In my previous article, I gave the background and history of Banners Broker. In this article I am going to do an analysis of Banners Broker using their description of who Banners Broker is, and what they do. But before I provide my analysis, I do want to point out that there are two main sources where this discussion of Banners Broker can be found. They are: www.realscam.com; and http://finchsells.com/2012/12/20/banners-broker-scam-update/. Now to my analysis:
Banners Broker hired a PR person, Terry Stern to address the business model of Banners Broker, and to answer questions about Banners Broker. Here is his explanation of how Banners Broker works, and I quote:
“BB buys ad space from ad networks with the understanding that they’re going to package that ad space up and resell it to their network of affiliates. These packages contain panels, each panel has a certain value and each has a specific time period it will take for that panel to mature, some as little as 2-3 weeks and some take 5-6 months or more. Each panel also requires a specific amount of traffic to mature. Each panel also has 2 values, what BB paid for it and what it’s charging the affiliate for it.
As BB sells the panels through their packages, they require traffic for these panels to generate revenue, which BB purchases in order to service the traffic needs of the panels. In return for purchasing the panels, BB pays a dividend to the affiliate once the panel matures, however, that panel is generating live revenue as the panel is running from the ad network. So BB is generating revenue from the sale of packages to affiliates, as well as from the ad network for serving ads. The ads appear on the ad space BB has purchased from the Broker in the blind network, as well as on publisher sites BB has attracted. Whether BB has 1 site, 100 sites or 100,000 sites in their network, they’ve already purchased ad space through their affiliation with the ad network, and that ad space rests on sites within the ad blind network. So no matter what, there’s advertising that will satisfy the panel needs. Since BB is paid every 2 weeks from the ad networks they do business with, and the panels mature at staggered intervals, BB is constantly serving ads and generating income. Now, it’s understood no business will pay on its products what it gets paid to sell them, so BB reduces the amount it’s paid by the ad networks for that advertising so it can afford to pay its affiliates and generate a profit.
Now since it takes traffic to generate ad revenue, BB purchases bulk traffic from the ad networks as well, which generate upwards of 3 Billion impressions per day. Again, since no company will sell a product for what it pays, it marks up the cost of the traffic to resell to the affiliate, the difference of course is profit for BB, and as BB owns the space and ads keep running, this revenue flows to BB. As it takes impressions to activate panels, and impressions for panels to mature, those impressions or traffic must be purchased up front. Now, an affiliate isn’t required to use all their traffic up front, but they must purchase it up front, like a variety store can’t buy individual cans of soda, it must buy cases. Since the purchased traffic represents a specific amount, and since each panel requires a different amount to activate, traffic purchases are constantly being made, and since BB only pays for what it uses, there’s always going to be a surplus, which represents profit for BB.
So, if we look at things together, BB generates revenue from the banners placed in the space it purchases, and through the amount of time it takes for the panels (which is a virtual representation of an ad space BB purchased in the blind ad network) to mature, it generates revenue from the sale of traffic that it takes to activate those panels, and since it only pays for the traffic it actually uses, that’s where the revenue BB generates comes from. Since it pays less to the affiliate than what it earns from the ads, and (to use an analogy) it pays on the cans of soda used not the cases bought, there’s a surplus of revenue that represents profit that it can now turn around and pay its affiliates with while maintaining profitable growth.
Any advertising generated either through the site or through affiliates is passed through to the ad networks, BB takes a commission on that sale, and passes 10% to the affiliate for bringing in the business. When it comes to publishers (people looking to monetize their websites with ad revenue), those sites are added to the BB internal or “choice” network, and leveraged with the ad blind network to get better pricing deals. The affiliate is paid 10% of the revenue generated by the ads revenue to the publisher with BB and the publisher splitting the balance.
This is how BB works in a nutshell. We’ve already established what the Blind Ad Network is, and it can be easily researched. It’s easily discovered that these companies all offer the ability for companies to “resell” their products (ads and traffic) to other resellers. It comes down to packaging really and how these initial “resellers” package what these networks provide to them to add enough value to resell others.”
Now that you have read the explanation of what the official representative of Banners Broker has stated is how Banners Broker works, let’s now analyze this industry in regard to Banners Broker.
