Cashback Sites Fight Back by Matthew Wood

Earlier this week I raised concerns about the dominance of cashback darling Quidco within the channel and the potential hazard this gives to both Affiliate Networks and Affiliates through an apparent monopoly.

Firstly I do not want to put a downer on the fantastic achievement of Quidco but to merely attempt to reflect on how their success can affect others members here.

It is rather timely that two of Quidco’s major competitors are Fighting Back!

Earlier this week R Points launched their new 100% cashback site – Cashback Kings, and today we see the launch of another 100% cashback site We Promise To - launched by Submission Technology the owners of one of the first cashback sites here in the UK Greasy Palm.

The one thing that’s fair to say is common with all of these new breed of cashback sites is its reliance on the £5 annual fee that it charges members.

You could presume that sites like Quidco also keep bonuses given by merchants as an extra source of income. On the other hand wepromiseto.co.uk places extra commissions within their ‘Honey Pot’ a novel idea that promises to give back these bonuses to the members that deserve them.

Some alarm bells are ringing in my head as I write this. These websites now operate on very slim margins and with each evolution the consumer gets more of the revenue.

This battle between the sites in turn evolves the cashback sector in a way that is unique to the UK, and where the only real winner becomes the network. The home of cashback - the USA still mainly operates on keeping 20% to 50% of the commissions within the affiliates pocket.

To further backup my thoughts in addition to wepromiseto.co.uk's Honey Pot, Cashback Kings are introducing a Highest Cashback Guarantee to the mix, thats also new to 100% cashback.

The guarantee offers to match any advertised cashback rate from any competing, established cashback site – including Quidco.

I wonder how Quidco will react to the above?

Moving on to how this will affect us. A fair beauty of affiliate marketing is that as you provide more sales to a merchant you can often be incentivised by higher commissions.

The two above companies already provide substantial volumes to their merchants in most instances they would be able to match the rates advertised by Quidco. I doubt however that new entrants would be able to achieve this, so to be competitive you would need to match the rates out of your own pocket.

With the above scenario this would mean you would need investment backing or a sizeable pocket of gold.

One could only presume that the sites mentioned in this article are building up for a potential buyer. A site that has over 1 million active online shoppers in its database has healthy bargaining power and is a very attractive proposition.

A final thought is that networks operate on an over-ride of between 20% and 30%, that’s their fair cut, but I wonder if we’ll see offers of kickbacks for moving merchants from one network to the other? or more bullish affiliates demanding such rebates - cashback for cashback so to speak! - this could increase the affiliate margin.

By placing merchants on more than one network you keep some power rightfully so with the affiliate. Which let’s face it always have and always will be the fuel for the whole industry.

On a plus side for networks unlike the diminishing activity of Brand Bidding Groups where a number of relationships were moved direct, Cashback is an area that is reliant on the technology and services of an Affiliate Network. Managing over 1,000 relationships directly would be logistically challenging!

I wish all three sites the very best of luck for the future, its foing to be an interesting fight!

Finally I wonder if any will fall before the changes in Capital Gains Tax comes into plat on the 5th April!