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Quidco vs Affiliate Window. What It Means For Most Affiliates

Unless you've been hiding under a substantially sized rock recently, you'll have heard that Quidco in a roundabout way announced it was leaving Affiliate Window (AW). It's a bizarre case of twists and turns.

From what I understood, Quidco's SureShop agreement was the primary reason why they were leaving as AW didn't sign up to it. But it turned out not to be that simple.

Here's my comments on some of the more important allegations that were revealed in the last week.
The original email that started off everything was:

Dear Colin,

We are contacting you to inform you that as of September 1st 2008, Quidco will no longer be operating on the Affiliate Window platform.

We have worked with Affiliate Window since our launch in May 2005 and have enjoyed working closely with them over the last three years. We believe the Affiliate Window team are a great asset to the affiliate community and are strongly committed to raising the profile of the industry.

The rapid growth of Quidco along with the announced entry of Microsoft and Yahoo! into the UK cashback market (through Live Search and Kelkoo respectively) once again indicates that the cashback incentive channel is set to be a major part of any online media strategy.

The increasing mainstream use of cashback has brought greater pressure on the service we offer including the technical integration of Quidco with our network partners. As part of our effort to deeply integrate with network merchants and create bespoke solutions for their needs we have made the decision to reduce the number of our network partners. Unfortunately this means that we will be unable to promote you on the Affiliate Window platform as of September 1st 2008.

Kind Regards,

Paul Nikkel

Jason's written a great commentary called Dropping Network Links Was Never This Exciting! which gives a good idea of what went on.

I'm more concerned with several points that have been raised by both sides (Quidco / AW).

Cashback Loyalty

Quidco wrote:
one of the statements from the network is that Quidco members will simply use an alternative cashback site for the merchants that will become unavailable on Quidco. There is no doubt in our mind that members will prefer to support merchants who are investing time and effort into providing premium customer service through SureShop.
Quidco is the most popular cashback site I know about but I strongly doubt that it's users are completely loyal. There are many other 100% cashback networks out there. Also, if I want to make a purchase through Dixons, I'm not going to make it through Bob's Electronics simply because they are a SureShop member. Cashback users are frugal else they wouldn't bother with cashback. This means they compare prices first and foremost. Cashback just helps make things cheaper, even though it generally isn't guarenteed. If Dixons are the cheapest for product XYZ, users will go wherever Dixons cashback is offered.

In my opinion, sites only have a loyal database of users where the site offers valuable content that changes lives, changes opinions, or offers something unavailable elsewhere. I'm loyal to BBC News for instance. I rarely use any other news site. But when it comes to prices and e-commerce, I look for the cheapest. I will default to Amazon for most things not because I'm loyal but because they are often the cheapest for the items I purchase.

What does this mean for affiliates? Cashback sites will benefit from the new traffic that will be created from now until the drop date. Traffic will be looking specifically for AW-only programs such as Dixons, Currys, Pixmania, Buy a Gift, I Want One Of Those, etc.

I suspect merchants need not panic about the drop of revenue as I'm sure the traffic will not disappear - it will simply switch channel.

As for the rest of affiliate land, nothing much will change. The chances are cashbackers will jump ship rather than start searching for content. Sorry.

Sharing Overrides - Should Networks Support Affiliate Business Models?

AW wrote
Quidco have for a long time operated on the basis of member sign up fees, a struggle for a company offering a supposed 100% cashback to their members. However at present we believe that Quidco have agreements with a number of networks to share override revenue generated from member purchases through the merchants they manage.
The first point to highlight is that what originally seemed like a SureShop disagreement turned out to be more about Quidco's finances allegedly. Essentially, it is implied that only claiming 5 annual fee from each member apparently isn't commercially viable.

I'm livid to hear that some networks have agreed to a percentage cut in their override, even though these are currently unsubstantiated allegations. If this is true, IT IS PLAINLY WRONG. Affiliate networks shouldn't be propping up affiliate business models.

Affiliates should be rewarded by means of the current systems of fixed fees or percentage shares, not these plus a proportion of the network override. I've yet to hear which networks, if any, are that unethical towards their affiliate base and I suspect we may never know. In my opinion, if the allegations are proved true (i.e. that Quidco are receiving a share of the network's cut), I want it too and every other affiliate should benefit from this as well. I understand the performance scale most programs offer and this is has worked well up to now. But sharing the network's override is downright dangerous in the grand scheme of things. Tinkering with the mechanics of an affiliate network risks the future of every partnered affiliate.

What does this mean for affiliates? This should outrage you. If these allegations are true, AW should be applauded for having a moral backbone and in my opinion, the unscrupulous networks should be named and shamed. If your affiliate business nose dived and your had to close down, would you expect the networks to bale you out? No, neither would I.

In a nutshell, if a network engages in sharing override profits with so-called supper-affiliates, watch out as there's going to be a huge mess on the horizon.

Is 100% Really 100%?

A sinister turn appeared when Quidco user miffyl asked:
Out of genuine curiosity, if Quidco offers 100% cashback, why is your cashback lower than a competitors?
Now from day one Quidco has been trumpeted as 100% cashback so it's a bit of a surprise to learn it is allegedly isn't. Quidco publicly denied this issue claiming:
We pay out 100% of the commission we are paid for a transaction.
Kayleigh75 asked:
why for example does JackpotJoy pay 10 on Quidco but Wepromiseto pays 20 PLUS WPT says they only pay out 50% on this retailer as "This retailer does not permit us to pay 100% cashback for commercial reasons. The excess will be added to the honest pot." and there are many many more like this.
The comments thereafter are a mixed bag of loyal users and those that have deferred to rivals.

What does this mean for affiliates? The whole affair may make some cashback users sceptical and perhaps they will be alienated from cashback sites. The chances are they will still continue to use cashback but will now be calling for transparency and honesty. They will be looking elsewhere for better deals so perhaps now is the time to move into cashback.

One Sided Arguement? Where Will It All End?

Quidco are rumoured to have deleted several posts from their website. They state:
To date, we have not engaged any parties in discussion of speculation or factual inaccuracies and will continue to remove any comments here which are intended to formulate an Affiliate Window smear campaign against us.
However, Curryswillbegone supplied a link to Martin Lewis's Money Saving Expert's site which claims to have all the deleted comments.

Whilst this probably doesn't have any direct affiliate consequences, it doesn't reflect well on Quidco's reputation for fairness and honesty. I can understand why Quidco would delete libellous and factually inaccurate posts in order to protect themselves and AW but the problem with this is it results in more allegations about Quidco's transparency. Not only this but alleging AW is running a smear campaign could be construed as libellous too.

So where will this sticky mess end up? One Quidco user suggested a law suit for Quidco vs. Affiliate Window though I hope this won't be entertained as I'm sure AW could countersue with some of the comments going back and forth.

I imagine this will leave AW with a tarnished reputation amongst the general public which won't really affect them. I imagine Quidco will also be tarnished which does have serious consequences as they are the public-affiliate-merchant interface.

The name calling and allegations will hopefully subside and the two parties should move their separate ways.

Overall, from an affiliate perspective, it's interesting to learn what goes on behind the scenes with networks. I'd like to think (and like to hope) that the majority of the affiliate industry was ethical and pure but there are some serious accusations in this affair.

For most affiliates, nothing will change. Life goes on as normal. Cashback affiliates may see a boost in registrations but more importantly will undoubtedly be questioning whether there is a level and fair playing field. It is anti-competitive otherwise.

Let's let the dust settle and see what happens.

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Written on Tuesday 29 July 2008 at 14:41:58 GMT (Permalink)

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