According to his own statements, Alexander Bachmann is now turning over 180 million euros with his Admitad project
As a 17-year-old founder, he led the largest layered advertising network in Germany years ago. When business went haywire because fewer and fewer publishers were offering pop-ups ("layers"), Alexander Bachmann founded Admitad, an affiliate network. It is now primarily conquering the Russian market. Although the company has its official headquarters in Heilbronn, it does almost all of its business in Russia and India. We trace the history of Bachmann's projects and clarify whether his company really has a turnover of 180 million euros this year.
When OMR founder Philipp tells us about his chat with online marketing veteran Andre Alpar and sends the link to an article by US blogger Jeff Bullas, a few sirens go off right away. The sponsored post is about the German Alexander Bachmann, who is said to have built a company with a turnover of 100 million from an initial investment of less than 30 US dollars. We always associated the name with the layer advertising business BinLayer, which had to file for bankruptcy a few years ago. So we went in search of clues and talked to Bachmann about his new project Admitad.
Dropped out of school, learned to be an affiliate
Bachmann grew up in Oberdingen near Heilbronn and dropped out of school in the ninth grade. At 17 he discovered affiliate marketing and started his first business BinLayer. "Back then I tried to buy advertising on a CPM basis and convert it to CPO," says Bachmann about OMR. Starting in 2007, he buys coverage from publishers for just a few cents, which he then feeds with pop-ups and layer ads via his company BinLayer. The ads, in turn, come from affiliate programs that bill on a CPO basis and pay a lot of money for desired user actions.
That worked quite well, at least in the beginning – around 2007 to 2009. At this time, adblockers are still in their infancy. BinLayer has 18 employees at the company headquarters in Heilbronn. In 2009, the company became the market leader in the field due to the insolvency of its competitor LayerAds.de and, after two years of heavy losses, made a profit of more than 300,000 euros for the first time. Anecdotes were circulating in digital marketing circles at the time about how much money Bachmann earned in addition to the figures that are public today. He was a dazzling figure back then, because an 18-year-old who drives up to corporate appointments in a jogging suit and in an expensive sports car was not yet trained.
However, Bachmann himself seems to have foreseen that his system will not function permanently. In 2009 he brought Sabrina Saleh on board as co-managing director and was already working on his next project. Incidentally, Saleh founded the affiliate network Digidip himself in 2013, which came ninth in the 2016 start-up scene ranking of the fastest growing startups.
First company bankrupt, second already in the starting blocks
After Bachmann's final exit in 2010, BinLayer went steadily downhill. The managing directors change almost every year, and in 2012 the company filed for insolvency. In 2013, QE GmbH took over what was left of BinLayer and restarted the network. The domain is still online today, but nothing has happened here since 2013.
BinLayer's stale website
From 2009, Bachmann will focus more on a completely different market: “I asked in Russia what was going on there. At that time there was hardly anyone there who had positioned a real affiliate network – so I started one.” He moves to Unterhaching near Munich and starts working on Admitad in September 2009. In March 2010 the beta is ready and he plunges into the Russian market. "After more than half a year and several attempts to get things moving in Russia from Germany, I decided to move to Moscow myself," says Bachmann.
Largest affiliate network in Russia?
According to their own statements, the work on site works much better for Admitad. Although Heilbronn is still the nominal headquarters today, the actual central office has long been in Moscow. According to Bachmann, 270 employees work for his company worldwide. Seven to ten are added every month. There are 150 colleagues in the 1,752 square meter office in Moscow alone, plus offices in Germany, Belarus, Ukraine, Switzerland, India and Turkey. According to Bachmann, within a few months it has managed to become the largest affiliate network in the CIS region (Commonwealth of Independent States).
