[ir_dizzle]

Hello everyone -

I am new to affiliate marketing and am seriously thinking about starting a cash back website with my partner who will build the website. I am an accountant by trade so my accounting side has to see the numbers to make sure this business venture makes sense...

I pretty much have my start up costs squared away and I am trying to budget for my monthly costs; I'm sure right off the bat I will get little-to-no traffic and I want to make sure I have enough cash on hand to carry me through the expected dead times. Please review what I have budgeted so far for monthly costs and let me know if this makes sense and/ or if I missed anything:

- $50/ month for web hosting
- $50/ month for SEO/marketing
- $200/ month for misc costs

Am I missing anything? Additional information; I plan to get links from merchants from affiliate network sites such as CJ, Linkshare, etc.; I haven't picked a niche yet (I don't want to be like ebates and big crumbs and offer everything; I plan to focus on a target market). Also, I'm under the impression that affiliate networks track sales to [ideally] ensure I know what to expect to collect from the retailers.

Also - based on what you've observed; is the cash back website idea (ebates, big crumbs, etc.) already dead and is it even worth trying to build keeping in mind that I plan to target a particular market unlike the aforementioned competitors? I tried to research cash-back sites on this forum but didn't find anything; I apologize in advance if there are several topics already discussing what I'm querying.

Thank you very much - I appreciate you reading my post and am open to any tips and suggestions as I am BRAND SPANKIN' NEW to the industry.

Irwin

[Convergence]

Hi Irwin,

The "cash back" business model is pretty in-depth. You should, before investing much, really get a handle on affiliate marketing. So should your partner - because your partner can not build the site without understanding how affiliate marketing works, how EACH network works (whether or not you start off with any merchants on those networks), how reporting is/can be done. Just the tip of the iceberg.

You will be surprised how low your "monthly budgeted costs are". Especially the first two. I don't know what your ramping up time frame is but your hosting is going to have to be an investment BEFORE you become big. Don't do this in php/mysql, but .net, and on a nice dedicated server (even consider cloud hosting).

I'd like to get further in depth, but I won't/can't. Keep an open mind, because what you are envisioning doing is so entailed, it's going to blow you away...

[Haiko de Poel, Jr.]

Originally Posted by ir_dizzle

Please review what I have budgeted so far for monthly costs and let me know if this makes sense

Yep, the penny slots usually have a 90+% payout percentage, the only problem is that they pay you in pennies

As Convergence said your REALLY far off the mark budget wise and really need MUCH, MUCH more information before you even think to begin spending another one of those pennies.

[Chuck Hamrick]

Irwin, if you get into cash back your biggest failure point is the subID tracking. If your member buys from merchant A on network A then buys from merchant B on network B the tracking is different. Plan on a lot of database work to keep everything straight.

Also research toolbar on ABestWeb as that is very controversial. Many merchants, affiliate managers and outsourced program managers here will not work with you.

[ak1lz]

Take advise from these guys above! they are really help full, don't be discouraged though.. you are going to have to do tons of research or possibly get another employee on board that can shed some light on questions you have or may come across in the future.

Hosting - Mentioned above (Cloud Hosting), I would recommend aws.amazon.com, you will need someone familiar with cloud hosting or prepare to spend nights researching and testing. Your partner should be familiar with it.

SEO/Marketing- you will need a bigger budget for your marketing purposes. Once you get established don't go spend "Thousands" that most people do and get ripped off from big SEO companies, I do not have a place to recommend either. Do your research on it and figure out what SEO practices will best suite your website. I would focus on Search Advertisement.. and your niche is very competitive I would assume. expect to pay more than $1-$10 for certain keywords regarding coupons. I think a realistic marketing budget for you would be at least $1000 per month to get started. SEO will come in time as you ad more coupons / merchants and gift cards.

the cash back website idea.

Cool way to promote coupons and such, since the Extreme Coupon'ing TV show came out, more and more people have realized that coupons can save you a ton of money, and getting back money for just shopping at a recommended store is great too. Coupon's have become popular, just look at groupon.com for example. I think their is opportunity in the market for you!

Good Luck Irwin!

[ir_dizzle]

I will continue my research and most likely you will see more questions from me!



Thanks!
Irwin

[LukeCBiz]

Originally Posted by Convergence

The "cash back" business model is pretty in-depth. You should, before investing much, really get a handle on affiliate marketing. So should your partner - because your partner can not build the site without understanding how affiliate marketing works, how EACH network works (whether or not you start off with any merchants on those networks), how reporting is/can be done. Just the tip of the iceberg.

