In late October, Medifast informed its affiliate program partners that they will not be paid any commissions on sales for the balance of the year. Their statement was:
"Due to significant budget cutbacks, Medifast is having to drastically reduce spend, particularly in the affiliate channel for the remainder of 2013. Effective immediately, you have been pushed a 0% commission rate structure. This will take effect seven days from now (10/23) and remain through December 31st, 2013. Any sales from when the 0% structure takes effect will not generate any revenue for you.
We understand that you have made significant efforts to promote Medifast to date, and this effort is greatly appreciated. The current plan is to bring the program back to reasonable commission levels starting January 1, 2014. As you are considered a valuable partner, you will automatically be pushed the new terms at that time and you will not have to reapply to the program."
Medifast used to pay a 20% commission on sales made by affiliates, through their own program or via Commission Junction. The average sale was $250, so that's a $50 commission. When Medifast says that it wants to bring the program back to "reasonable" commission levels, that probably means only one thing--LOWER commissions, which will not make its partners happy.
The suspension of the affiliate program, and budget cutbacks, in our view, can only mean that sales for the most recent quarter ended Sept. 30 were bad, and they don't expect them to improve in the 4th quarter. The diet market slowdown looks like it has reached one of the few bright spots so far.