Before I go into the detailed analysis, I do want to address the banner advertising business industry. The industry as a whole is shrinking at the rate of about 25% per year due to all the other types of advertising that are now available to an advertiser. This flies in the face of Banners Broker claiming their business is growing and will continue to grow in the years to come. It simply does not compute. You cannot have Banners Broker expanding in a shrinking market, especially when Banners Broker is insignificant player in this market in the first place. Simply put, advertisers are moving into the newer forms of advertising and abandoning the banner advertising market. In fact it is very possible the banner market will disappear within the next 2 years as a significant form of advertising. I am sure there will still be some banner advertising done, but not at the levels Banners Broker must have in order to survive in this market. So the question is: How can you have a business that is expanding in a market that is shrinking?
Now let’s look at each part of Banners Broker and see if it passes muster as a business model that is generating the amount of business and affiliate payments they claim. I am not going to address the ad-pub combo of Banners Broker mainly because it doesn’t exist. No-one has ever been able to purchase the publication aspect of Banners Broker business.
Banners Broker says:
“BB buys ad space from ad networks with the understanding that they’re going to package that ad space up and resell it to their network of affiliates. These packages contain panels, each panel has a certain value and each has a specific time period it will take for that panel to mature, some as little as 2-3 weeks and some take 5-6 months or more. Each panel also requires a specific amount of traffic to mature. Each panel also has 2 values, what BB paid for it and what it’s charging the affiliate for it.”
Banners Broker Panels: Banners Broker has different color panels, and each panel has a different cost and days to cycle. They are: Yellow – 1,000 banner impressions Cost $10; Purple – 3,000 banner impressions Cost $30; Blue – 9,000 banner impressions Cost $90; Green – 27,000 banner impressions Cost $270; Red – 81,000 banner impressions; Cost $810 and Black – 243,000 banner impressions Cost $2430.
Now that you have seen the cost structure of Banners Broker panels, let’s compare them to the real world of banner advertising. For example, you can purchase 6 Million global ad impressions from Feedjit for around $49, but the same impressions would cost you around $18,000 from Banners Broker. Feedjit is not the only company that provides the same number of banner impressions for about the same price, so Feedjit is not the only one in this price-range.
Next Banners Broker says, and I quote:
“As BB sells the panels through their packages, they require traffic for these panels to generate revenue, which BB purchases in order to service the traffic needs of the panels. In return for purchasing the panels, BB pays a dividend to the affiliate once the panel matures, however, that panel is generating live revenue as the panel is running from the ad network. So BB is generating revenue from the sale of packages to affiliates, as well as from the ad network for serving ads. The ads appear on the ad space BB has purchased from the Broker in the blind network, as well as on publisher sites BB has attracted. Whether BB has 1 site, 100 sites or 100,000 sites in their network, they’ve already purchased ad space through their affiliation with the ad network, and that ad space rests on sites within the ad blind network. So no matter what, there’s advertising that will satisfy the panel needs. Since BB is paid every 2 weeks from the ad networks they do business with, and the panels mature at staggered intervals, BB is constantly serving ads and generating income. Now, it’s understood no business will pay on its products what it gets paid to sell them, so BB reduces the amount it’s paid by the ad networks for that advertising so it can afford to pay its affiliates and generate a profit.”
Now let’s analyze the “blind network” that Banners Broker talks about above. One of the companies that is providing advertising for Banners Broker is a company called Choice Network. This “network” consists of five sites. Yes you read that right – five sites. But they were sites owned by Banners Broker. When questions were raised about the Choice Network, the answer was it was in Beta testing. Now stop and think about that for just a moment. Here is an advertising company that claims it is doing over $100 Million Dollars a year in advertising, and one of their networks is in Beta testing? Later Banners Broker said there were real advertisers on the Choice Network to prove Banners Broker was real. Well, in reviewing those ads, and yes there were ads from real companies, only they traced back to www.ox-d.bannersbroker.com where the server is owned by OpenX Technologies. OpenX is a powerful ad exchange that offers publishers the chance to sell their own inventory, or broker through the OpenX Market.
Another market is Clicksor. Clicksor is a reseller network to sell ads. Banners Broker said that Clicksor was one of their advertising platforms. Clicksor Reseller Network specifically states that it will only grant the third party access to its publishers, not its advertisers. So how would Clicksor do business with Banners Broker as a third party advertiser? But there is another problem with their claim they use Clicksor as an advertising platform, and it is this: In the latest 2011 data, Clicksor’s parent company Yesup Ecommerce Solutions Inc posted annual revenue of $17.5 Million dollars. And yet Banners Broker claims to have paid out over $100 Million dollars, by brokering through Clicksor.
