Why Nutra Trials are crumbling in the US. Fake News, lawsuits, & the future of Trials (14)

I see that a lot of people are talking about the nutra trial space (trial skin, diet, muscle, anti aging, etc...). Since I have been running nutra for a while now, I wanted to make this post in order to give some clarity of what is going on in the industry and what direction we are going. I have spoken to many advertisers and networks who solely focus on nutra offers and gathered a lot of good info.

Some History:

I have been running Nutra trials for the last couple of years, I have run with some great networks, as well as directly with some of the biggest advertisers. Throughout the years there has always been some ups and downs with caps. However, recently most trial offers have been suffering, no caps, horrible processing, pretty much 80% of the trial space in US is down or working poorly.
Trial offers, due to their nature of rebilling, are considered to be high risk payments by banks & processing, therefore each offer needs to have several different MIDS (merchant IDs). Each mid can process a certain number of chargebacks or disputes before they are flagged and ultimately shut down by the banks. In the case of a MID closing down, an offer owner needs to find a new mid in order to continue to process payments. Usually the big advertisers have tens to hundredths of mids. Recently most of these mids are crumbling, hence the drop in caps and offers.

Fake news…

We’ve all seen them, the fake news landers that include a bunch of celebrities from Dr. oz to SharkTank, to Costco. Well, I’m sure most users running trials have seen them (or have run these angles). Obviously, these landers can get you in trouble. But if everyone is running them, what harm could they do?
I’m sure there are some media buyers who have receive cease and desist letters to stop running certain angles in the past, that’s a warning. There are pubs who receive these warnings and keep pushing hundredths if not thousands of leads per day using the same shady angle. In short, this is where the problem is.

Mastercard & Costco

In 2017 there was this angle for Nutra trial offers using “Costco”. Much like the fake news landers, these Costco landers were deceiving their users that “Costco” is giving away free trials to it’s members. I don’t dare to put an image up here, but I’m sure many of you have seen it or received a warning from your AM.
Well this angle went so out of hand that Costco ended up prosecuting Mastercard in a lawsuit. In my opinion this is the main cause of all the mids crumbling. When asked “who said trials are over?” a friend (& great advertiser) answered “Mastercard said trials are over”.
Thinking back, I remember receiving emails from many networks stating "Immediately stop all Costco angles, Advertisers will not pay......." this was around october/november 2017, perhaps before.

Moving on

My advice, and what I am personally pursuing: I strongly believe that international Nutra offers are worth it. First, the angles are relatively similar as to US landers. Second: less competition therefore payouts are competitive, Conversion rate is good, & traffic is cheaper. (Also, FB accounts run longer anywhere compared to US, but you already knew this)
Another suggestion (if running in US), which I am testing out and trying to scale: Move to Straight Sale, most nutra advertisers are moving to SS direction, and have a couple of offers up and running already. Benefits of running Straight Sale: 1. No need to worry about rebill rate. 2. Can be considered less “Blackhat” and might give you more opportunities running traffic.
If you are starting out, I suggest keeping away from US trials for now, I am sure they will pick back up, as they have been doing for the past couple of years.

I personally am very curious to see in what direction new angles will go for SS, I imagine there will be some very aggressive landers pushing Straight Sale. As for international trials, I believe the same type of landers will continue to crush.

NOTE: I have met and spoken to many advertisers in the last week claiming to have unlimited caps for trial offers in US.. In my opinion these advertisers don’t know what they are talking about or trying to deceive new pubs. Either way I will never trust someone who promises me “unlimited cap” in such a horrible market.


If anyone wants to pursue Nutra offers, I personally have had excellent experience with a couple networks:
Jumbleberry
Mobooka
I also work with some direct advertisers, PM me and I can intro you to some.

Anyway, I hope this gives some clarity to some users. If I am missing something, please feel free to comment it.
Thanks,
Anthony

Great post - thanks!

