money on ads or service, but they don't, it's VC funding. Only later are they planing to make a profit.

The surprise for people most likely wasn't that Honey would have to make money on some weird side hustle, the surprise was that they'd steal from their partners.

[mrguyorama]

I thought they used their extension to improve advertising tracking and selling that data. Hell, they even could have been an old style "we will burn $100 million to acquire a bunch of customers and then do dumb customer milking strategies" business like nearly ever single other business youtubers advertise.

I did NOT think they purposely, aggressively, stole affiliate attribution from advertisers while pretending to look for coupon codes that never existed or even ignoring actual coupon codes on purpose.

Most people are not familiar with affiliate marketing even existing, how much of a bubble are you in that this SPECIFIC business strategy is surprising to people confuses you?

[leosanchez]

> how else did people think they made their money?

I don't think anyone ever thought to research / investigate how Honey made their money until recently.

[progbits]

I see Brilliant a lot on technical channels I follow and I'm very confused, the "courses" they are selling all seem like highschool level at best, but very advanced technical channels go "I've learned all this from our sponsor Brilliant".

[vasco]

Next you'll tell us you think those really jacked guys do it because of a specific brand of protein powder and not buttloads of steroids.

[bombcar]

Advertising is paying people to lie, and that's becoming more and more apparent.

Or what they "learned from our sponsor" is that they're offering courses.

[rrr_oh_man]

> that's becoming more and more apparent

That's been apparent for the last 300,000 years of human existence.

- 2,000 years ago: Google Ads: https://www.campaignlive.co.uk/article/history-advertising-n...

- 5,000 years ago: Google Reviews - https://en.wikipedia.org/wiki/Complaint_tablet_to_Ea-n%C4%81...

There is little to no history beyond the melt at the tail end of the last ice age 13,000 years ago. Seas have risen by 200 years and we've always lived near water. My head canon: Agriculture didn't just "pop up", there was a history and tradition before that. Humans have never changed. We just have flashier toys now.

[xmprt]

As someone who has done some of the free Brilliant puzzles, I can't say I've learned a ton from them but it does feel nice to exercise some of my brain muscles occasionally in ways that aren't directly related to my job even if it's just high school level physics or math.

[bakugo]

> but very advanced technical channels go "I've learned all this from our sponsor Brilliant".

Yeah, because they're paid to say that. You don't actually think they use the service themselves, do you?

[progbits]

Of course they are paid to say that, the question is how far are they willing to go. I'm not talking about some shitty clickbait channels but ones like Steve Mould, whom I generally trust not to straight up lie and would only accept sponsors whose product they believe in at least a little bit.

[mrguyorama]

Or StuffMadeHere who literally lurks here on HN and has sold Brilliant a bunch.

Do you actually use it man? Have you actually learned anything on Brilliant?

[grecy]

As a YouTuber it is fascinating to see the waves of "free product" sponsorship emails pushing harder and harder for me to review something, then a few weeks later to see the waves of videos in my niche from everybody saying "This is the greatest x on the market, you NEED to buy one".

One product in particular I must have received twenty emails from different marketing agencies trying to give me one for free. It's now pretty popular in my niche, though when reviewed by an actual expert they said it was junk.

[Krasnol]

Don't know about the margins, but every time I talk with non-IT people on the topic of VPNs, they know about NordVPN. I've heard it being used synonymous to VPN.

Seems to work somehow.

[underseacables]

I think the vast majority of ad spending goes into the furnace. Most people block it out, skip it, or ignore it. Unless it's really good, or unique, it is just universal noise now.