Performance marketing series: How can advertisers decrease their reliance on cashback sites?

The Drum catches up with a cross-section of performance marketing experts to discuss the key questions facing the industry.

Over the next few days, The Drum will publish a series exploring developments in performance marketing, to coincide with the publication of The Drum's latest quarterly performance supplement dissecting the space. The supplement is available for purchase from The Drum store.In today's article, our panel discuss how advertisers can decrease reliance on the cashback model.Kevin Edwards, strategy director, Affiliate WindowI think we fundamentally frame this question incorrectly. There seems to be a general assumption that there has always been a static number of affiliate sales, split between various affiliate types and in recent years the cashback sites have claimed a bigger and bigger chunk of that. But actually we see sales from all affiliate types continue to increase, the only difference being that cashback and voucher code sales have grown disproportionately. They have been a critical part of the channel’s evolution and increased share of market so to see their size as something negative misses the point. Advertisers shouldn’t decrease their reliance on cashback, instead they should look to continuously engage with as many affiliates as possible across the digital spectrum. How do they do that? Persistence, resource, flexibility and hard work. There are no shortcuts and the solution hasn’t really changed in the past decade.Jo Thomas, assistant head of performance marketing, DigitasLBi Advertisers can decrease their reliance on cashback by working more strategically with other types of affiliates and not relying on the larger cashback sites to generate high sales volumes. A number of clients want to reduce the reliance on cashback but very few actually do anything about it.Carla Arrindell, client services director, OMGAlternative affiliate models typically require a greater level of engagement, understanding and investment to fully optimise them, and this can be a challenge for advertisers, but it is critical in reducing reliance on cashback driven sales. The focus for any advertiser should be to know their customer and share this information with the network, agency or publishers. This approach makes identifying the right affiliate types with relevant audiences to generate valuable sales, far easier.In addition to this, non-cashback models may require a specialist tracking implementations, bespoke content or tailored offers and in some cases, a more appropriate remuneration model, and when these elements come together the rewards are significant. The volumes that can be achieved tend to be more sustainable and more importantly, more profitable, particularly in verticals where LTV is critical.Stephen Kerin, managing director, Webgains UKThis will always be a contentious subject. Cashback and voucher sites will always be among the big volume drivers and it’s important not to overlook their contribution, both in terms of volume and incrementality. That said it is of course important not to be over-reliant on such publishers. Ultimately advertisers should be looking to achieve a healthy mix of publisher types and it is this which should shape their recruitment strategy. Advertisers should speak to their network account manager for advice as to what a healthy publisher mix looks like and identify the gaps in their current coverage.Helen Southgate, managing director UK, Affilinet Decreasing reliance on a channel is not the same as decreasing sales. Cash back forms a very important part of many affiliate programmes and we should continue to optimise that channel. Equally though, the same amount of focus should be given to the rest of the affiliate channel, particularly in content which is where the majority of publishers sit. Advertisers should work hard to balance out their programme and work more intuitively with the medium to long tail. To do this though they have to make sure they make their messaging relevant and have good content and tools for publishers to leverage. Eleanor Pickering, head of advertiser development, Commission JunctionI think there’s an education piece that needs to happen here. The volume that cashback can drive should not been seen as a negative thing. If a cashback strategy is managed correctly, it can deliver exceptional results for clients. Few models can drive similar volumes in tandem with customer value and the key brands in the sector are working hard to innovate and prove their true worth to clients. The key things for an advertiser to consider when evaluating the role of cashback within their programme are: Do the publisher and my network understand my KPIs and are these KPIs being met by my cashback strategy? If the answer to both of these questions is: yes, then I would say that ‘over-reliance’ isn’t an issue.As a network, we devise cashback strategies that both maximise incrementality and enable advertisers to obtain their desired return. We’ve seen huge returns from having open discussions with the cashback sites themselves to implement flexible solutions that maximise exposure, incentivise new customer acquisition and tweak cashback payment timelines to boost customer retention.James Milne, head of client services UK, TradedoublerThe reliance on incentive site traffic has long been a talking point in the performance marketing channel and the stock answer seems to be switching to some kind of weighted attribution based payment model, but this is missing the point a little…The most important thing here is the value of the customer, not the value of one part of the sales chain, which delivered that customer. We need to be looking at the true value of the customers we are delivering, the journey they take to sale (across all channels), and what they go on to be worth. Only when we understand all elements of that equation and the final answer can we be in a position to start looking at how to change it.Tina Judic, managing director, FoundCashback sites, voucher code sites and social codes, and what each brings to the market, remain a core topic of discussion. We live in a world where everyone is now seeking a bargain, so the first question any advertiser needs to ask is whether they are comfortable to be seen in this bargain-seeking market or not? The answer to this fundamental question then leads to how much an advertiser understands about their sales funnel and how their customers are interacting with their brand. Equally, are they losing out to competitors if cashback isn’t an option? Have they tested turning cashback on and off to gauge response? And have they tried to take more control of the funnel?If an advertiser understands the part cashback plays in the conversion process, a much more informed decision can then be made to embrace, remove or realign. They need to know if cashback touch-points are integral, or are they a bit-part player? Could they be managed differently? And very importantly, does the brand operate well in a cashback scenario? But moving beyond the initial sale, they need to also understand what impact cashback is having on the lifetime value of the customer? Only when these questions are answered can decreasing reliance be contemplated.Previous instalments of this series have explored how to optimise the publisher/network relationship and tips for managing international affiliatesThis feature was first published in The Drum's performance supplement on 22 November.