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  1. #1
    Moderator MichaelColey's Avatar
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    Questionable Value of Loyalty/Incentive Sites
    I received an "Open Letter to Members" from MyPoints.com via email yesterday, and I thought it illustrated very well the questionable value of most loyalty/incentive sites. Here's the letter:
    Open Letter to Members

    First of all, I want to heartily thank you for being a MyPoints member. We have such a loyal membership, and it is your use of our program that has allowed us to grow over eight million strong in the ten years we've been around. We are grateful for the opportunity to help you earn rewards for the things you do every day.

    We want to be able to continue giving you these great rewards. That's why we have a request to make of you today.

    We all know it's tempting to get Points every way we can. Taking surveys, signing up for programs, filling out online forms it's so easy, and it adds up so quickly. But please, do us and our affiliates a favor: Only respond to those offers you are honestly interested in.

    People do business with us because they trust our integrity and the integrity of our members. When they get the feeling that people are just in it for the Points, they're less inclined to do business with us which means we can't pass along their value to you. And to protect the vast majority of our members who use our program honestly, we'll immediately close the accounts of those we find making fraudulent use of the program.

    In the long run, the few Points you gain in this way will seem pretty unimportant if doing so damages the program, and you can't shop and earn the way you used to.

    By all means, participate in MyPoints. Complete surveys with integrity. Sign up for programs that you have a real interest in. And continue to redeem for great rewards with the best, most reliable companies around.

    Sincerely,

    John Fullmer
    President of MyPoints
    For the president of MyPoints to resort to sending out an open letter to their members, the problem must be huge.

    First, let me point out that I'm not just talking about loyalty sites who have software applications. That adds yet another layer of problems, and software applications are a good topic for another thread.

    Second, I'd like to point out that there are some loyalty sites that do offer some value and that try to do the right thing. Some have large user bases and truly do provide (some) incremental orders. I know I've talked with many owners and employees of loyalty sites, and they have some major challenges. Some members will place large, fraudulent orders to get their rebate and return them after they get their rebate. They see even more clearly than normal affiliates which merchants track properly and which ones don't, which items don't pay commissions, etc.

    But even with the best of them, there can be some really serious issues.

    Most of the big ones do have toolbars, which effectively nullify cookies/return days for other affiliates and steal sales from direct type-ins, bookmarks, internal marketing/newsletters, in-house PPC, etc. I do not recommend working with any loyalty site that has a toolbar.

    Because of the lack of transparency, the fraud will likely be higher from loyalty sites than from your affiliate customers as a whole. There are organized groups of fraudsters who specifically target merchants through loyalty/incentive sites.

    Especially if you offer a CPA/Lead for a continuity type program, or if you pay for some sort of action that requires further actions for you to actually make money, and if you pay a high payout, the quality of leads you get from loyalty/incentive sites can be downright terrible. If you run this type of affiliate program through a sub-affiliate CPA Network, it's even worse, because there is yet another layer or two of lack of transparency and low-quality incentive sites flourish on CPA Networks.

    In a nutshell, here is my advice to merchants when it comes to loyalty/incentive sites:
    1. If they have a toolbar, don't work with them.
    2. If you've never heard of them, don't work with them.
    3. If you pay per lead (or in any way where you aren't ensured that each transaction is profitable), don't work with them.
    4. If the above three points don't apply, tread carefully.
    Michael Coley
    Amazing-Bargains.com
     Affiliate Tips | Merchant Best Practices | Affiliate Friendly? | Couponing | CPA Networks? | ABW Tips | Activating Affiliates
    "Education is the most powerful weapon which you can use to change the world." Nelson Mandela

  2. #2
    Full Member Code Monkey's Avatar
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    Hmm
    Can anyone provide some real numbers as to the extent of this problem?

    It would seem to me, if the numbers didn't justify the cost of doing business with loyalty sites, merchants would not choose to work with loyalty sites.

    Until I see hard numbers on this, I'm inclined to think that these merchants see value in working with loyalty sites, even if the value is lower than other types of sites.

