Why are CPA Networks Going out of Business?

With last weeks announcement that COPEAC, one of the first CPA networks in existence, was shutting down, people started talking a lot more about the issues in the industry. We received dozens of emails and comments asking why CPA Networks are shutting down – several affiliates mentioned that they have now more than once had a CPA Network shut down, owing them thousands of dollars. One person wrote on WarriorForum that they were now owed from three networks, including COPEAC, EliteClicks Media and another network I never heard of. All of them shut down suddenly, owing them money.

People have been asking me now what networks they can trust, especially when a large company like COPEAC goes out of business. What should they do? It’s hard to say, but perhaps there are a few reasons that CPA Networks go out of business and things you can look for:

1)   Not a real company. There are more than a few CPA networks being run, that don’t actually exist in reality outside of a website. What happens is that some guy registers with HasOffers, sets up a  “network” and starts paying out via his paypal account.  There are even reports of some networks being run out of cheap slum apartments.Do a little research on the company, find if it’s even “real.”

2)   No management experience. On top of the above, just because you can register a corporation and set up a website, doesn’t mean you can make a network. A lot of affiliates after they start making money, think they can create a real company, get offers, bill people, pay out people. Running a company that does more than a few dollars requires experience, training and more importantly, smarts.

3)   Poor Cash Planning. Advertisers pay late, period. It’s a constant in our industry, and if you are an affiliate, you may not know that many networks are paying you before they get paid. So many networks start up, have a kick-ass, one-hit wonder offer, bill tons of money to the advertiser and then have to wait months to get paid. Since they started from scratch, have no backing, they can’t pay their affiliates, their server bills, their rent, their telephone and so on.

4)   Only Brokering Offers. This doesn’t work. Taking offers from another network and trying to push it to affiliates at a cheaper price is a poor model. It generally mean the network doesn’t know what is really going on, and when something goes wrong, they have no way to address it. In fact, there are more than a few networks out there that are jumping from one network to another, trying to get offers after being kicked off of all the other networks. Some even hire people out of china to try to cheat networks to get their offers  .

5)   Wrong Priorities. If your network owner just started his company, and all you see is photos of him partying and hanging out with strippers, that is a good way to know he is going to go out of business. When a company starts, that is when you stop bad habits and get to focusing on business. Most companies go out of business within the first 12 months, so if someone is taking all the money they are making and wasting it, not investing into their company, they are idiots. Next time you see a photo from the owner of a new CPA Network, with his new luxury car, bragging about how much he spent on his trip,how much he spent on champagne, realize that is probably coming out of your future commissions.

6)   Lack of Ethics. This goes back to many of the points before. Frankly, making money at all cost shouldn’t be the goal. Tons of companies in the industry have gone out of business after being sued to oblivion by enforcement agencies and through class-action lawsuits. All those Acai floggers, the networks that supported them are facing severe financial penalties and in some cases, criminal charges for fraud.


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Pesach Lattin

Pesach "Pace" Lattin is one of the top experts in interactive advertising, affiliate marketing. Pace Lattin is known for his dedication to ethics in marketing, and focus on compliance and fraud in the industry, and has written numerous articles for publications from MediaPost, ClickZ, ADOTAS and his own blogs.

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  1. I figured it must be something because a lot have disappeared actually elite click media owed us money when they shit down a week after affiliate summit last year.

    As for parties…they rented a mansion and then went under.

    You called it perfectly. Damn you’re right on.

  2. Btw…what plugins is this that turns comments certain words into links? That’s pretty cool, so is the subscribe to our newsletter checkbox. Like it

  3. What the hell is with that image?? NSFW and unprofessional to have that on my screen with a client at the office.

    1. I was thinking the same thing. Really a low-life thing to put on here. Also would like to add the lowly choice of words I read here.

  4. Hi Pace,

    Great blog post. Been enjoying Performinsider more and more the past few months now. I personally own my own network ‘www.NAMoffers.com’ which started back in Nov 2010 and I FINALLY starting to have more free time to read blog post like yours. It’s been a crazy year with 10-12 hour work days.

    Anyway just wanted to say thumps up for taking this subject up. You are spot on and super refreshing to read..:)

  5. This CPA networks are very profitable at a moment but many closes over the time.Also there are many offers which trick peoples if they not read carefully the “terms of use”…because involve some hidden costs,unknown for many. And acai,koji ,etc are really a joke…(a good one)

  6. Some networks who claim high payouts actually are not real claims. They will give you higher paid offers maybe even higher than any other network but the bottom line is that they will scrub the heck out of your conversions cos they want to make their money back.

    In some cases they will get $2 offer and want to pay their pubs $3 how is that possible? This is mostly what is going on these days and it’s been going on a long time!

  7. Greed and ineptitude is killing them. I’ve been a vocal opponent of a lot of major networks because they prey on newbie affiliate marketers and newbie advertisers alike. They nickle and dime advertisers to death, then love to red pen affiliate commissions.

    Most have no real concept of running a business or about affiliate marketing in general. They hire their buddies or some lazy eye candy and milk it while they can, then close their doors and take off with the money (if they’ve even managed to make/save any).

    Great article and something newbie publishers and advertisers should be aware of (us veterans too).

  8. I think some companies mean well, they really just have a poor business plan. I’ve noticed with some new companies they start out of the gate with really nice payouts, but then bigger blogs start using them with more visitors and then the payouts begin to decrease.

What's your opinion?