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Pepperjam Jammed

There’s a significant issue brewing and because I don’t want to take sides in an issue whose sides will not ever be visible, I spent yesterday sitting on my hands and listening. A day later, I’m still not taking sides.

Instead, here’s the issue in the words of others who have been discussing it, that stand out most to me, and then my own take on the issue and some obvious questions, perhaps rhetorical.

Wednesday night, Kris Jones from Pepperjam wrote on their corporate blog that they’re being acted against by Commission Junction. You can read all the details at Pepperjam’s blog, but Kris sums up the issue in a few paragraphs:

“There is no question that the launch of Pepperjam Network has created a lot of positive buzz within the affiliate marketing community. Thousands of affiliates and advertisers have contacted us and congratulated us on advancing the industry by offering an alternative affiliate network that addresses many or most of the shortcomings that have existed for years on the other major affiliate networks.

In fact most networks have reached out to Pepperjam and want to work more closely and strategically with us, while others, such as Commission Junction, has decided to conclude that we are now competitors that pose serious potential harm to the Commission Junction business and decisive action must be taken against us.”

and

“Our clients told us that they were being aggressively contacted by Commission Junction employees and delivered an ultimatum - either stay with Commission Junction or terminate all agency business with Pepperjam.”

Many bloggers and commenters who are discussing the story are self-described CJ haters and quick to side with Pepperjam on this. Some people who have covered the story initially actually got the story wrong, jumping on the non-exclusivity in affiliate networks that Commission Junction has always touted, and questioning how CJ could pick on one network and tell clients that they couldn’t participate in that network in addition to their own.

Kris Jones clarified, and this is an important distinction:

“In short, CJ didn’t tell Pepperjam clients that they couldn’t launch on another network; instead, CJ told them that they had to immediately terminate contractual relations with Pepperjam as it relates to marketing services or the client would be kicked off CJ.”

Meanwhile, other affiliate marketing industry people weigh in.

Carsten Cumbrowski calls it blackmail (alleged, of course). Blackmail is extortion. Extortion is illegal. Strong words.

“Commission Junction allegedly black mails advertisers of its network to terminate their existing marketing services business relationship with Pepperjam. CJ gave Pepperjam’s clients an ultimatum - fire Pepperjam immediately or you’ll be kicked off our network. CJ also goes on to offer Pepperjam’s clients the same management services Pepperjam was offering them.”

Jim Jessup (who is a real person) also has strong words:

“To hear Mr. Jones tell it, he’s been done a tremendous wrong. But has anyone looked at how Pepper Jam was able to launch its “next generation” affiliate network? The way I see it, Mr. Jones & Co have tried to turn a decent OPM business into a network play. It’s such a brilliant idea - build your own platorm and then simply migrate the programs you manage and all their affiliates (or at least the high volume ones) and boom, you’ve cut CJ out of the picture, get to keep their fees and have seeded your fledgling network. A brilliant idea with only one problem - PJ needed CJ to stand by while they worked to steal that business. That’s what you call a hole in your business model… Was PJ really being a good partner to CJ? Did they really have their clients’ best interest at heart as they worked to migrate their business to the PJ network? The simple answer is no. PJ was interested in CJ’s piece of the pie and is now paying the price for over reaching. And as the old saying goes, hogs get slaughtered.”

Kris responds:

“Under no circumstances do I believe it was acceptable for CJ to cold call Pepperjam clients.

I’ve been told by enough people and I myself believe that this situation is CJ’s error, not Pepperjam’s.

I’m not sure how Pepperjam could be considered in the wrong for being more innovative than CJ.

I think most reasonable interpretations of the facts conclude that CJ abused their financial and decision making power as a publicly traded company to thwart competition.”

Elsewhere, Kerri Pollard of Commission Junction weighs in for Shawn Collins:

“We’re really disappointed. We thought we had a great partnership with Pepperjam so for them to go down this path and force us to make a decision is extremely unfortunate. I really wish it didn’t have to happen this way.”

Kris Jones responds:

“Kerri - I’m not sure what your statement is meant to imply because it lacks any truth based on the facts and CJ’s actions against Pepperjam and our clients. If your open-ended legalese given to you by your legal and PR team is meant to imply that Pepperjam forced Commission Junction to ambush Pepperjam clients, interfere with existing Pepperjam client contractual relations, and potentially break Antitrust Law, I’d like you to explain.”

Here’s my take on all this so far.

“This path” that Kerri speaks of seems to be one that was walked well before the beginning of this year, and became rocky when this established OPM service aggressively launched a competing network. I think aggressive is a fair term when describing Pepperjam’s marketing strategy.

On most days since they launched their own network, Pepperjam very publicly puts themselves in the same class or even better than the larger affiliate networks (CJ, Linkshare, Performics, and Shareasale). They and their supporters celebrate that they’ve innovated enough to make major waves in this large affiliate network space.

All of these large affiliate networks offer affiliate program management services. None of these large affiliate networks manage programs in the other large networks. If Pepperjam is this caliber of network, they have backed themselves into the situation that would be akin to Performics or Linkshare managing a program in the Commission Junction network, or vice versa. That notion is absurd to anyone who knows this space, and anathema to the networks themselves.

That is unless Pepperjam isn’t really a next generation network who intends to go head to head with the other networks for their client business, and therefore offers only what amounts to in-house tracking solutions or CPA network level functionality to round out their services. Many of those types of companies coexist peacefully in the world with the Networks and are probably nervously thinking, hey keep me out of this.

Again, I’m not taking sides. I’m not defending or condemning anyone’s actions. But since ethics and behavior is being called into question, and even resignations are being called for, I do find that more hard questions present themselves around how both companies have carried themselves, not only in the past week, but in the past few months when these wheels really started turning.

1. What did CJ do to communicate that they’re concerned with the road that Pepperjam has taken in the past few months?

   Pepperjam has already made clear what CJ’s behavior has been recently, that they’ve blind-sided Pepperjam with their actions in contacting their shared clients expressing that they must choose a management service. Given that CJ won’t likely engage here, I’ll take Kris on his word.

2. Is it wrong to identify that a relationship between companies has changed, and therefore, clients must make a decision on who they do business with because the interests of the former partners are now conflicting?
3. Did Pepperjam, being a strategic partner, before they launched a competing network contact CJ to address and assuage any concerns that they would somehow be able to successfully walk this line that has never before been walked by two major networks?
4. Was CJ blind-sided by the launch of a competing network by a strategic partner that has so many close ties to their own client base?
5. After the PJN launch in January, did Pepperjam, carry themselves in such a way that Commission Junction could be completely assured that this business that the two companies have formed and shared together over the years would not be jeopardized in any way? e.g. Has Pepperjam never approached a CJ client, managed or otherwise, to move to the Pepperjam network?
6. Did Pepperjam truly intend to keep all of their managed Commission Junction clients on that platform? Or is this simply the inevitable conclusion to this story, just much more suddenly than Pepperjam had planned?

To anyone who is inclined to discuss here thank you in advance. Please resist copying and pasting the same stuff that has been posted in comments in the other blogs. I’ve read it all and have linked to it all above. Also, I’m not a lawyer. Please spare the legal stuff, tort law, etc. I am in no position to discuss that, so let’s leave that for the lawyers. Finally, even though it’s irrelevant, since it’s been raised in the past, I am on the CJ Publisher Advisory Board. It doesn’t mean we’re blood brothers. It doesn’t even mean I have to like them.

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