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  1. #1
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    A reminder on loyalty sites
    Some of you may wondering why I don't like these loyalty sites. I got mad after checking the new frontpage of LinkShare promoting eBates and CauseLoyalty. First you have to remember LinkShare (Rakuten) is the owner of CauseLoyalty who owns SchoolPop and OneCause, two other loyalty sites using LS.
    I see this as a big conflict of interest but it's not the most important.
    Let's imagine these loyalty sites are clean (It's not always true) but let's pretend they don't pop on your traffic, don't do drive by installs or have other ways to steal your commissions. Let's pretend they are normal affiliate sites like mine and I hope yours.
    What's the business model of a Loyalty site? They want a customer to don't even consider the competition's offers by buying their freedom to choice with money, points, college, charity... Once again, let's pretend everything is fine and that business model is acceptable.
    The collateral damage done by these loyalty sites is that they are turning these regular ecommerce customers into your competition. You don't believe it?
    You pay for your traffic by doing PPC on Google, Yahoo... whatever, you pay for your listing in directories, you pay for press releases, you buy your logo, your web design, you pay your way to meetings...
    Finally, a visitor find your site after clicking 10 times on your ad in Google, he likes your marketing effort, is ready to buy the product on your page... You think you're going to get the order. Nope, this visitor is a member of eBates, uPromise, whatever shitty loyalty site for a good cause, he knows he can get a kick back for his order and he says good-bye to you.
    Some will say it's the cost of doing business. Well OK.
    But, if a site like LinkShare or CJ are listing these loyalty sites, I'll say it's unfair competition, it's promoting corruption. How can they promote your competition and promote practices what are going to limit day after day your possibilities to get a return on your investment, to increase your competition. I'm not talking about other web designers, affiliates marketers, other loyalty sites, no I mean they are turning your own visitors into your own competitors.
    My estimate is that at least 40 million domestic ecommerce customers are now your competitors. What's the future of affiliate marketing?
    You understand a merchant is not going to pay double commission, to the customer (thru loyalty sites) and to you. Who is losing the battle? What are the "trusted" third parties doing?

    I can't back up this stat. Some of you may have better information but I heard that 75 percent of consumers participate in some sort of loyalty program, only 22 percent said that the incentive programs created an incentive to purchase online. It means Loyalty sites are stealing a great part of your marketing efforts.

  2. #2
    Super Cool Affiliate Manager IanBookMan's Avatar
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    Thanks Zeus.
    The only way merchants (like me) will change is if they're educated enough to make the right decisons and reading posts like this is step in that direction.

    Ian

  3. #3
    Affiliate Manager Howard Gottlieb's Avatar
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    With lots of competition for products consumers have learned that it makes sense to use stores participating in a loyalty site that pays them cash back.

    Case in point. We had a customer contact us about a slow reporting transaction for a major bookseller. Our staff told them we have had other issues with this merchant's reporting on a timely basis. We also pointed out that we had other alternatives. The customer went to the competition.

    The competition would not have gotten the customer if it were not participating on the loyalty site. So did the loyalty site create a new customer that will come back time and time again? I think yes.

    Interestingly there is weakness in every area of the AM world. Loyalty sites complain about coupon sites. Content sites complain about loyalty sites. Etc, etc, etc.

    I once proposed that the industry create a one hour hard cookie that could not be overwritten during that time frame. I believed then and I believe now that a 1 hour cookie would solve a great percentage of all of our complaints.
    I would rather live my life as if there is a God and die
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  4. #4
    Moderator MichaelColey's Avatar
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    Quote Originally Posted by visitourmall
    I once proposed that the industry create a one hour hard cookie that could not be overwritten during that time frame. I believed then and I believe now that a 1 hour cookie would solve a great percentage of all of our complaints.
    That's a good discussion for another thread, but in short it would just change the dynamics. Instead of trying to be the last one to overwrite cookies, the bad players would shift to trying to be the first to set the cookie. In the end, it wouldn't solve much.
    Michael Coley
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  5. #5
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    This raises a very timely issue for me, I was going to post this today..

    I just signed up with a merchant, where I had to click through these terms & conditions:

    "In addition, Publisher may not: (i) except as expressly permitted by 'merchant', directly or indirectly offer any person or entity any consideration or incentive (including, without limitation, payment of money (including any rebate), or granting of any discount or other benefit) for using Links on its Web site to access the Destination Site (e.g., by implementing any "rewards" program);"

    Well, if I google the merchant name & "cash back", they're on ebates, cashbaq, morerebates, mrrebates, rebatezone, coupounrefund etc etc..

    I think this whole segment has been allowed to grow because (without sounding cynical) merchants don't really care where the sales come from. I'm not going to "out" this merchant until I have dealt with this directly, but it seems it's a case of do as I say, not as I do...

    I appreciate when merchants take a stand on this (and in fact I do have a few who don't allow rewards sites), but don't like the pretense...

  6. #6
    Antisocial Media Expert ProWebAddict's Avatar
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    I'm not a fan of incentive sites but it's not because I'm afraid they are taking away my business. I just don't like the whole idea because this society is already so "gimme, gimme, gimme, more, more more".

    A coupon is one thing, but now I have to give you a coupon and money back in order for you to shop? What's next? How about I just give you everything for one cent plus shipping...oh wait, you want free shipping too.