Re: the SS argument - I highly doubt that many pubs will be able to make this work. The sales cycle on SS products is much longer and much harder - many a trial conversion come from the extremely low friction point of a $4.95 S/H charge and count on a whimsical consumer imperative to say "This seems kind of cool, it's probably crap and it's the first time I've been exposed to this brand, but what the heck it's only a few bucks."

When trying to get that same consumer to commit to $50-100, it's a lot harder. Most companies pushing WH products need to leverage lootss of pixel data and targeting strategies in order to make it work at scale. What comes to mind is a retargeting drip: retarget ATCs/no purchase audience from the past 24 hours with 1 video, hit the same audience with a different video from days 2-5, then another from 5-10. This can't really happen at scale unless ADVs will be willing to implement all of their pubs pixels on the ATC page, not to mention with the aggressive angles needed to have a shot at this, accounts won't last long enough to get sufficient data anyways.

Now that's just my conjecture, and I haven't tested SS yet, so take it with a grain of salt. I spoke with a couple AMs that say their guys have been running SS, so they must be making it work, but I just don't see most pubs as having the media buying chops to transition successfully. If anyone's making US nutra SS work I'd love to talk.

Do you think MC will relent on the trial MIDs? Any idea what the way forward is? Am running a US trial now (until it gets capped later today) where the ADV is using intl processing, but it's new for them so they have no idea how rebills will back out. Perhaps this is where the space can find some room to breath..

Thanks for sharing your insights optifyme, much appreciated

very insight view indeed, we are in a very embarrassing position that has no trail to run and losing money when trying to turn to SS. and if you have some advertiser still have some trails caps(never except "unlimited”， LOL), pls be so kind to let PM or sky pe me, my ID is: tianyah.

Great post, fully agree. I think trials will stay though, there is no legal way to get rid of them as long as Spotify gets to do it so do other operators. What will be more difficult is compliance and a lot of it is on the affiliate side or at least will be. SS is the the future of nutra and so is brand building.

Read a really good overview of the background by Nate Lind in the supergotdamnaffiliates group, posting below in its entirity

..


I’ve gotten a lot of calls and messages in the last two weeks. I've never seen anything quite like this. Individuals in this situation, on different sides of the situation, have told me their perspectives, and I will share those and my own.

The last few weeks have brought a huge sweep of negative option and trial continuity merchant accounts. That is only the beginning. Now those merchants are being listed on the match file.

My sources do not want to be named or cited which puts me in a strange position to say anything because I can’t identify them.

I see a lot of conversations and spreading false information and rumors. I'm also watching some very naive thinking being expressed online as well. I’ve hesitated on commenting until now because this situation is still developing. I will comment on what I believe to be fact and what is speculation.

This is my opinion of the situation, the cause, and the near and long-term effects. I’ll also share my thoughts on the long-term strategies various parties involved may want to consider to “weather the storm.”

Where this all began:
Sources nearest to the Card Brand (I.e. Visa/MasterCard/Discover/American Express) and Bank (i.e. Woodforest, Merrick, Wells Fargo, Chase, etc) audits from the last couple weeks think that this is fallout from the Canadian Skin Cream Scams from last year (http://www.cbc.ca/…/business/marketp...trials-…).

I'm told that following the outrage in Canada, Canadian media outlets approached a major Card Brand demanding action. I can’t verify that so this may be a rumor.

There have also been continued attacks from other outspoken and angry media outlets which have risen the profile of the risk-free trial industry to infamy. There's even been a South Park Episode about it.

A famous US TV Doctor and Celebrity Shark have exposed and hunted the supplement and risk-free trial industry. (http://www.doctoroz.com/…/big-bust-g...fake-ad…)

This episode featured Christy Brinkley. She has her own line of skin cream products that she sells on a risk-free trial. Those products have been investigated by the FTC but found to be following proper disclosures, advertising, and business practices.

Others speculate that the FTC is driving this.