  3. #3
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    Without violating an NDA, I can tell you that loyalty sites are the TOP performing affiliates of many merchants.

    Publicly traded merchants are reluctant to discontinue working with them even when they are shown they overwrite in-house PPC, etc.

  4. #4
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    Great post. These loyalty sites should not be allowed in affiliate marketing. Their business model is in conflict with our agreements.

  5. #5
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Great post Coley, you hit all the nails on the head!

    Quote Originally Posted by Code Monkey
    Can anyone provide some real numbers as to the extent of this problem?

    It would seem to me, if the numbers didn't justify the cost of doing business with loyalty sites, merchants would not choose to work with loyalty sites.
    I can provide real life experiences... many merchants can't "see" the difference between reported sales numbers and value (that may or may not justify doing business with some particular partner). Reported sales aren't a good indicator of the value of a marketing partner, but must be taken into context with the methods used to post those sales. Don't assume most merchants understand this insight, my experience indicates otherwise.

    Most cookie setting toolbars inherently prove this point, they don't sell, they just take credit for sales. Further, paying the wring entity for sales that do happen, demotivates and removes the incentive to sell more. As such, they are more than an ROI leak themselves (both in comms paid and network fees encumbered), but they also impact the reported (and real) ROI of the other channels (both internal and external) and partners who are doing the actual selling and marketing and promotion that is desired.

  6. #6
    ABW Ambassador SunshineTricia's Avatar
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    Quote Originally Posted by Zeus
    Great post. These loyalty sites should not be allowed in affiliate marketing. Their business model is in conflict with our agreements.
    By "these loyalty sites" are you saying all sites that provide cash back or only ones with toolbars?
    --Tricia Meyer-- I love being the exception to the rule.

    Tricia Meyer | Helping Moms Connect | Wine Club Reviews and Ratings | Hunger Games Fan

  7. #7
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    I know you asked Zeus, and he can answer as he sees fit, but for me, it's the toolbars only. The toolbars interfere with our contract because we are supposed to be paid for return days and the toolbars interfere with the tracking we are entitled to recieve for referring a customer to our partner merchants, including the ones who don't happen to buy instantly.

  8. #8
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    Exactly Donuts, I don't consider FatWallet or helpingmoms site as parasite as long as you don't overwrite other affiliates cookies. I don't know of a different name for these loyalty sites.
    Also, I guess you don't have 7 million members like uPromise or eBates...

  9. #9
    Affiliate Manager Howard Gottlieb's Avatar
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    On the other side of the coin the letter from MyPoints highlights that people do in fact think of loyalty sites when shopping. While the letter is addressing the people that are abusive of the system, the fact of the matter is there is a huge universe of people that shop on loyalty sites and many limit the merchants they do business with to those on the loyalty site they are members of.

    I don't want to rehash info from other threads but loyalty sites without cookie stealing software do deliver meaningful, repeat traffic to merchant sites.

    I do think its silly for pay per lead merchants to partner with loyalty sites since their strength is in helping provide returning loyal shoppers not new shoppers.
    I would rather live my life as if there is a God and die
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  10. #10
    ABW Ambassador SunshineTricia's Avatar
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    Quote Originally Posted by Zeus
    Exactly Donuts, I don't consider FatWallet or helpingmoms site as parasite as long as you don't overwrite other affiliates cookies. I don't know of a different name for these loyalty sites.
    Also, I guess you don't have 7 million members like uPromise or eBates...
    Thanks for the clarification. I agree 100% on the toolbar and cookie stuffing issue.
    --Tricia Meyer-- I love being the exception to the rule.

    Tricia Meyer | Helping Moms Connect | Wine Club Reviews and Ratings | Hunger Games Fan

  11. #11
    Outsourced Program Manager Angel Djambazov's Avatar
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    Great post Michael.

    I think it is most telling for sites like MyPoints where for the longest time they encouraged wracking up points rather than really participating with merchants. I am sure it negatively impacts the ROAS for merchants who do any advertising with them not just through the affiliate channel but in terms of media buys as well.