View of Admitad's Moscow office (source: vc.ru)
“More than 550,000 publishers are registered in the network. If we only talk about active publishers, i.e. those who have made at least one transaction in the past month, we are at over 32,000 publishers," says Bachmann. In addition to many Asian partners, these include well-known international partners such as Ve Interactive, Cuponation, Savings United or the German Adgoal. At the same time, Admitad is relatively transparent about the advertiser situation in the network. Potential publishing partners can search the currently 1,384 partner programs for suitable advertisers on a public page. These include Asian e-commerce giant AliExpress, Booking, Asos, Lamoda (Zalando in Russia), Nike, Adidas and more.
The location advantage and a full-service approach
But how does Bachmann intend to build such an affiliate heavyweight in just a few years? “We offer the complete service that an affiliate agency would provide in Germany. This does not cause any additional costs for the advertiser in the first step.” However, Admitad can usually collect 30 percent commission from the partners – in Germany the large affiliate networks usually keep 20 percent of the payment to the publisher. "Every advertiser with us gets a key account manager," says Bachmann. There are currently 65 employees in this area alone. On the other hand, 70 colleagues would only take care of expanding and supporting the publishing network. Admitad can only afford this large number of employees who take on the job of an affiliate agency because the office is in Moscow and the ruble is relatively weak at the moment.
The revenue development of Admitad Advertising partners. (Source: Admitad)
"In Germany, an account manager would cost me 3,500 euros gross, but I can hire three colleagues in Moscow who also all speak English," says Bachmann. This location advantage allows Admitad with more staff to acquire more and more new publishers and, above all, to help them with the clever implementation of their affiliate strategy - which in turn helps the advertisers. The technical implementation of the affiliate program, on the other hand, is more classic. According to Bachmann, his company makes most of its money through typical affiliate links - especially on coupon sites. Advertisers would primarily pay publishers on a CPA basis (cost per action), with the most common “action” being the classic purchase. "E-commerce sales in Russia in 2016 were 920 billion rubles (about 12.6 billion euros) - Admitad accounted for about 3.03 percent of this," says Bachmann.
No fraud in Russia?
However, Bachmann emphasizes that Admitad is also working on technical solutions for typical affiliate problems. His company has developed a technology that is intended to prevent so-called “cookie stuffing” or “cookie dropping”. With this fraud method, users are given an affiliate cookie, which is triggered when the user makes a purchase on relevant advertiser sites. The affiliate who planted the cookie receives the commission, even though the user did not reach the purchase page via their advertising material. However, other major affiliate networks such as Awin (ex-Zanox) also offer such tools.
In his old Layer days in Germany, it was an open secret that many transactions did not come about cleanly, but that many providers still aggressively used gaps in know-how and tracking technology. So has there actually been a complete rethink on his part in Russia? On a Russian rating portal, publishers complain that no payments are made and clicks are sometimes faked (at least that's understandable despite the lousy Google translation).
Can the numbers be right?
So what's up with a turnover of 50 million US dollars in 2016 and a targeted growth of 252 percent in 2017 to almost 180 million dollars? First of all, it has to be said that sales in affiliate networks are not always the sales of the company. In some cases, total sales generated via the network are also given here, some of which are still distributed to publishers. A look at the Federal Gazette shows at least that Admitad was still a long way from such numbers in 2015. At the same time, the available figures are also the minimum that must be stated in a balance sheet. It can be seen that the current assets increased from 2014 to 2015 from over 475,000 euros to almost one million euros and at the same time the liabilities increased slightly from 191,000 to 262,000 euros. However, these figures do not directly indicate nine-digit sales.
But if it is true that Admitad has an 80 percent market share among affiliate networks in the former USSR countries and at the same time has exclusive contracts with 140 advertisers such as Groupon Russia (Frendi), Mothercare, Asos, Adidas RU, Foodpanda IN, Otto RU, Reebok and others, then business should definitely be doing reasonably well. Added to this is the market leadership in India and the first major deals in Europe. What is certain is that the international markets are very differently mature in terms of tracking, fraud prevention and know-how. So it's quite possible that a long-standing professional like Bachmann can also find his experience from more mature markets helpful here.