The email I sent out a few weeks ago stating that 3500 mids would be closed is wrong. Much of my thoughts I don't share publicly anymore. If you want to hear my thoughts, so to adsum.net and signup for my emails.

The number in my email was off by TENS of thousands. After sending that email, a source told me a major Card Brand said in a public forum it would see to it that 35,000 mids that would be terminated. This is not confirmed by a second source.

A major Card Brand is visiting banks who have large portfolios of mcc code 5968 (Direct marketing Subscription - Continuity/subscription merchant) and auditing those bank's portfolios. This is the beginning and the “shock and awe” approach has wide implications and is only going to get worse.

There are a couple of red flags that are being investigated:
1) Searching for straw signers. If there are common addresses, websites, phone numbers or other identifying information that could link multiple merchants they are being closed. Unfortunately, this is also closing accounts for companies that are not straw signers. One example is a multitude of companies sharing mailing addresses nearby a chargeback representment company to make it easier for that chargeback company to do their job. And since the chargeback technology (or lack thereof) used by most acquiring banks is still paper and fax, sorting and reviewing those mailed Chargebacks is still difficult.

2) Load balancing. Merchants sharing a common customer to avoid chargeback thresholds are being linked and closed. This has spread to some software providers whose technology could be used to allow this. Those providers are being required to register as third party providers and working with the card brands. Parts of their software that could be used to load balancing may have to be removed. This is a little confusing because very large payment gateways have load balancing technology and load balancing is used by some of the largest merchants in the world to route transactions by geography or for the most beneficial currency exchange rates, or intelligent bin routing and other reasons.
3) One click upsells. Merchants sharing card data across companies are being linked and closed.

As of this writing, thousands of accounts have been closed and now those merchants are being put on the match file. This is a “scarlet letter” for that legal entity and individual behind the entity. This will result in other banks that provide processing to the legal entity or individual to close the account. This is being done without notice or time for the Merchant to find an alternative. The loss of revenue is disastrous to the Merchant, his affiliates, and his vendors.

Individuals that have asked not to be named within some of the ISOs involved have vehemently said that they are advocating for their merchants and are *not* seeking these closures and are *not* in support of the merchants being placed on the TMF list. The force behind that is Mastercard. Merrick may be pointing the finger to avoid responsibility as well. The bank’s position in this is unknown and I have no contacts to confirm or deny their motivations so that part is speculation. Since Priority Payments is moving from Merrick to Citizens Bank at the end of the month, there is some concern that Merrick (who is losing all of this business to a competitor bank) is not incentivized to care, fight back or take action in defense of their merchants.

Many are saying that certain CRM’s are getting shut down or that they are under investigation by the FTC. This is not true. The CRMs are under no jurisdiction to respond to or agree to demands by a major Card Brand but obviously want to be on the “good side” of the card brand and are working with a major Card Brand for a long-term solution.

Short-term effects:

For advertisers/merchants:
New Trial continuity Merchant processing is all but stopped with most of the major banks on hold until the fallout from these audits is over. Some people think this will shake out in a few weeks. No way. MasterCard will likely issue new regulations that must be followed. ISO's will have to adapt their risk and underwriting to comply. Merchants will have to comply. The hundreds or thousands who were TMF'ed are out of the game for 4-5 years. This may take months to sort out.

Merchants caught in this situation, whether complicit, ignorant or malicious, it matters not. Beware expensive “legacy” billing solutions. Avoid utilizing credit card processing options that are unaware of the situation. MasterCard will follow the transactions from bank to bank and keep shutting down options.

What can you do? I sound like a broken record, I've been saying it for a while now: You need to pivot. Ecommerce and white hat continuity are not just a novel idea, they are the ONLY idea. Use this disrupted market to launch products and funnels that focus on providing products at a good value to a customer base that wants it.

Now that this disruption has happened, there is still a flood of available affiliate and paid media traffic. Copy cat advertisers are in deep shit. Innovation is what's needed now. Investigate transparent billing models (we have a mastermind next month about this exact topic). You can learn more at http://thelegends.io or message me.

