Continued from Part I

Part Two: 2003 to 2006: Making a fortune, losing a fortune. Walking away. Forced back.

So where were we? Oh yeah, Adwords came along, and totally changed the game for me, and a lot of other affiliates. We were making a good living before, but once Adwords hit these shores, the game suddenly became easy, and almost overnight a decent living became £10,000 a month profit, and showed no signs of stopping there. The only question was how much better could it get? With the ease with which money could be made in PPC, I soon lost interest in running a freebie site, and took on Jason Brockman, my very first member of staff in April 2003 (he’s still here 7 years later and is now a director of the company) to look after NFS whilst I concentrated on the PPC. A techie then followed in the summer of 2003 to develop and build more sites.

This three-person setup worked a total treat for around a year. The PPC was going great guns, and I’d done particularly well in the gambling sector, using Adwords to bring in large numbers of punters new to the Internet who would need an online bookie account. In April 2004, I attended the very first buy.at speakeasy, which was being held on Grand National day. Unbelievably (this was pre-iphone days!) I didn’t check my stats until I got back to Devon on the Sunday night, and couldn’t believe my eyes when I did: I’d made £13,000 profit in one day. Thirteen Grand. On a Saturday. Without even being at my desk! That’s as much as I’d have earned in a whole YEAR working at the Day Job. I have the Midas touch!

Of course, looking back I didn’t have the Midas touch at all – I was just lucky to be in the right place at the right time. But no-one told me that at the time, and so I made some rather grand plans for huge expansion, taking on not one, but two offices, and from employing 2 people in May 2004, I’d employed 12 people within 6 months (not to mention another 4/5 agency staff that we used on a fairly regular basis. Kitting out the offices, paying solicitors fees etc set us back something like £20,000, and the wages we’d committed to would come to around £15,000 a month. “Not a problem”, thought ‘Mr. Midas Touch’, by this point the PPC was making nearly £25,000 a month profit, and we had a cash reserve of nearly £100,000 in the bank.

And then came Google’s bombshell.

With immediate effect, they were banning ALL PPC for gambling terms and websites. The source of huge amounts of dirt cheap, highly-targeted traffic came to an abrupt end, and along with it went my profit margins.. However rather than abandon the expansion project, it became even more important: As the bookies pay lifetime revenue share, I still had good money coming in from the signups I’d already made, so all I had to do was replace the source of new revenue, whilst the existing revenue paid for the expansion. I moved into retail PPC (or brand bidding to give it its more popular term!), and sure enough made good money (albeit nowhere near as good as the gambling PPC). Onwards and upwards!

Except the expansion wasn’t working. I soon found that I hated being responsible for two offices. I hated spending time there, and hated dealing with staff issues. I seemed to spend all my time there dealing with one problem or another, and neglected the PPC that was paying the bills. Despite having 5 times as many staff as a year earlier, we were now making less money. From making £25k a month profit in April 2004, we were losing £10k a month by October 2004. Suddenly ‘Mr. Midas Touch’ had become ‘Mr. Everything-he-touches-turns-to-sh*t’ almost overnight. A few staff members left of their own accord, a few were pushed out, and nobody enjoyed working there, least of all me. I wasn’t too far from “nervous-breakdown territory”.

I’d decided by Christmas 2004 that I wanted out. If I could have, I’d have shut the door there and then and walked away. But I was now responsible for the livelihoods of around 10 people, and so instead made a plan that would allow the company to carry on without me, whilst still giving me a salary to pay the bills. Over the course of the next 8 months, we merged the offices and allowed the staff numbers to reduce naturally (people were keen to leave anyway), and I focused almost entirely on increasing the companies income. I therefore launched a cutting edge (cough!) shopping directory that is actually still going today, and still makes a fair bit of money, and spent months populating it. We launched “Big Idea Management” as we spotted a gap in the market for an affiliate agency that looked after the small to medium guys – Everyone else was fighting over the big brands, so we targeted everyone else. This was championed and spearheaded by our head of Business Development (I think that was his title at the time.. it changed a few times!) Mark Russell, who managed to bring in some network experience in the very talented Bruce Clayton who had worked at dgm, and who agreed to work for next to nothing.

Summer 2005 arrived, and as agreed, I stepped back from the company, leaving it in the capable hands of Mark and Jason. Things were already looking a lot better than they had done 8 months earlier, and whilst the cash reserves had long since gone, we did poke our head out over the overdraft a couple of times a month, and with the future plans, all was going to be rosy. Except it wasn’t. There were still issues with staff not pulling their weight, the income from PPC continued to drop, Google dropped a few of our sites out of the index (don’t cry too hard for us – they were crappy spammy sites that deserved to be kicked!), and Big Idea Management was taking a while to start showing profit. The cash was running out, and the fact that I was still taking a salary (I still had a HUGE mortgage to pay, taken out at the height of ‘Mr Midas Touch’s reign) was a contentious issue at every board meeting.

Things eventually came to a head around a year after I’d originally stepped back, when it became clear that there wasn’t any money to pay everyones wages. So everyone got paid but me. Which I could swallow for one month, but beyond that, I was going to run the risk of losing my house if I didn’t get any wages (I was building up another business at this point, but it was no-where near at the level of being able to draw a wage from), and so I made the hardest (and most selfish) decision I’ve ever had to make. I wasn’t prepared to lose my house so that everyone else could have a job, so I returned to Big Idea Media, closed the remaining office and made half the remaining staff redundant, including Mark who I did not want to lose, but who I could no longer afford to keep.

Big Idea Management was the most cash-hungry area of the business, and so it had to go. Mark asked if he could take the existing Big Idea Management clients with him if he set up on his own, and we agreed that he could do that, after all he had won the contracts, and we were unlikely to be in a position to fulfill them. Mark then teamed up with Matt to take on Existem Affiliate Management, and they’ve not stopped since, winning every award under the sun and attracting investment from the buy.at dream team. Talk about the one that got away!

Initially, my concern was keeping the company in business, however before long I’d embark on the process of rebuilding a more sustainable affiliate business from the ground up.

Coming up in Part Three: “Knock it down and start again”

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