    I think there are loyalty sites that have done a good job of adding value. I feel that FatWallet is one of such site. Mostly because of the way they have acted as curators in their forums to facilitate real organic discussion among their members and thus generate real incremental sales.

    The impact of those that are cheating can be felt in many channels not just affiliate. If, as a merchant, you want to know how how damaging a toolbar like TopMoxie can be just run a first referrer last referrer test compared to your search traffic. The numbers should scare you.
    Angel Djambazov
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    OPM for Keen Shoes and Graphicly.com

  12. #12
    Certified Affiliate Manager sunshiner's Avatar
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    Quote Originally Posted by Zeus
    Exactly Donuts, I don't consider FatWallet or helpingmoms site as parasite as long as you don't overwrite other affiliates cookies. I don't know of a different name for these loyalty sites.
    Also, I guess you don't have 7 million members like uPromise or eBates...
    I sure wish someone would think of one soon and quit lumping all the loyalty sites together, the parasite free, toolbar free ones are tired of having fingers pointed at them by some people. We are legitimately as valuable to the merchants as the affiliates who are not loyalty sites. I'm glad at least some people can see this. C'mon, lets think of a good name.

  13. #13
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    Great post Michael!

    Before I ask my question, please remember this is just a question, you all know my stance on toolbars and parasitic methods of affiliate marketing, and that I do not work with them. If a program insists on keeping them, I continuously educate them until they agree to let me remove them. After saying that, here is my question which is just a question and not a practice I am doing.

    Suppose you take Upromise who advertises everywhere you look from Bed Bath and Beyond coupons to grocery store carts and more....they are buying a huge base legitimately through advertising, however they also have the toolbar which people download to participate in their program.

    Now suppose as an OPM, your merchant wants to work with them because of the huge buyer base. If the merchant and OPM can get the affiliate to agree to only use the links within the site and to exclude them from the toolbar and software so that it will not effect other affiliate's sales, would you have an issue with it as it will not effect your sales or cookies?

    In this situation, the affiliate is no longer parasitic as they are only digging into their buyer base who visits their sites and not using software.

    Please remember that this is just a theoretical question and I am currently not working with and do not endorse toolbars or parasitic software.
    Adam Riemer Marketing, LLC. Online Marketing Blog and Affiliate Management Company
    Do you need help with your Marketing or Sales funneling, write me at adamr (at) adamriemer (dot) me

  14. #14
    ABW Ambassador SunshineTricia's Avatar
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    I should mention that in addition to the toolbars, Michael is absolutely right about the fraud. There's another aspect to loyalty sites that no one ever talks about but, in my opinion, adds to the fraud.

    Those are the sites that scream all over their websites "cash out with no minimums and no wait times." It's almost like they are encouraging people to sign up with them to buy things and cancel/return quickly. I think it totally devalues the entire cash back process. When we were young and stupid, we let people cash out quickly. As a result, I had a few really big fraudulent purchases. When we wised up and started putting a hold on people's funds and only doing cash outs after X number of days, we started seeing almost no fraud. I would say we have about 10 returns TOTAL a month, and they are all legit.

    Fraudulent signups and purchases hurt not only the loyalty industry but the whole affiliate industry. I'm surprised that merchants continue to work with sites that feature no holding time on their cash outs.
    --Tricia Meyer-- I love being the exception to the rule.

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  15. #15
    ABW Ambassador Rehan's Avatar
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    Quote Originally Posted by Rollerblader
    Suppose you take Upromise who advertises everywhere you look from Bed Bath and Beyond coupons to grocery store carts and more....they are buying a huge base legitimately through advertising, however they also have the toolbar which people download to participate in their program.

    Now suppose as an OPM, your merchant wants to work with them because of the huge buyer base. If the merchant and OPM can get the affiliate to agree to only use the links within the site and to exclude them from the toolbar and software so that it will not effect other affiliate's sales, would you have an issue with it as it will not effect your sales or cookies?