For affiliates: When the cash shuts off, so does “cap”. Advertisers cannot pay for what they cannot process. Be prepared for months of lost cap and look for new ways to promote sales to the products you have created angles for but disclose the true price of the products. Launch your own product. You can learn how over at http://www.continuityu.com or message me.

If you run traffic, don’t pimp out products using fake celebrity endorsements. Be willing to accept lower conversions for longer term stability.

For the rest of the ecosystem: Diversify your client base with brands and companies that aren’t risk-free trial based. If you are looking to diversify into the white hat universe but don't know what or how to do that, message me, I have been thinking about this for over a year. I have some ideas.

Predictions: This is going to hurt a lot of businesses. When the money all shuts off at the top everyone loses. This industry is symbiotic. It's also cutthroat.

Advertisers who can’t bill their customers and ship products cannot pay the rest of the ecosystem. Advertisers that have pivoted or have a plan to pivot will survive.

Straight sale, straight continuity, ecommerce and longevity focused subscription box plans are the smart move.

Perry Belcher and I have been digging into the differences between the risk-free trial funnels and the funnels he’s used to build continuity based product companies on one mid. There is no concern about Chargebacks and the card brands coming after you. If that’s something that appeals to you, message me.

Banks cannot go around and "print mids" the banks under scrutiny now all had huuuuge exposure!

Originally Posted by david2772

Great post - thanks!

Re: the SS argument - I highly doubt that many pubs will be able to make this work. The sales cycle on SS products is much longer and much harder - many a trial conversion come from the extremely low friction point of a $4.95 S/H charge and count on a whimsical consumer imperative to say "This seems kind of cool, it's probably crap and it's the first time I've been exposed to this brand, but what the heck it's only a few bucks."

When trying to get that same consumer to commit to $50-100, it's a lot harder. Most companies pushing WH products need to leverage lootss of pixel data and targeting strategies in order to make it work at scale. What comes to mind is a retargeting drip: retarget ATCs/no purchase audience from the past 24 hours with 1 video, hit the same audience with a different video from days 2-5, then another from 5-10. This can't really happen at scale unless ADVs will be willing to implement all of their pubs pixels on the ATC page, not to mention with the aggressive angles needed to have a shot at this, accounts won't last long enough to get sufficient data anyways.

Now that's just my conjecture, and I haven't tested SS yet, so take it with a grain of salt. I spoke with a couple AMs that say their guys have been running SS, so they must be making it work, but I just don't see most pubs as having the media buying chops to transition successfully. If anyone's making US nutra SS work I'd love to talk.

Do you think MC will relent on the trial MIDs? Any idea what the way forward is? Am running a US trial now (until it gets capped later today) where the ADV is using intl processing, but it's new for them so they have no idea how rebills will back out. Perhaps this is where the space can find some room to breath..

Originally Posted by matuloo

Thanks for sharing your insights optifyme, much appreciated

Originally Posted by tianyah2

very insight view indeed, we are in a very embarrassing position that has no trail to run and losing money when trying to turn to SS. and if you have some advertiser still have some trails caps(never except "unlimited”， LOL), pls be so kind to let PM or sky pe me, my ID is: tianyah.

Originally Posted by robert-e

Great post, fully agree. I think trials will stay though, there is no legal way to get rid of them as long as Spotify gets to do it so do other operators. What will be more difficult is compliance and a lot of it is on the affiliate side or at least will be. SS is the the future of nutra and so is brand building.

Thanks so much Anthony for posting this like you said you would - and so soon too!

As promised when we were chatting at the San Diego meetup, this is going straight to our weekly newsletter which gets sent out to current and past subscribers, as well as posted to our blog:

https://stmforum.com/blog/

Thanks again!



