Performance focus: Will voucher codes and cashback sites eventually spell the end of performance marketing as we know it?

As part of a series on performance marketing, The Drum catches up with key industry players including A4u, Affiliate Window and the IAB, to answer some questions on the role of cashback and voucher code affiliates.

Can incremental value truly be gained from the use of voucher codes/cashback affiliates?David McDermott, Performance Director, 7thingsmediaThis discussion is very much in vogue at the minute. Unfortunately a lot of perception in the industry states that these channels are not incremental, when time and time again this is proven an incorrect/ignorant assumption. One of 7thingsmedia’s fashion brands tested this and over 80% of the sales generated via a targeted promotion on a cashback website were in-fact new to file, plus naturally the increased propensity to purchase due to the reward.Also, incrementality should not just be pigeon holed in to new-to-file customers, but instead brands should look at: Higher spend levels, Higher AOV’s, Higher lifetime value across customers and Shorter lapsed periods.Carla Arrindell, client services director, OMGYes. Both segments have established a strong brand loyalty with their members, creating a clear means for both large and emerging brands to reach customers making both considered, and incidental purchases. One of our leading clients sees a 16% increment of traffic following the transmission of a vouchercode email even without an exclusive offer. However, brands need to avoid a ‘money for old rope’ approach and ensure they are incentivising customers for actions that really matter, such as minimum spends or deposits, higher margin products or bulk buys, ensuring strong levels of both ROI and LTV. Kevin Edwards, strategy director, Affiliate WindowI think we need to be clear about what we consider incremental as this word has different connotations for different people. If we assume that we’re using the standard question ‘would I have got the sale otherwise?’ then I’d say absolutely they can be incremental. It’s one of my biggest bugbears that this myth is continuously peddled. It seems people are generally happy to fall into the trap of lazy assumptions rather than stitch the data together and prove or disprove the theory either way. We’ve been looking at the incremental nature of these publisher types for several years and the patterns are generally consistent. Not only are sales originating from these affiliate types typically not overwriting other affiliates but, particularly in the instance of cashback and loyalty, they are typically quite standalone. In fact one of our clients found they represented the most standalone of any marketing channels. I think it’s important to remember these publishers have created consumer portals in their own right attracting significantly more customers than the brands they promote, offering dozens of routes to market. With this in mind, advertisers need to be clear about what they’re trying to achieve and work their strategy accordingly using the appropriate controls and checks. Also trialing and testing should in time lead to the optimum approach to working with publishers as it should be with any digital channelClare O'Brien, industry programmes consultant, IABOh definitely. Voucher code, coupon and loyalty sites are becoming brands in their own right with consumers increasingly looking for deals and loyalty benefits. And this is more than a trend. We’re seeing advertisers developing their offers through these independent destination sites and these will become more targeted and complex. For example, I expect we’ll see the growth of increasingly sophisticated campaigns, such as location and time limited offers where conversion uplift optimises value for both consumers and advertisers.Matt Bailey, commercial director, Performance Horizon GroupYes, of course they can. These channels are an incredibly powerful tool for consumers and the brands that succeed will be the brands that seek to understand, learn and adapt to how consumers behave. For hundreds of years, brands have operated discounting strategies offline and moving this online doesn’t mean that brands can’t benefit from it.Andrew Copeland, Network Director, North West, TradedoublerThis very much depends on what your definition of ‘incremental’ is. Measuring the incremental sales which come as a result of the cashback channel can be a tricky business. However, a much clearer picture can be gained when evaluating the number of new customers acquired through the channel. Advertisers are increasingly using cashback as a new customer acquisition channel and, by association, an incremental business channel.Will cashback eventually spell the end of performance marketing as we know it?Kevin Edwards, strategy director, Affiliate WindowThere exists a belief that there was a golden age of performance marketing. I’d counter it’s a fabrication to say there ever was one. Performance marketing is a movable feast, adapting and evolving according to the digital trends. It’s also true to say the pool of publishers available to advertisers is larger than ever before. Six or seven years ago publishers were (quite legitimately in some cases) bemoaning how paid search affiliates were stifling their business. PPC as a widespread, viable part of the performance channel waned and a new phenomenon emerged. What people fail to mention is that these publishers have massively grown the slice of pie that performance marketers can tap into whilst driving our channel ever more mainstream. It’s fair to say cashback has changed the landscape but certainly not to the detriment of the channel.Chris Johnson, content director, A4uBut how do we know it currently? Performance marketing is evolving day-in, day-out, and although for the most part the industry’s main revenue drivers at present are loyalty and incentive publishers, we’ve seen many case studies of advertisers who’ve entered the space who due to brand guidelines are unable to offer discounts. By working closely with other publisher demographics there has been significant revenue made through them. Cashback / Incentive will always be a large revenue driver for the industry, but there’s a place for innovative publishers who are serious about building new business models within the channel, those who add influential value to a brand’s activities within the performance marketing ‘umbrella’.Clare O'Brien, industry programmes consultant, IABCashback, like vouchers and coupons is all part of the evolving performance marketing landscape which getting increasingly complex and sophisticated. The IAB’s recent Affiliate Advertiser survey, which we published at the end of November, revealed that the cashback, coupon and voucher sector is now accounting for almost 50 per cent of affiliate advertisers prime revenue sources. This is great news for the sector which is attracting significant growth as more advertisers initiate affiliate programmes as part of their online spend. Branded affiliate sites such as Quidco, vouchercodes.co.uk, Nectar and Savoo have really established themselves in the minds of UK consumers and so it’s no surprise we’re seeing more and more advertiser spend in this sector, increasing Performance’s overall share of marketing budgets.Matt Bailey, commercial director, Performance Horizon GroupNo it will not, unless it becomes the be all and end all of performance. I grow increasingly frustrated that the performance channel is viewed by marketers as a discounting channel and this is something that needs to be addressed. Cashback has a place but brands should not be over reliant on it, and they should study data to fully understand the impact it has on them.Andrew Copeland, network director, North West, TradedoublerI don’t think cashback will result in the end of performance marketing. At the end of the day, it is the consumer who demands cashback on their purchases, not the affiliate. We’re seeing more of the ‘deal hunter’ mentality, where consumers are becoming progressively less brand loyal as times get tougher.What will happen, and we’re already seeing the first examples of this, is that brands will use the cashback channel more strategically than they do currently. By this I mean that brands will begin to make a distinction between new and existing customers with the emphasis being placed on new customer acquisition. This will allow them to use the cashback channel more as a new customer acquisition channel and less as a discount channel. This is already changing the perception of cashback amongst advertisers as they realise that value of cashback is not simply in incremental sales, but in incremental customers.Richard Sharp, managing director, ValueClick MediaThe most effective affiliate strategies are the ones that integrate a variety of models, and whilst publishers will continue to innovate, this will continue to happen. Similarly, consumers will always want variety in the way that they shop online and therefore the future of performance marketing is safe.This feature is part of the performance marketing supplement published with The Drum's 14 December issue.

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