Next Banners Broker says:
“Now since it takes traffic to generate ad revenue, BB purchases bulk traffic from the ad networks as well, which generate upwards of 3 Billion impressions per day. Again, since no company will sell a product for what it pays, it marks up the cost of the traffic to resell to the affiliate, the difference of course is profit for BB, and as BB owns the space and ads keep running, this revenue flows to BB. As it takes impressions to activate panels, and impressions for panels to mature, those impressions or traffic must be purchased up front. Now, an affiliate isn’t required to use all their traffic up front, but they must purchase it up front, like a variety store can’t buy individual cans of soda, it must buy cases. Since the purchased traffic represents a specific amount, and since each panel requires a different amount to activate, traffic purchases are constantly being made, and since BB only pays for what it uses, there’s always going to be a surplus, which represents profit for BB.
Banners Broker said that the ad networks generate up to 3 billion ad impressions per day, or up to 90 billion ad impressions per month. Clicksor provides about 5 billion ad impressions per month, and Tribal Fusion, which is the biggest company in this market, has a monthly capacity of 20 billion ad impressions per month. Now take into consideration how many affiliates are in Banners Broker, multiply that number by the number of ad impressions they have purchased, and immediately you have a problem with the number of ad impressions per month that Banners Broker needs compared to the whole market. Simply put, Banners Broker would need 100% of the capacity of Clicksor to supply the ad impressions needed by Banners Broker affiliates.
Terry Stern, as I mentioned, who is the PR man for Banners Broker agreed to answer questions put to him at the FinchSells Blog and also at RealScam. Well, let me just say he answered a few questions, but refused to or ducked the most serious questions put to him. You can read this interchange with Terry and Finch here: http://finchsells.com/2013/01/29/banners-broker-qa-with-terry-stern/ and at Real Scam here: http://www.realscam.com/f8/banners-broker-question-answers-1924/.
I think you will find both these Q&A sessions most interesting reading, and will shed more light on Banners Broker as to what it claims as to what it truly is to many of us a Ponzi. One of the major issues with Banners Broker from my perspective was when Banners Broker was launched, they declared it to be the first real straight line cycler doubler. A point that Terry Stern, nor anyone from Banners Broker wants to talk about or discuss. But another troubling issue was Banners Broker showing a stock photo of their CEO Chris Smith being white, and then when introduced publicly Chris Smith was black. This is another question that Banners Broker will not address as to why this was done.
Now we are told that Banners Broker is a Direct Sales Organization. The affiliates must now write blog posts in order for part of their panels to mature. No longer is it a “passive” program as it was advertised from its inception. They keep changing the conditions their affiliates must comply with almost as frequently as people earn frequent flier miles.
As of this writing, the Banners Broker website is offline due to maintenance and moving to new servers. Payment problems continue and are behind as they have been since late October of 2012. Banners Broker has had their MasterCard pulled by MasterCard. Many of the affiliates were pointing out that if Banners Broker had a MasterCard, this proved they were legitimate. Now the question can be raised if MasterCard pulled Banners Broker MasterCard, does this now mean they are not legitimate?
World Tours have been cancelled. The closure of the India office, and the ongoing legal problems have not been resolved as claimed by Banners Broker. The legal case is still moving forward. There is confusion if the new office Banners Broker announced would be opened in India is indeed open and operational. All their bank accounts are still frozen, so one has to wonder how they are operating legally. There have been reports on how Banners Broker is accepting new affiliates and paying their affiliates, but if true they are doing it illegally. One has to wonder with the current legal proceedings still ongoing why they would risk violating the law now.
There is no doubt the next 2-6 weeks are going to be pivotal for all the affiliates of Banners Broker as well as for the company. I will conclude by saying it is now just a matter of time before Banners Broker folds or is shut down by the authorities. There are rumors flying all over the place, which is normal when a website is taken down for an extended period of time. Especially when it is a IT-type company as Banners Broker operates as in their claim of advertising. If there system is down, how are they buying ad space for their affiliates?
I have already made my decision, and it was made a long time ago as to the legality of Banners Broker. But as for you: As the motto of Real Scam says, “Is it, or isn’t it? You decide.”