I completely agree with this, especially when it comes to networks. Each network has a different payment system that they oblige by, which is not flexible in terms of the types of offers etc. So many may just outright not allow cash back offers. Secondly, within networks - specifically advertisers because they will have restrictions on campaigns. Everyone is moving away from incentivized and I can imagine the same may be for cash-back.

[simcat]

I wonder if anyone would join a "niche" cashback site? Maybe if the niche was something where none of the big sites covered those merchants? Don't know what that would be though.

I'd think a niche coupon site would be many time easier to get off the ground. (not that that's very "easy" though...)

[ir_dizzle]

Originally Posted by LukeCBiz

I completely agree with this, especially when it comes to networks. Each network has a different payment system that they oblige by, which is not flexible in terms of the types of offers etc. So many may just outright not allow cash back offers. Secondly, within networks - specifically advertisers because they will have restrictions on campaigns. Everyone is moving away from incentivized and I can imagine the same may be for cash-back.

Thanks for the advice. I'm at the point where I'm tired of just listening to podcasts and reading books; I have to get started now! If anyone has some in-depth experience of how a cashback website works please PM me; if you live in Southern California we can meet up and lunch/ drinks will be on me.

Thanks.

[ir_dizzle]

Originally Posted by Convergence

I'd like to get further in depth, but I won't/can't. Keep an open mind, because what you are envisioning doing is so entailed, it's going to blow you away...

Convergence:

I tried to PM you but for some reason it didn't go through. Please PM me (if it works on your end), IM me via AIM (SN: Dizzleir), or e-mail me at ambiz112 at gmail.com

Thanks.

[ir_dizzle]

Originally Posted by Chuck Hamrick

Irwin, if you get into cash back your biggest failure point is the subID tracking. If your member buys from merchant A on network A then buys from merchant B on network B the tracking is different. Plan on a lot of database work to keep everything straight.

Also research toolbar on ABestWeb as that is very controversial. Many merchants, affiliate managers and outsourced program managers here will not work with you.

Chuck,

Thanks for your feedback. Whenever I research "cashback" websites; whether it's in this forum or anywhere else; the users seem to love it (well, the big boys such as ebates, big crumbs, etc.) but everyone else seems to hate it because it's difficult to run, propensity for fraud, various "merchants, affiliate managers and outsourced program managers here will not work with you", etc.

Why is there so much negative talk about the cashback model? Why won't merchants, etc. work with someone who plans to use affiliate links in a cashback website? Is there a list of merchants, AM, and outsourced PM that will not work with someone running a cashback website?

I'm obviously a newbie to this space so I appreciate you being so helpful with my questions. One more question; where is the best place to meet people here who run a cashback or loyalty site of their own?

Thanks,
Irwin

[Chuck Hamrick]

Read these forums in their entirety then come back with the same question.
eBates - ABestWeb Affiliate Marketing Forum
Upromise - ABestWeb Affiliate Marketing Forum

[Trust]

Chuck, not every cash back site/loyalty site uses toolbars, I didn't see the OP talking about those.

"where is the best place to meet people here who run a cashback or loyalty site of their own?"

We have a subforum here just for that, I think you need to get permission/opt in to that one - http://www.abestweb.com/forums/ethic...lty-sites-517/

If you're brand spankin' new to the industry, you just picked one of the toughest models to start/run and one with already well known players, Ebates that you mentioned already, Fatwallet is a pretty big one.

[ir_dizzle]

Originally Posted by Chuck Hamrick

Read these forums in their entirety then come back with the same question.
eBates - ABestWeb Affiliate Marketing Forum
Upromise - ABestWeb Affiliate Marketing Forum

Thanks Chuck. I barely scratched the surface of the ebates forum and I answered a few of my own questions!

[Convergence]

Originally Posted by ir_dizzle

Convergence:

I tried to PM you but for some reason it didn't go through. Please PM me (if it works on your end), IM me via AIM (SN: Dizzleir), or e-mail me at ambiz112 at gmail.com

Thanks.

Irwin - Sorry, but I CAN'T and therefore WON'T discuss any details on setting up a cashback site.

Originally Posted by ir_dizzle

One more question; where is the best place to meet people here who run a cashback or loyalty site of their own?

Those who run cashback and/or loyalty sites have a huge investment into their business plans/models. You are not going to find any one readily sharing that information.

One of the largest, if not the largest, is ShopAtHome, located in the Denver metro area...

