Some merchants are offering one price if you click out from our site and a different pice if you land directly. Simply put it means they are using differential pricing to push volume when hey are in a price war. Many times if you go direct and use a voucher or cash back site, it is still more expensive than if you came direct from us.

I believe merchants will more and more start doing differential pricing, depending on the channel. The issue with normal cachback sites is that they never deliver enough volume to any single merchant, hence the comparators have more power to negotiate with merchants.

Another thing we are seeing more and more of in our industries are that people are becoming less brand loyal, and hence we know of merchants who ar launching white labels with discount pricing on comparators. These white label offerings have no voucher codes, cashbacks etc.

Doug
http://www.carrentals.co.uk

I think the market is evolving, getting better and growing. Not dying.

Cashback sites:

**Atleast 39 out of 40 online shoppers DO NOT know ANYTHING about cashback or other forms of incentive shopping**

(Figure based on our Market research, official figures, surveys we conducted and running 40+ cashback sites)

The number of people signed up to a cashback site does not reflect the actual number of people who continue to use the site on a regular basis.

There is still PLENTY of room for existing affiliates and newbies to grow in the market. As with any growing market, competition is stiffening and people have to work harder to earn their money. Simple as that.

Search Engines:

I think SEs are just weeding out useless sites. They only hate THIN affiliate sites with little unique content. There still is, I believe there always will be, a place for quality, niche, well SEOd content sites. I can give many many examples of our content sites in no.1 spot in google, outranking the big price comparison portals, manufacturers etc for competitive terms.

Let’s strip affiliate marketing back to the bare bones: it’s a CPA deal, a fixed cost for a sale; it’s payment on performance; it’s a phenomenally popular business model and usually rewards for the hardest action. In other words an easy sell.

What this debate is really about is who is driving sales for advertisers; in other words the evolution of different types of affiliates. Yes cashback/voucher coding is the flavour of the month but PPC affiliates have pretty much dominated for years, only recently dropping off, and affiliate marketing was borne from an assumption that content was king.

Inevitably as the web develops other affiliates will emerge but be under no illusion that CPA as a concept (in other words affiliate marketing) is in rude health.

Unlike some of the other replies, I see your post as mostly positive.

As someone that started as an affiliate in 2007 and went full time the same year I can honestly say there is loads of scope for new affiliates. I, as well as many other affiliates, have a list as long as my arm of sites I’d like to build but will never get a chance. There is an ever increasing variety of products and services available and merchants are crying out for people to help market those.

We need to just be creative and build good quality sites around sound and good volume niches

Affiliates, get your fingers out, start thinking new and adapt or die, simple as that.

I haven’t got time to give my two penny’s worth about all the interesting points, but I’ll respond to above post by Phil and the comments on his blog here.

Phil, I wasn’t intending to scare anybody off affiliate marketing and certainly not people new to the industry. I have voiced the opinion more than anybody else I know that AM is in desperate need of fresh blood. And it is not just platitudes that roll off my tongue: I must have helped a 1001 newbies with their websites and search campaigns over the years. It gives me more satisfaction than anything else. To give just two examples, last year I was the only person who spent hundreds of hours writing a free tutorial series on affiliate marketing specifically to assist people new to the industry and I also arranged a SEO course in London which was primarily attended by people starting out in the field; instead of charging a few hundred quid as others do, ours was completely free. So you can see that I am proactive at trying to bring people into the industry and help them build some momentum: fresh blood makes it a more dynamic, exciting industry to work in and keeps everyone on their toes.

I’ll address your point: “Firstly, how many people actually have cashback accounts?” Both Quidco and Greasypalm have over 500,000 members each, as far as I am aware. That is not an insignificant number. Like I was saying in the polemic above, based on the growth patterns at our client eDealsUK.com’s site (their own sites are acquiring members at an astronomical pace and we have launched over 30 new white-label cashback sites in just three months), I wouldn’t be surprised if there were 10 million members of cashback sites at the start of the next decade. That’s a sizeable chunk of the UK adult population. Don’t you think that will impact on the number of people buying via affiliate links that don’t reward customers with cashback?

It’s 03:55 now and I can’t address all your points, alas, but I do believe AM a bright and rosey future, with lots of money swimming around; my argument was just that there will be changes, and it won’t be the AM that some of us knew and loved.

I’d like to end by wishing you a very prosperous 2008 in which you make megabucks from AM.

It could be that its not long before the merchants, papers and public turn on cashback sites.

If cashback gets too big and brand A is having to pay for all its media exposure and are then paying a cashback site a % for nearly every sale it makes because people stop purchasing direct that can only lead to price increases as the CPA for the merchant will rise.

Its the same as brand bidding on PPC - as soon as merchants realise they are cannibalizing their own business by paying for customers they would have got anyway they’ll look for a way to kill off the cash back sites.

Directline are already setting a precedent for this on TV. How long will it be before others follow suit and the press starts to turn on cashback sites?

It could be that their success in the short term ends up killing them off!

My first prediction for “the death of affiliate markeintg” is the doom and destruction of pure voucher sites. It can’t be too far off for the big players in the cashback arena to add voucher code functionality and give visitors the best of both worlds. Why bother using two different sites when you can get the best voucher codes and best cashback rates under one roof. It’s much more difficult for a voucher site to integrate cashback functionality. Goodbye MVC et al?? Quidco gets great % commission deals because of its size, so why not the best % off vouchers.

My second prediction is for the doom and destruction of the major cashback / voucher hybrid sites. Once major brands take a real good look at their stats and run some customer surveys, they’ll realise how many sales they would have received anyway, and how much profit they have thrown away in commission and vouchers. It’s already started to a certain degree with some of the big insurance brands moving away from cashback genre. The backlash seems to have lost momentum for now, but I’m sure it will pick up again soon.

What are we left with??? Content site affiliates, and merchants increasing commissions to get those all important incremental sales.

Many of the coupon/cashback sites out there already are, to be frank, rather appalling. Not only does there need to be a singificant increase in awareness of these kinds of sites but there also needs to be growing trust in them. Whilst both are likely to increase over time, I still think there’s a lot of scope remaining for those affiliates that focus on providing good quality, helpful information with affiliate revenue as an add-on to that offering.

Paul

But …

… I’m not as pesimistic for a number of reasons.

I feel there is a very strong need for content based sites that inform and instruct users. These sites build up loyality in themseleves that I feel cashback sites would find it hard to break down in many instances.

There will be a widget out there that allows content based affiliates to add to their sites that allow them to split the revenue with the cashback sites - just as Adsense does. And just how I add discount codes to my sites to prevent the loss of commissions. Content affiliates will have to get “code savvy”.

There’ll be something after discount codes and cashback sites. As affiliates find ways of making money, merchants will try and remove them as they’re seen as “leakage” - isn’t this already happening with VC and CB sites? It’s starting to happen big time with brand bidding affiliates!

Hard to say what will happen in the next couple years really.