Affiliate networks and advertisers caught up in collapse of marketing services company

Small web publishers, advertising companies, Telstra and Neverfail Springwater are among the companies caught up in the collapse of Sydney-based affiliate marketing services business Affiliate Marketing Solutions.

The company, run by Christian Knight and Andrew Kilday, managed web-based affiliate marketing programs for a range of big-name clients, including Quickflix, CareerOne and RSVP. But it collapsed into administration on August 31.

While the level of debt owed is small by insolvency industry standards – Vouris told SmartCompany that AMS has debts of $500,000, versus assets of about $200,000 – the list of creditors includes some big names.

Tesltra (owed just $240.36) is the biggest name on the list, while other well-known creditors include Neverfail Springwater (owed $189.10), Veda Advantage (owed $16,984), Tempest Media (owed $6,681) and Shop-A-Docket (owed $3,388).

Two of the largest creditors are King (owed almost $75,000) and Kindlay (owed almost $30,000).

However, the collapse is being felt most keenly among the affiliate networks and small web publishers who earn money through deals set up by AMS.

Craig Seitam, founder of CompetitionsGuide.com.au, says he was one of many website owners to receive correspondence last week from the administrators saying commissions owed by AMS would not be paid as a result of the collapse.

He says he is owed a few hundred dollars from a Quickflix promotion run by AMS in July and August.

“The only saving grace is that because Quickflix has not traditionally been a high performing campaign, I didn’t ramp it, so it’s only cost me a few hundred dollars,” Seitam says.

However, Seitam says there are number of website owners and affiliate network companies that would have taken a hit from the collapse of AMS.

One of these is Viva 9, which owns the affiliate network Commission Monster. The administrators’ first report to creditors shows the company is owed $38,743 by AMS, making it the company’s third largest creditor.

A spokesperson for Viva 9 said the collapse would have no long-term affect on their buisness.

Quickflix chief Stephen Langsford told SmartCompany that his company is not a creditor of AMS and the collapse has not had an impact on the business.

“Certainly AMS was one of the affiliate network providers for us and it was a bit unfortunate to see that they went under, but it really hasn’t affected our business,” he says.

“It’s a sign of the flexibility and nimbleness of the web – one player goes down another spring up.”

Administrator John Vouris told SmartCompany that it is too early to say what sort of return creditors can expect to receive.

He says the company’s directors attended the first meeting of creditors held in Sydney on September 10, and believes they may consider rescuing the company through a deed of company arrangement.

“That’s the premise of appointing an administrator. If there was nothing of that ilk the recommendation will be just to liquate it,” Vouris says.

“Whether they do that and whether they can, that’s another thing.”

Vouris assessment of the reasons for the company’s collapse is blunt.

“Bad management is to blame. It may have been that costs overran income, but it really points to bad management.”