    In this situation, the affiliate is no longer parasitic as they are only digging into their buyer base who visits their sites and not using software.
    Look at how CSN Stores deals with coupon sites... Scott Jangro explained it in detail here. As a non-coupon, non-loyalty affiliate, I think Brent and CSN Stores have done an excellent job with this. I wish other merchants would do the same.

    I think if you apply the same thing to loyaltyware affiliates and other loyalty sites, there would be far fewer complaints about them.

  16. #16
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    sunshiner - We are legitimately as valuable to the merchants as the affiliates who are not loyalty sites.
    I will not say that. The strengh of a loyalty site is to provide returning loyal customers to the merchants. IMHO, a returning customer is not as valuable for the merchant as a new customer. A merchant should be able to keep his customers coming back to his site without the help of an affiliate or more likely a loyalty site.
    At the beginning of affiliate marketing and before the first loyalty sites (2001) the merchants were not willing to pay for returning customers. We had higher commissions (part of the customer acquisition cost) to compensate the affiliates. Others had bonus for new customers. Then, we saw these new services to help merchants to keep their customers like loyalty sites or to close the sale like shopping cart abandonment solutions, second bite. IMHO, these sites don't belong to Affiliate Marketing, the service should be paid by the merchant using them but on a different basis.
    I must say the networks did a good job to confuse the merchants (to get a bigger cut).

  17. #17
    ABW Ambassador Greg Rice's Avatar
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    Great post Michael. We tried some non-toolbar loyalty sites for a subscription site. What we found were that nearly all of the leads were useless, since the merchant relied on the recurring monthly subscribers. We don't accept any loyalty sites for that program and have been removing the ones we find.

    If it is for retail products, I can see some value as long as they don't offer a download and the shopper must shop through the affiliate site.
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  18. #18
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    Quote Originally Posted by Zeus
    I will not say that. The strengh of a loyalty site is to provide returning loyal customers to the merchants. IMHO, a returning customer is not as valuable for the merchant as a new customer. A merchant should be able to keep his customers coming back to his site without the help of an affiliate or more likely a loyalty site.
    With so many choices a consumer can make, I think the value of a loyalty site driving repeat customers back is almost as important as driving new customers. People are not all that brand loyal on the net, they shop where ever they land. They also have the "trust" factor more with shopping through a loyalty site, even after they shop somewhere online once, they want the reassurance that the site is recommended by someone else as being trustworthy.

    Obviously I mean non-toolbar, non-software loyalty sites
    Deborah Carney
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  19. #19
    Certified Affiliate Manager sunshiner's Avatar
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    [QUOTE=Zeus]I will not say that. The strengh of a loyalty site is to provide returning loyal customers to the merchants. IMHO, a returning customer is not as valuable for the merchant as a new customer. A merchant should be able to keep his customers coming back to his site without the help of an affiliate or more likely a loyalty site.
    (QUOTE]


    If merchants don't care about repeat business, and you don't see it as value, can you tell me why my emails are full of coupons from merchants offering me special deals to shop with them as a repeat customer? Or are you saying the loyalty sites are only good for getting the business in the door initially and then they are of no use because the merchants have got out of them what they need? I can tell you working for a loyalty site that my members have tons of choices of where to shop, and not necessarily with me, but, its because of the loyalty to my site that they prefer to shop through me, even with the sites that we can't incentivize, just because they are loyal members. I can also tell you with the customer service the way it is today with the merchants, a lot of them would not get repeat business if it weren't for us.

  20. #20
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    For me it's a shift from the original affiliate marketing model and I don't like incentive sites because they can be abused easily even without a toolbar (it's the Mypoints experience).

    If People are not all that brand loyal on the net I've many ideas of services to offer to these merchants. Some have been discussed at ABW already.

    I know a merchant who don't have time to send out newsletters. This merchant ask me to design it and send it for them. Can I accept to be paid as an affiliate. Is it still affiliate marketing?
    I've a call center with thousand of operators. I can convince a few merchants to add my number on their web sites and to help their customers pick the right product and close the sale. It's free for the merchant if I'm paid a commission with an affiliate account. Is it affiliate marketing?
    I can do the same without a call with software installed on the merchant site and pop a window each time a visitor needs help. I can do it with Live Person or other companies. The merchant is offering me a commission for each sale. Is it affiliate marketing?