Amy

Originally Posted by nickpeplow

Read a really good overview of the background by Nate Lind in the supergotdamnaffiliates group, posting below in its entirity

..


I’ve gotten a lot of calls and messages in the last two weeks. I've never seen anything quite like this. Individuals in this situation, on different sides of the situation, have told me their perspectives, and I will share those and my own.

The last few weeks have brought a huge sweep of negative option and trial continuity merchant accounts. That is only the beginning. Now those merchants are being listed on the match file.

My sources do not want to be named or cited which puts me in a strange position to say anything because I can’t identify them.

I see a lot of conversations and spreading false information and rumors. I'm also watching some very naive thinking being expressed online as well. I’ve hesitated on commenting until now because this situation is still developing. I will comment on what I believe to be fact and what is speculation.

This is my opinion of the situation, the cause, and the near and long-term effects. I’ll also share my thoughts on the long-term strategies various parties involved may want to consider to “weather the storm.”

Where this all began:
Sources nearest to the Card Brand (I.e. Visa/MasterCard/Discover/American Express) and Bank (i.e. Woodforest, Merrick, Wells Fargo, Chase, etc) audits from the last couple weeks think that this is fallout from the Canadian Skin Cream Scams from last year (http://www.cbc.ca/…/business/marketp...trials-…).

I'm told that following the outrage in Canada, Canadian media outlets approached a major Card Brand demanding action. I can’t verify that so this may be a rumor.

There have also been continued attacks from other outspoken and angry media outlets which have risen the profile of the risk-free trial industry to infamy. There's even been a South Park Episode about it.

A famous US TV Doctor and Celebrity Shark have exposed and hunted the supplement and risk-free trial industry. (http://www.doctoroz.com/…/big-bust-g...fake-ad…)

This episode featured Christy Brinkley. She has her own line of skin cream products that she sells on a risk-free trial. Those products have been investigated by the FTC but found to be following proper disclosures, advertising, and business practices.

Others speculate that the FTC is driving this.

The email I sent out a few weeks ago stating that 3500 mids would be closed is wrong. Much of my thoughts I don't share publicly anymore. If you want to hear my thoughts, so to adsum.net and signup for my emails.

The number in my email was off by TENS of thousands. After sending that email, a source told me a major Card Brand said in a public forum it would see to it that 35,000 mids that would be terminated. This is not confirmed by a second source.

A major Card Brand is visiting banks who have large portfolios of mcc code 5968 (Direct marketing Subscription - Continuity/subscription merchant) and auditing those bank's portfolios. This is the beginning and the “shock and awe” approach has wide implications and is only going to get worse.

There are a couple of red flags that are being investigated:
1) Searching for straw signers. If there are common addresses, websites, phone numbers or other identifying information that could link multiple merchants they are being closed. Unfortunately, this is also closing accounts for companies that are not straw signers. One example is a multitude of companies sharing mailing addresses nearby a chargeback representment company to make it easier for that chargeback company to do their job. And since the chargeback technology (or lack thereof) used by most acquiring banks is still paper and fax, sorting and reviewing those mailed Chargebacks is still difficult.

2) Load balancing. Merchants sharing a common customer to avoid chargeback thresholds are being linked and closed. This has spread to some software providers whose technology could be used to allow this. Those providers are being required to register as third party providers and working with the card brands. Parts of their software that could be used to load balancing may have to be removed. This is a little confusing because very large payment gateways have load balancing technology and load balancing is used by some of the largest merchants in the world to route transactions by geography or for the most beneficial currency exchange rates, or intelligent bin routing and other reasons.
3) One click upsells. Merchants sharing card data across companies are being linked and closed.

As of this writing, thousands of accounts have been closed and now those merchants are being put on the match file. This is a “scarlet letter” for that legal entity and individual behind the entity. This will result in other banks that provide processing to the legal entity or individual to close the account. This is being done without notice or time for the Merchant to find an alternative. The loss of revenue is disastrous to the Merchant, his affiliates, and his vendors.

