The growth of the cashback sector in UK affiliate marketing has caused a few ripples, and a lot of false assumptions about this method of marketing, so I thought I’d post a few notes to merchants from someone who has seen both sides of the fence and seen what works and what doesn’t - me!

Cashback is the general term for sites that share their affiliate commission with members in some way. “incentive sites” and “reward sites” are other terms that cover business models that may give out products or vouchers rather than cash.

The fundamentals remain the same though, the cashback site aims to get its members to make multiple purchases, or take up multiple offers from one or many merchants in order to earn the maximum commission from their members.

The objections to this from merchants generally fall into two themes:

1) A lead isn’t “real” if you are paying someone to show an interest.

2) We’ll have to pay commission on every sale, not just the first one.

I’ll deal with these each in turn…

1) A lead isn’t “real” if you are paying someone to show an interest.

Leads are when there is some work needed after paying for an enquiry to convert the consumer to a sale. I have some sympathy with this line, but only in certain sectors.

I certainly wouldn’t put a high lead payout like a loan application with an incentive site, but if you follow through to actual business placed, then these members are the same as any other.

A number of sectors do very well out of leads from cashback sites, these tend to be ones where there is information being given in return for the lead costs. Survey panels, direct marketing lists (such as Axciom or Experian), product samples & reviews and so on all work very well.

One type of merchant who takes a gamble (if you’ll excuse the pun) with lead payouts are gaming sites.

A gaming site may commonly pay £50 for a player who deposits and plays £20. The big payout is in the expectation of taking more money from them in the future. If the player is getting half the commission from the cashback site (£25) plus the chance of any winnings it looks like a no brainer for the player but a high risk for the site, and you’d be right.

However, the chance to earn some safe extra cash has attracted some serious high rollers to these sites as this post about a £15,000 bingo player proves. Talk to your cashback sites and other people in your industry, and get an idea how many of these players there might be in the database of a given partner. My advice would be to go in high with the best CPA you can afford, but with a limited number of leads. Once a site has proven it’s membership, open things up a bit.

Keep an eye on how long offers stay on cashback sites as well. Long term deals and prominent positions usually mean that your competition are making good ROI.

2) We’ll have to pay commission on every sale, not just the first one.

Now, this one really gets my goat. I’ve worked on the merchant side of e-retail sites in many different guises and I can tell you that many large brands have an assumption about their repeat custom which is born from pure arrogance rather than any analysis of the sources of their repeat business.

The worst case I’ve seen is Amazon, who regularly throw all the cashback sites off each time a new boy appears in the affiliate management seat, then let them all back in again as they see their sales switch to the likes of play.com and other competitors. Their 24 hour cookies show how Amazon either believe that customers automatically shop with them every time without thinking, or are happy to steal the commission from any sale that takes a bit of thought and research.

Working with a cashback site can therefore present a great opportunity for a second-tier brand in a sector to swipe some of the customers from their biggest competitors. The inclusion of your product feed shopping tools of cashback sites can be a great way to get in on the act.

Don’t forget also that many sites where price is a large factor in teh purchase decision get huge volumes from price comparison sites, who they also pay on every purchase, often on a CPC basis. Cashback sites are not the only model that encourage repeat visits. ( Don’t even start me on spyware!).

Using cashback for short-term offers

The lifeblood of any good cashback site is its email list, and the biggest ones in the UK are now over over a million names, that’s more coverage than most TV slots can offer you these days.

Certain types of offer lend themselves to promotion by email, most significantly, anything with a time limit on it or that is outside the normal run-of-business.

Sales, clearance offers, headline deals designed to get you shopping for products with upsell or cross-sell opportunities, new brands, and offers based on current events and PR can all do well off these lists.
Don’t believe (all) the hype.

So my advice to any merchant considering working with cashback sites is, don’t write them off based on assumptions or information from anyone who hasn’t seen them in action. Talk to them, and go in with well prepared numbers on your margins, cost of acquisitions, and repeat purchase patterns.
A list of cashback sites can be found at www.cashbacknews.co.uk but the biggest ones are as follows, get your affiliate network to make an introduction:

• Nectar
• Greasypalm
• ipoints
• Mutual Points
• Quidco