    Each time I'm helping the merchant, should I be paid a commission and erase a cookie from an other affiliate who works hard to bring new customers? I don't think so.

    In all these cases, the merchants will offer me a coupon to close the deal. Do you think the coupon makes me legitimate?

    IMHO Incentives, shopping cart reminders, emailing for a merchant, phone support, live help... are not compatible with affiliate marketing and are services that should not be paid on commission at the expense of other affiliates.

    PS: My customers are very loyal to my sites. I'm still in business after many years. Got my first affiliate sale in 1995. And since, I NEVER had a day without sales, even with many ups and downs. I don't need to have a loyalty site for that. I don't incentive my traffic, my sales...

  21. #21
    Affiliate Manager Howard Gottlieb's Avatar
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    Quote Originally Posted by Zeus
    Each time I'm helping the merchant, should I be paid a commission and erase a cookie from an other affiliate who works hard to bring new customers? I don't think so....

    A ton of loyalty sites do not overwrite or erase other affiliate cookies. They DRIVE their loyal traffic to the merchant. I don't understand how that is not clear.


    Quote Originally Posted by Zeus
    And since, I NEVER had a day without sales, even with many ups and downs. I don't need to have a loyalty site for that. I don't incentive my traffic, my sales...
    Congratulations on that. You have obviously found your niche. Good for you!!!

    I have two kinds of sites. I have a fairly large rewards site and I have not had a day with less than dozens to 100's of transactions every day.

    I also have some straight SEO sites designed to drive traffic directly to 1 or 2 industry or product specific merchants and those rarely if ever go without numerous daily transactions.

    No one is suggesting that you change your model and start offering incentives. Each of just needs to find their own way and stop criticizing what others do unless they clearly are breaking the rules laid down by the merchants and/or networks they work through. Then that needs to be dealt with accordingly.
    I would rather live my life as if there is a God and die
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  22. #22
    ABW Ambassador SunshineTricia's Avatar
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    Quote Originally Posted by Zeus
    PS: My customers are very loyal to my sites. I'm still in business after many years. Got my first affiliate sale in 1995. And since, I NEVER had a day without sales, even with many ups and downs. I don't need to have a loyalty site for that. I don't incentive my traffic, my sales...
    Wow. That's a pretty low blow. I'm not even going to spend the time to defend myself because it won't change your mind and it would only further arguing. Clearly I don't have anything negative to say about content sites because I have a few of those myself. But I'm disappointed at the way that you look down at what I do without understanding how much work it really takes.
    --Tricia Meyer-- I love being the exception to the rule.

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  23. #23
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    A ton of loyalty sites do not overwrite or erase other affiliate cookies. They DRIVE their loyal traffic to the merchant. I don't understand how that is not clear.
    Like MyPoints you mean.
    I have two kinds of sites. I have a fairly large rewards site and I have not had a day with less than dozens to 100's of transactions every day.
    Good for you.
    What's your point?

  24. #24
    Affiliate Manager Howard Gottlieb's Avatar
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    My point was to respond to your comment that you do not depend on incentives to drive a couple sales a day and insinuating that is was wrong for others to use incentives to drive traffic.

    I simply wanted to point out there are many ways to get legitimate traffic to a merchant without stealing commissions from others. In fact I assure you I lose a lot more commissions to parasites AND to coupon sites when someone opens another window to see if they can find coupon codes we might have not listed on our site.

    The fact, though, is that we usually have those same coupon codes within our sites and just have our cookies overwritten.
    I would rather live my life as if there is a God and die
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  25. #25
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    helpingmoms - But I'm disappointed at the way that you look down at what I do without understanding how much work it really takes.
    It's obviously not directed at you. Why do you think I'm looking down at what you do?

    Do you think you're in the same business than these Rewards companies, with incentive offers once the customer is in the merchant shopping cart? The kind selling your private information to Telemarketers. I don't think so.

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