Cashback sites - Necessary or Evil

In the current economic climate, consumers are so much more price sensitive and in becoming so are increasingly looking for a bargain, and why not if they are there to be had? With this change in consumer buying behaviour cashback sites (which have in fact been around for years) have seen an upsurge in popularity, however we are seeing an increasing number of merchants throughout the affiliate community choosing not to work with them.

Are merchants missing out by opting out of the increasingly popular cashback sites?

In the current economic climate, consumers are so much more price sensitive and in becoming so are increasingly looking for a bargain, and why not if they are there to be had? With this change in consumer buying behaviour cashback sites (which have in fact been around for years) have seen an upsurge in popularity, however we are seeing an increasing number of merchants throughout the affiliate community choosing not to work with them.

So why is this? We are all aware of how cashback sites operate, merchants are promoted by the cashback affiliate in the usual way, but where the affiliate would normally keep the commission paid by the merchant for any completed sales, the affiliate gives some or all of the commission to its members. So far so good, merchants see an increase in sales and consumers effectively receive some money in their pockets.

So why are an increasing number of merchants leaving cashback sites or reluctant to join them in the first place?

Whilst many merchants can see the benefits of partnering with cashback sites, as they can drive significant volumes of traffic for them, some are starting to question their benefits. A primary concern amongst some merchants is that cashback sites are taking commission where not appropriate. For example, merchants are worrying that consumers are deciding what to buy and then visiting the cashback site to make the purchase, resulting in the cashback site receiving the credit for the sale, perhaps where it isn't due. This has left some merchants feeling that they have just paid for a sale that they would have gotten anyway.

Furthermore, merchants are becoming increasingly concerned about the number of new customers generated via cashback sites, as many believe that, whilst these affiliates send a high number of consumers to them, many are repeat purchasers.

So what do we advise our merchants?

It's our view that cashback affiliates are an important part of the affiliate marketing mix. Whilst merchants may have a legitimate concern regarding whether or not sales were destined for them or the ratio of new to existing customers, you could argue in both cases that cashback sites are actually acting in the interests of merchants by protecting sales that may have gone elsewhere.

Having said that cashback sites aren't for everyone, particularly premium brands. Whilst they can aid growth, there is a danger that offering cashback on a premium product may in fact cheapen it, particularly for those merchants who have a specific target market in mind, as the use of cashback sites raises awareness of the brand to a wider audience. Whilst we wouldn't completely deter our merchants of this type away from cashback sites, we would carefully assess the benefits of their use compared to the effects they could potentially have on the brand.

However you look at it, the fact remains that cashback sites can direct a serious amount of traffic to your website and in doing so will increase sales - in today's climate, we would suggest to our merchants that it would be better to accept that consumers are looking to effectively get money off something that they perhaps intended to purchase anyway, than to miss out by choosing not to work with cashback sites. Either way, it doesn't look like their popularity will be diminishing any time soon.