Cashback Sites : Love Them or Hate Them or Impassive?

[Barry]

The merchant was UK2 and they don't allow purchases through personal affiliate links. However I should have signed up an account in my girlfriends name and used hers thinking about it now.

Ta

[Qui Gon Jinn]

Will it push some other affiliates concerned about the potential threat of cashback sites (if there is one) to seek alternative payment models such as cpc or cpm? Because of their cookie being overwritten?

I guess the same could be said from the other thread from from closed group brand bidders, that it might be a safer option to look at cpc or cpm for those eventualities so at least the initial presell affiliate is seeing some reward, thus what a network think they are gaining with in one hand, they lose out more in the other?

[tbp]

One of the problems with cashback sites from a merchant side, is when the merchant pays the commission on the sale, and then the cashback site doesn't pass it on to the consumer.

You then get angry customers phoning the merchant, demanding to know why they didn't get their cashback, and often they don't understand that the cashback deal is nothing to do with the merchant itself.

I`ve worked with one merchant this kept happening to, and they ended up having to ban cashback sites as affiliates, as it damages their reputation and also ties up staff doing customer support when its nothing to do with them.

[Greavsie]

* What exactly are the issues some affiliates have with cashback sites?
- Not sure why you would have an issue with them, there are far more things we should all be worried about. Dodgy Search affiliates, AdWare/Spyware, Cookie stuffing etc.
- Issues mainly derive from the fact that their users typically circulate around all the other sites, meaning a lot of repeat customers. Most if not all are very poor at marketing to new consumers. If you ask the average joe on the street, he would probably have no idea such sites exist.
- I would imagine some affiliate sites attract the interest of the user, who then goes and buys through the cashback site rather than the original affiliate. but this is same problem for every site and user across all sectors. You could argue that the users interest was originally from an offline promotion, email, friend etc. Never a fair resolution

* Are cashback sites a threat to other affiliates, if so how & why?
- Not in my opinion, as stated above they typically rely on the same users/members. There are 30 million+ UK consumers online, which is more than enough to go around.
- As a consumer i am just not interested in cashback, neither are most of my friends and family.
- If they decided to expand the offering based on a loyal member base, then they could have an affect on other affiliates.

* What do cashback sites offer? (and not simply cashback please)
- Prizes, Competitions typically supplied by merchants
- In some instances better offers than available on other websites.
- Don't downplay the cashback factor, if you get a 10% discount users often forget about the saving in a few days/weeks - and you probably dont say "i've save money here, so i can spend a little extra here". If you get a £10 cashback, you remember because its in your bank and might possibly treat yourself to something extra with the money (drinks, food etc).

* How do 100% cashback sites make their money
- Take a fee, which varies. i.e. the first £5 is the sites, all money after is the members.
- Tiered structures, baseline is offer to the member from what i understand. As a network we provide the commission, it's the sites job to transfer this to the member.

* How do networks & merchants treat cashback sites compared to traditional content or paid search affiliates?
- As a network, the same in most instances. Depends really on the site, some have more functionality and targeting, some are standard. Some are bigger than others and require more attention etc. We obviously have to be more mindful of the member tracking, to save them from member complaints.
- Some merchants cannot work with cashback due to their offer (so we have to think about ways to make it work), some do not want to be aligned to incentives/discounts. Merchants are typically more aware of repeat customers.
- Also merchants dont want the user complaints if they have not been paid their commission by the cashback site. I get several a day which actually derive from another networks link.

* If or as cashback sites are part of affiliate marketing what have they recently come together to discuss, documented quite recently?
- Not sure, but i would imagine the most important thing for them is
1- Tracking problems with networks, LinkShare's tracking tech is second to none, so hopefully we dont get brought up to often. Member's moan if they dont get their cashback, which is understandable; so cashback site live and die by their and the networks technology.
2 - Payment dates, Members want cash immediately and don't understand the workings of affiliate marketing and payment terms. Hence i would expect cashback sites to want quick payments
3 - 100% cashback sites! Actually depending on who is in attendence this would have to be the main topic.
4 - Account Management of the Networks, the needs are more than an atypical affiliate but do they get the service.

* What problems do cashback sites endure?
- Tracking (not with LinkShare hopefully)
- Member complaints (always going to happen), especially if the user goes often to get a voucher to.
- Account Management
- Payment dates & terms
- 100% cashback sites
- Repeat customers (merchants are increasingly asking for new new new, which means it would be long until they only pay for new - 1 maybe 2 years)
- Most active members are on a number of cashback sites (not sure why, it seems silly to me)

Greavsie

[loquax]

From my point of view...

If I get an offer/promotion from a merchant and put it in front of my userbase (i.e. my time, my resources, my users), it's often 'hijacked' with the immortal words "if you go to.... you get cashback" - so every time I do something with my community I'm indirectly promoting another company and getting nowt for it. Now we see that on a forum... how many times does it happen off forums and so affiliates aren't aware?