[iolaire]

Originally Posted by ir_dizzle

Please review what I have budgeted so far for monthly costs and let me know if this makes sense and/ or if I missed anything:
- $50/ month for web hosting
- $50/ month for SEO/marketing
- $200/ month for misc costs

So lets pretend that the above budget works (it will not), where is your budget for customer support?

Have you ever used eBates or any of the cash back sites? If you have you should know that there are always issues with the sales not posting, so customers start hounding the program to find out where their money is. Even without any sales not posting, the long period it takes for you to be paid from the affiliate programs will result in customers email you asking you where their money is.

If you want to do some sort of affiliate site, I would recommend that you do some sort of niche site to start with. This will give you time to learn about affiliate programs, how tracking works, how you work with the programs, what types of affiliate terms and conditions you will need to live under and such.

If you want to read about some of the issues you could have as a cash back site read the treads linked to on my recent post over here - Data feed errors = outrage at loyalty shopping sites If you screw up your offerings you will have some very irate people stopping by your office/home trying to find out where their money is.

[ir_dizzle]

Originally Posted by Trust

We have a subforum here just for that, I think you need to get permission/opt in to that one - http://www.abestweb.com/forums/ethic...lty-sites-517/

If you're brand spankin' new to the industry, you just picked one of the toughest models to start/run and one with already well known players, Ebates that you mentioned already, Fatwallet is a pretty big one.

Trust -

Thanks for the info. I've done a fair amount of research so far and you're definitely right; the market place is extremely saturated. I have been wanting to start a website for some time now so I feel I have to do something to get some experience in the on-line world. I am well aware that this will be a very humbling experience; I'm glad I can use this forum as a valuable resource.

[ir_dizzle]

Originally Posted by Convergence

Irwin - Sorry, but I CAN'T and therefore WON'T discuss any details on setting up a cashback site.



Those who run cashback and/or loyalty sites have a huge investment into their business plans/models. You are not going to find any one readily sharing that information.

One of the largest, if not the largest, is ShopAtHome, located in the Denver metro area...

Thanks for your input. Chuck shared some forum links with me; one about ebates and I can see why people dislike them so much.

[ir_dizzle]

Originally Posted by iolaire

So lets pretend that the above budget works (it will not), where is your budget for customer support?

If you want to do some sort of affiliate site, I would recommend that you do some sort of niche site to start with. This will give you time to learn about affiliate programs, how tracking works, how you work with the programs, what types of affiliate terms and conditions you will need to live under and such.

If you want to read about some of the issues you could have as a cash back site read the treads linked to on my recent post over here - Data feed errors = outrage at loyalty shopping sites If you screw up your offerings you will have some very irate people stopping by your office/home trying to find out where their money is.

Really good point about the customer service. Since the time I originally posted my original budget I realized I underestimated things and you mentioned a very important expense I missed altogether. In addition to the customer service budget do you see anything else missing?

Regarding working with something on a smaller scale, it's on my mind. I am working on this cashback site with a buddy of mine; I was thinking while he was working on building the cashbackwatch site I can do something on the side so I would learn key variables such as the ones you mentioned. Either way I will learn how the game works and from what I've read so far it's going to be a heck of an experience.

Do you have any experience running a loyalty/ cashbackwatch website?

[ir_dizzle]

Originally Posted by CASHGENI

thx all,

I was thinking cashback model in my coupon project. I am going to postpone it immediately. More research is required to get the work started.

@ ir_dizzle, my 2 cents on your budgets
- $50/ month for web hosting
Cost of webhosting depends on the size of your site and traffic, it's okey to run a demo site on shared host and then production on VPS and dedicated server farm when your traffic flies. I suggest dreamhost when your site is small. Find a $97 first year discount coupon in google. When your site grows you can easily migrate scripts and database to VPS which cost $12/month each. IMHO, that's enough for all none-top-50000 sites.

- $50/ month for SEO/marketing
That's way too low if this is your primary method to acquire traffic. I suggest you spend more time on on-page SEO and content creation at first stage.

- $200/ month for misc costs
[COLOR="rgb(0, 100, 0)"]hard to comment[/COLOR]

Thanks Cashgeni for your input. I've done some more research since I initially posted my question about the budget and like you mentioned; my numbers were off to say the least. I am still proceeding with the loyalty model - I hope everything goes well; one thing I know is I will learn a lot!

[tmtm]

I would like to build a site similar with the following ones:
[all links removed]

[jordan]

Originally Posted by ir_dizzle

- $50/ month for web hosting

what's kind of hosting service you use? I think that just way too expensive for hosting.