David Fiske A subtle blend of affiliate marketing and web development

Sounds a bit dramatic but will the success of cashback sites be their own wrongdoing? Here's why I think that if cashback sites aren't careful, they are at risk of killing themselves unless they adapt and evolve.
 
Lately my inbox has been flooded with emails with "change of terms for cashback sites" or "important news for incentive sites". Let's not forget that incentive sites are included here to as they encourage partaking in an offer (usually a free offer) in order to get a free gift.

In essence, incentive site leads are less valuable than cashback website leads in my opinion as the chances are that leads generated by cashback sites are fairly legitimate, whereas incentive sites generate sales from people looking to get a free iPod (or similar).

Cashback sites used to be about profit sharing so it was in the owner's best interest to maximise revenue. This has evolved with the likes of Quidco who charge an annual fee and pass 100% of the commission to the users. This means they don't have to push offers hard as they get no benefit from it (apart from winning incentive prizes from the affiliate networks!).

The latest email I have received is from the AA:

Since the recent merger between the AA and Saga we have been informed there have been some changes made to their affiliate strategy, the actions for which are summarised below.

> Cash-back sites are to be removed from the programme
> Loyalty partners are still permitted; sites offering points or air-miles are not included in the removal
> Cash-back sites have until October 18th to end their promotions; no commission will be paid after this point

If you are offering cashback, rather than a points or loyalty system, and you haven't been contacted by dgm then you must inform us at the earliest opportunity.

Loyalty sites (those who offer points such as Nectar) are still permitted to advertise the AA whereas sites like Quidco cannot. The fact that points invariably mean prizes (mostly CASH) means this whole change of terms is just daft. The easy way around this is to change cashback sites into a points website where 1 point = 1pence (i.e. simply drop the '£' sign) and then each month convert the points into cash. That way, sites like Quidco can still partner with the AA. (for example).

But why are merchants so against cashback sites?

Understandably where a merchant offers a free offer, their payout is usually higher than the money they make during the trial period. For example, Lovefilm offer a 4 week trial of DVD rentals but payout when a new lead is submitted. Cashback and incentive sites can generate huge amounts of leads for this kind of programme but the majority will cease the service before they start having to pay the month fee.

Magazines offer this kind of offer, in a hope that you will find it too difficult or you will forget about cancelling it. Some of the best offers have been 6p for 6 magazines with a RRP of around £15.

But car insurance? Why are they against it? The probable reason is that it conflicts with their brand image. Fine but surely it accounts for a significant part of their revenue?

At the end of the day, if a sale is fraudulent or the customer cancels within the cooling off period, reverse the affiliate commission. I personally wouldn't have a problem with this as Amazon and similar programmes have this built in. So long as it is fair and transparent (i.e. we can see what has been cancelled and why), there shouldn't be a problem with it.

Surely, cashback on products or services can help boost sales? Surely there are examples out there where cashback sites have multiplied the earnings of particular online efforts without impeding upon the brand?

The Way Forward

Firstly, cashback sites will probably start to die off as the likes of AA have their way. I say die off, I mean rebrand as loyalty sites. Notice how Nectar is exempt from the new AA rules.

Secondly, site owners will have to engage with account managers to ensure what they are doing is in line with the merchant's image. If I ran a cashback site, I wouldn't want to work separately to the merchants. I would want to speak to them regularly - to get juicy discounts, vouchers and terms.

Thirdly, owners will need to become more vigilant and responsible, penalising those who try and take advantage of affiliate marketing. Naturally this is more the responsibility of the merchants who have the ability to vet transactions and commissions. False transactions should be cancelled and the cashback owner should not credit the user for that transaction.

Summary

I don't think cashback sites will die any time soon but with high brow merchants changing their terms, it won't be long before you can claim cashback on a handful of merchants.

Nevertheless, affiliate marketing will continue to evolve. Cashback sites will soon be replaced with something much better, much more robust, and something more exciting for both merchants and users.