Should I offer cashback - well I've looked into it - and if you offer users 50% cashback and they know they can get 100% - erm, it doesn't take a genius to figure that one out - and I'd rather figute out how to run a free content service than use resources to fight for a piece of a heavily crowded cashback arena.

Anyone who says "100% cashback is not a threat" - come and bloody work with a community site! It might not threaten every affiliate, but it threatens some - and yes we have to adapt and figure out alternatives (which we do), but how would you feel if you've gone from "time + work = pay" to potentially "time + work = some pay, but you're also lining the pocket of someone else"?"

On Dec 1st we had several people on Loquax wanting to recruit people for Quidco's £40k Christmas Cup competition - and that's not a threat? 40k of prizes isn't peanuts - and with consumers more bargain/voucher aware (and cashback hasn't exactly been out the news) it's going to get more and more difficult.

In fact, and I've asked this before what would you agency and networks do if a similar service started to compete for your revenues? "We give you cashback for sales"... bet you'd all be chuffed and not quite as dismissive that it's not a threat!

In terms of 100% cashback - there's not much you can compete against. Once your user gets wind, and if they're of the moneysaving, competition interested, freebie hunting ilk (which quite a few are) then basically you've lost that user as a revenue source.

From chatting to people, some users aren't bothered about cashback on small items (cds, dvds) but on larger items (electricals, insurance) they are - which suggests to me that insurance companies should bin off their affiliate programs and offer cheaper insurance full stop.

My other huge gripe comes from the casino/gaming angle. We're denied promoting some retailers (e.g Evans which fits my user base to a T) because they get their pants in a twist that we have specific sections. Yet those same retailers go onto cashback sites who also have casino/gaming sections. Now mine sections are "obvious" was the last excuse - but for me offering cashback to sign up for a casino is worse than having a "you can gamble at these sites" sections.

So, as you can gather, I'm not a fan and I'm seeing it from the front line. Yes we can compete - and it's a challenge. But it's a big PITA knowing what you're doing is resulting in another site earning revenue from your time.

Also new affiliates coming in to the industry probably aren't even aware that they're going to putting together sites that will see their users going "oh, nice offer thanks for that - I'm off to 100% cashback now"....

And I haven't got started on the "what happens when the 100% cashback site is the dominant affiliate and starts to recruit merchants to it's own private network" scenario... bye bye agency and network at that point? Possible!?

Jason

[Qui Gon Jinn]

I hear there are white label solutions available on cashback sites.

Would adopting one of these assist in of off setting losses, if there is a swarm of them launching simuletaneously will it off set the competition or multi-fold the highlighted problems (if that is deemed the case). Or is there room to refer visitors from our sites, cashback sites themselves deal with the headaches, the reffering affiliate gets paid & in an ideal sceanrio the referring affiliate owns the membership base.

[loquax]

There are whitelabels, but for me it's "another site to promote" - and the days aren't long enough as is - so it won't be something I'm happy to give full interest too. Plus I don't really want to launch another "Loquax" branded product. So, reality is do something else.

And as I've said above you simply can't compete on 100% cashback.. yeah you might get odd sales, but if Your User can get £50 off their insurance from your white label vs £100 off another site - no brainers there - £50 is a fair big saving for those who do cashback.

Jason

[Greavsie]

And I haven't got started on the "what happens when the 100% cashback site is the dominant affiliate and starts to recruit merchants to it's own private network" scenario... bye bye agency and network at that point? Possible!?

well of course this might happen with a few merchants by having direct relationships, some of the non-100% have been doing it for a while. But there issues if you are the merchant
1. where you gonna get new customers? there would be too many Repeat customers. and all the other internal customer marketing would become useless i.e. emailing your customer base
2. what about all the other sources of new customers etc. most merchants have been around a while and understand the need to not put "all your eggs in one basket". some will fall foul, but eventually realised they need a large pool of good affiliates across multiple sectors
3. branding. if the merchant is only reference on cashback sites they lose all the branding they have built up. same with vouchers/coupons site. any merchant worth its salt would not do this.
4. Account Management, merchants want account management which means you need to employ people. can become more expensive that utilising a network.

And various other reasons. Good luck to them if they do, but to be honest i don't see if happening to any great level.

[Rich]

I agree with Jason. I run a number of price comparison sites and again there is lot of advice on the money saving type sites to use price comparison sites to get the best deal and then go and get the cashback. This is hard to counteract, I could include details of the cashback available from the various cashback sites with affiliate programs or run my own cashback site but that just reduces my income on all sales. It could make my sites more unique but, once other comparison sites follow suit, it just means more sales for the cashback sites. Also someone will ask why the 100% site isn't listed.

From Jason's blog I see the >100% cashback site a real possibility.

[Colin@DVDTimes]

Originally Posted by loquax From my point of view...

I agree 100%. I do believe that cashback sites are one of the biggest threats to genuine affiliates.

We actually don't allow dicussion of cashback now due to the effect it has had on our income. We've never been in a position to make a living from our sites, but as it stands now, the actual existence of the sites are at risk.

CPM and CPC are options I'm going to be investigating, but they have their own issues and don't really fit with what we're trying to do.