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Are We Relying Too Much on Cashback?

Are We Relying Too Much on Cashback?

Before I start, it is worth pointing out that the extent to which an advertiser ‘relies’ on cashback will often depend on the sector they operate within and the general makeup of their affiliate programme. For example, the fashion sector maintains a wealth of content publishers which drive significant sales volumes sometimes over and above those of cashback sites. Within this sector, the reliance on cashback will be smaller than within, say, the finance sector where relationships with large aggregator/comparison sites are often maintained outside of the performance channel, leaving fewer publishers within the channel able to drive the significant sales volumes required to rival those seen through cashback. In a similar vein, the range of publisher types an advertiser chooses to work with within the performance channel will vary their reliance on cashback. An advertiser who operates Brand PPC, behavioural retargeting and remarketing (all significant sales drivers for many advertisers) through the performance channel will surely rely less on cashback than an advertiser whose programme consists solely of cashback, vouchercode, content and email publishers.

Having said all of this it is still commonplace across advertiser affiliate programmes for cashback publishers to be at the top of the list when it comes to sales volume, but is this something we should be concerned about? In order to answer this we have to look at both the continued impact of these sites on consumer shopping habits in addition to the value being delivered via this method of acquiring customers over and above sales volumes.

Cashback goes mainstream

Until fairly recently, the cashback site user demographic was restricted to a select pool of savvy online shoppers who went out of their way to find the best deals and offers online. If I ever asked any of my family or friends if they used cashback sites the question would be met with a resounding ‘no’ coupled with varying degrees of facial contortion and the returning question; ‘what is a cashback site?’ Since then, the 2 biggest cashback publishers in the UK have invested a lot of money in extensive above the line advertising campaigns which have brought awareness of the cashback model to the masses. Cashback sites are no longer the best kept secrets of savvy online shoppers; they are now fully exposed to consumers who may not have previously been particularly deal conscious. This new level of exposure means that cashback publishers may actually be more important than ever as more and more consumers are alerted to this method of online shopping. Furthermore, this increased level of awareness means that a growing number of consumers will be comparing cashback rates between competitor brands so it is imperative that advertisers maintain a presence on these sites so as not to lose out to the competition.

If the sheer size and growing popularity of these sites means that an advertiser cannot simply stop working with them and expect to maintain the same overall sales volumes, then maybe the question shouldn’t be ‘are we relying too much on cashback’ because cashback publishers are a necessary part of any performance marketing mix. Rather we could ask the question ‘do we understand the value delivered by cashback publishers?’ In other words what does a customer who has come from a cashback site look like compared to one from another publisher type?

Cashback users spend more

For example, research carried out by one of our largest telecoms advertisers showed that out of all publisher types, the customers coming from cashback publishers had the lowest churn rates (i.e. stayed with that advertiser the longest without leaving or switching to a competitor). As a result, this advertiser understands that it is imperative to continue working closely with these sites in order to take advantage of the valuable customers they drive. In another example one high street department store profiled the customers referred by their cashback publishers over a given period. Collectively these customers transacted more frequently and spent considerably more than those from other publishers. The very nature of the cashback model means that there is a propensity for the user to spend more in order to earn more and this coupled with the fact that almost half of the members of the two largest cashback sites in the UK earn over £50,000, means that cashback publishers have the potential to drive significantly high value customers.

To an extent we do rely on cashback publishers to drive significant volumes but this should not be seen as a negative thing. I don’t see cashback sites disappearing any time soon, leaving advertisers scrabbling to regain those sales volumes. On the contrary, they are growing at a healthy pace and advertisers that are able to embrace the platform provided by cashback publishers to market intelligently to a fully engaged, high income earning base of users should not be concerned by these publishers supplying a hefty proportion of their affiliate programme sales.

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Simon Hofmeister

Simon Hofmeister

Simon has been at Affiliate Window for over 3 years during which time he has managed major teleco

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