Individuals that have asked not to be named within some of the ISOs involved have vehemently said that they are advocating for their merchants and are *not* seeking these closures and are *not* in support of the merchants being placed on the TMF list. The force behind that is Mastercard. Merrick may be pointing the finger to avoid responsibility as well. The bank’s position in this is unknown and I have no contacts to confirm or deny their motivations so that part is speculation. Since Priority Payments is moving from Merrick to Citizens Bank at the end of the month, there is some concern that Merrick (who is losing all of this business to a competitor bank) is not incentivized to care, fight back or take action in defense of their merchants.

Many are saying that certain CRM’s are getting shut down or that they are under investigation by the FTC. This is not true. The CRMs are under no jurisdiction to respond to or agree to demands by a major Card Brand but obviously want to be on the “good side” of the card brand and are working with a major Card Brand for a long-term solution.

Short-term effects:

For advertisers/merchants:
New Trial continuity Merchant processing is all but stopped with most of the major banks on hold until the fallout from these audits is over. Some people think this will shake out in a few weeks. No way. MasterCard will likely issue new regulations that must be followed. ISO's will have to adapt their risk and underwriting to comply. Merchants will have to comply. The hundreds or thousands who were TMF'ed are out of the game for 4-5 years. This may take months to sort out.

Merchants caught in this situation, whether complicit, ignorant or malicious, it matters not. Beware expensive “legacy” billing solutions. Avoid utilizing credit card processing options that are unaware of the situation. MasterCard will follow the transactions from bank to bank and keep shutting down options.

What can you do? I sound like a broken record, I've been saying it for a while now: You need to pivot. Ecommerce and white hat continuity are not just a novel idea, they are the ONLY idea. Use this disrupted market to launch products and funnels that focus on providing products at a good value to a customer base that wants it.

Now that this disruption has happened, there is still a flood of available affiliate and paid media traffic. Copy cat advertisers are in deep shit. Innovation is what's needed now. Investigate transparent billing models (we have a mastermind next month about this exact topic). You can learn more at http://thelegends.io or message me.

For affiliates: When the cash shuts off, so does “cap”. Advertisers cannot pay for what they cannot process. Be prepared for months of lost cap and look for new ways to promote sales to the products you have created angles for but disclose the true price of the products. Launch your own product. You can learn how over at http://www.continuityu.com or message me.

If you run traffic, don’t pimp out products using fake celebrity endorsements. Be willing to accept lower conversions for longer term stability.

For the rest of the ecosystem: Diversify your client base with brands and companies that aren’t risk-free trial based. If you are looking to diversify into the white hat universe but don't know what or how to do that, message me, I have been thinking about this for over a year. I have some ideas.

Predictions: This is going to hurt a lot of businesses. When the money all shuts off at the top everyone loses. This industry is symbiotic. It's also cutthroat.

Advertisers who can’t bill their customers and ship products cannot pay the rest of the ecosystem. Advertisers that have pivoted or have a plan to pivot will survive.

Straight sale, straight continuity, ecommerce and longevity focused subscription box plans are the smart move.

Perry Belcher and I have been digging into the differences between the risk-free trial funnels and the funnels he’s used to build continuity based product companies on one mid. There is no concern about Chargebacks and the card brands coming after you. If that’s something that appeals to you, message me.

Originally Posted by vortex

Thanks so much Anthony for posting this like you said you would - and so soon too!

As promised when we were chatting at the San Diego meetup, this is going straight to our weekly newsletter which gets sent out to current and past subscribers, as well as posted to our blog:

https://stmforum.com/blog/

Thanks again!



Amy

Compliance from all sides is key to trials. Pubs can't run shady angles, and advertisers need to clearly spell out terms as well as requiring customers to specifically want to take the upsell. The days of hidden and forced negative option upsells are over if an advertiser wants to keep their mids.

From an advertisers perspective, it's nice to see that compliance is now a major issue.