From Peril To Public: How To Overcome Challenges And Get Acquired

Digital Media Solutions' acquisition of ClickDealer's assets shook up the marketing world at the beginning of March. It seemed unlikely for the deal to go through with ClickDealer's Ukrainian assets at risk and its business in Russia disappearing overnight, but the company still managed to finalize it despite the mounting challenges. How does a company go from incurring major losses that threaten its existence to a successful acquisition in one year? Let us look at ClickDealer's track record of dealing with challenges to find out.

Founding and Early Challenges

To get the complete picture, we must start from the beginning. ClickDealer was founded in 2012, and it was a small affiliate network focused mainly on the dating vertical, working from a single office in Ukraine. This constitutes the first challenge that the company has faced. For the uninitiated, affiliate marketing is a volatile industry with a lot of uncertainty. Verticals emerge and go under, compliance rules change on advertising platforms taking thousands of campaigns down suddenly, and new technologies quickly render obsolete the companies that fail to adapt.

ClickDealer had to quickly branch out to stabilize against the industry changes that could put the company out of business. Luckily, the company's strategy from the outset made it a much easier and more quickly attainable goal. Most CIS affiliate networks at the time didn't venture out to foreign markets, instead choosing to deal only with partners in the post-soviet space. ClickDealer had been aiming to go global from the start, hiring people with connections and expertise in the US, APAC, LATAM, and European markets. This strategy panned out perfectly for ClickDealer, as in 3 years, ClickDealer was working with AliExpress, Booking.com, Baidu, and other global companies. The affiliate network achieved its goal of developing new verticals and opened offices in the US, Canada, China, and the Netherlands.

Technological Barriers 

An affiliate network can't function without a tracking platform, and most developing networks go to software companies like TUNE and Everflow to use their platforms on a subscription basis because they have neither the development resources nor the server capacities required to create and run their own platforms. There are several costs to doing that besides the obvious cost of a subscription. With so many companies using the same servers, server priority becomes a problem during peak hours, and if any technical issues occur, the company using the service has no influence on their resolution and simply has to deal with the losses. Losses that are particularly dire in affiliate marketing because platform downtime means clicks not reaching their destination and not getting monetized. With every second of downtime, the affiliate network and all its partners are losing money. As the scale of the network's operations grows, so does the server load and the potential losses that downtime and server lag bring about.

ClickDealer hit that point in its growth in 2018 and was faced with the choice to keep using rented software or take a risk and commit resources to develop and run its own platform. The company chose the latter, deciding to take on the challenge of creating a product that could handle the millions of daily operations involved in thousands of affiliates setting up and optimizing their campaigns. Putting together an in-house team of developers to work on the platform was a forward-thinking move that would lead to ClickDealer developing new features that would further differentiate the network's services from similar market offerings. The new platform ran much quicker due to not having to contend with other affiliate networks for server space and marked the point at which ClickDealer's growth and technological capabilities would go hand in hand. The team working on the platform would later go on to develop ClickDealer's smartlinks, webview app builder, and many other tools and platform features for the company.

Uncontrollable Factors 

The fallout of the COVID-19 pandemic has affected every industry globally, and affiliate marketing is no exception. For ClickDealer, that meant the loss of the travel vertical, a rise in e-commerce, and a myriad of other problems most IT companies had to deal with at the time: remote work, restricted travel, health insurance, and every other issue laid out in about any corporate blog from 2020. The global event that affected ClickDealer much more severely than it did any of its competitors was the Russian invasion of Ukraine in February 2022. ClickDealer is a global company, but as mentioned previously, it originates from Ukraine, and two of its offices staffed with large teams, including senior and C-level executives, were suddenly in a warzone.

At that time, one of the major development vectors the company had been pursuing was increasing its Russian partner base by sponsoring industry events, working with local publications, and running campaigns promoting ClickDealer to Russian performance marketers. This was over four years in the making, and the company already committed considerable resources to increase its influence in the market. Overnight, ClickDealer lost all of its Russian assets. Unwilling to fund the Russian regime through business taxes, the network put out a statement about the invasion and cut ties with all of its partners in Russia.

With a large part of its staff spending hours daily in air shelters and a sizable chunk of its business lost to factors outside its influence, ClickDealer faced the most dire challenge in its history. In March 2022, the company opened an office in Warsaw to provide a workspace to those who decided to leave Ukraine, but most of the Ukrainian team stayed in their home country, working remotely.

As it has done so many times previously, the company adapted. With the diversity of the assets ClickDealer had developed over the decade it has been in the business, the team had several avenues they could take to course-correct closer to the US and European markets. In 2022, some of the other directions the company was investing in were e-commerce, smartlink development, pay-per-call, iGaming, and most prominently, lead generation verticals like home improvement and insurance.

Recommitting resources and shifting priorities to verticals where the company already had lots of experience and assets resulted in exceptional progress in a short amount of time. With exclusive e-commerce partnerships, in-house smartlink technologies, pay-per-call know-how, iGaming assets across 3 continents, and several home improvement products operating profitably, ClickDealer had a diverse and attractive value proposition for anyone looking to invest. The market recognized that, and the result is the acquisition of ClickDealer's assets by Digital Media Solutions for $40m.

Conclusion

After recounting ClickDealer's 11-year-long history, the recent acquisition makes a lot more sense. The affiliate network made it through several high-risk situations that have prepared it for delivering results under pressure. But what makes a company capable of dealing with such varied challenges from its inception without a decade's worth of experience?

Diversification and adaptability are the obvious answers. As an affiliate network should, ClickDealer has done well determining possible market trends, building up assets to capitalize on those that take off, and executing when the time comes. That is evidenced by the company striking gold in dating, mobile apps, mobile subscriptions, e-commerce, and other performance marketing verticals right at the point when they hit their peak in profitability. However, what was it that let the company plan, execute, and correct its course so effectively?

The major through line in ClickDealer's example is good teams: the team that built bridges with global partners in the early days of the company, the team that developed the platform and features for it, and the team achieving results despite the full-scale war in their country. So, to answer the question “how to turn around after a catastrophe and get acquired in less than a year,” — invest in people. Create a team that sticks together through any storm, and it will make it through.

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