  7. #7
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    Quote Originally Posted by ProWebAddict
    ...oh wait, you want free shipping too.
    yup.. international please

  8. #8
    ABW Ambassador Boom or Bust's Avatar
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    Quote Originally Posted by teezone
    I think this whole segment has been allowed to grow because (without sounding cynical) merchants don't really care where the sales come from.
    Isn't the merchant going to do what's good for the merchant, not the affiliate who is promoting them? If they are finding that it's more profitable to loyalty/incentive market, isn't that the approach they will take? As an affiliate you have to live in the real world which means that if the stats mentioned above are indeed true, the affiliate will have to adjust and work within the trends to remain profitable. Being totally new to AM I don't really know what that entails. But I do know business. As competition for dwindling numbers of paying customers becomes more intense, the merchant will use whatever means possible to attract sales. Keeping their affiliates "happy" will probably not be high on the priority list.



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  9. #9
    ABW Ambassador Joshua's Avatar
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    Quote Originally Posted by Zeus
    I'm not talking about other web designers, affiliates marketers, other loyalty sites, no I mean they are turning your own visitors into your own competitors.
    My estimate is that at least 40 million domestic ecommerce customers are now your competitors.

    <snip>

    I can't back up this stat. Some of you may have better information but I heard that 75 percent of consumers participate in some sort of loyalty program, only 22 percent said that the incentive programs created an incentive to purchase online. It means Loyalty sites are stealing a great part of your marketing efforts.
    I'd be interested in actually seeing some stats - Maybe John from DBG Loyalty (jtoskey on ABW) could comment on this? DBG is a straight up web loyalty company (no parasiteware).

    I see accusations thrown around all the time, and at least someone actually admitted that they don't have the data to back their accusation up (Thank you Zeus). From my experience with loyalty affiliates (not software, not eBates, not uPromise), there is definitely value provided to the merchant that does not affect other channels including affiliate in any noticeable way. Programs such as airline mile bonus or credit card bonus rewards have been around for quite some time, even in the offline channels, and were effective back then.

    Zeus, you (I believe) have mentioned that eBates has 7 million members. As uPromise has relatively the same Alexa rank, I'll assume they have 7 million web members, as well (not getting into the parasite discussion here - just using them for loyalty user numbers). How many of those are active, is another question. Quantcast puts eBates & uPromise at having 1 million visits per month, though I don't know if that's unique visitors (or accurate, as I've seen some discrepancies either way on Quantcast stats before). MyPoints had 1.4 Million active points users 2 years ago (this week) when they were acquired by UOL, and ever since then, their traffic has been tanking. They currently have an Alexa ranking of 5800 (vs. 23,000 for eBates & uPromise), so I have to surmise that both MyPoints, eBates, and uPromise have under 1 million active users each.

    Airline miles and credit card rewards programs have millions of customers, but the popularity of their online loyalty programs is probably only a small percentage. For example, Quantcast thinks that American Airlines' loyalty shopping site only gets 30,000 visits per month, and American Express' loyalty site at around 20,000 visitors.

    40 million active users of loyalty programs online seems extremely high based on the quick research I was able to pull up, and the percentage of those consumers who will go to a website, and then check their loyalty site for a deal before purchasing is probably extremely low. As for your other data, I'd be interested in seeing the source, as well.

    Having an affiliate network own a loyalty site is its own debate, but it seems like you're not focusing on that issue (though I do agree with you on this one ).

  10. #10
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    What you say is true (merchants will serve their own needs over the affiliate) but incentive sites may force them to pay commission on potentially non-commissionable sales. This skews the industry as a whole.

    I had one merchant cut back on their affiliate program - they felt they were paying commissions to what would have been direct customers. This affects me as they were a solid performer.

    It also irks me personally as I have a highly ranked content site with solid readership - a points program once contacted me to suggest my readers would benefit from their program!

    However, I get off topic...

    My post was also in the context of recent experience... here's a merchant making me accept T&C that indicates I'm not allowed to offer incentives/rewards.. yet they are on every major incentive site.

  11. #11
    Super Cool Affiliate Manager IanBookMan's Avatar
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    Let the merchant know what's going on just as you are doing.
    I hope if we show up someone will let us know.

    And I wouldn't say we don't care, but without the proper knowledge we're just not aware of the complete ramifications and it's real easy to look the other way or ignore it when the $'s are coming in.

    Given the right information you will see that merchants do care.

    Since I started my crusade to rid our program of these it hasn't been easy either.

    My $0.02 when contacting a merchant is give them the benefit of the doubt that they wern't aware, give them a good but brief explanation on the effects of what they are allowing and give them some time to clean it up- if they choose to.

    It might not seem fair to grant them this much lenicy, but for some, they have personal relationships now in place with some of these (one of your top performers for years, you tend to get social with them)

  12. #12
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    Boomers - As an affiliate you have to live in the real world which means that if the stats mentioned above are indeed true, the affiliate will have to adjust and work within the trends to remain profitable
    The last 15 years, I had to change 3 times my business model and 5 times my sites design. It's not a problem for me to adjust.
    Is it the best to do? Are these stats true?
    "75 percent of consumers participate in some sort of loyalty program, only 22 percent said that the incentive programs created an incentive to purchase online."
    I've no idea. I've no data of my own to say it's true or not. I heard that a few times. Now, looking at what the idiots at LS & CJ are doing, (including their investments) it could be true. These thieves have the real figures. What I don't like is for them to still mislead a bunch of affiliates. Why don't they say: Give up on traditionnal affiliate marketing, it doesn't work anymore. You have to build Loyalty Sites. No, these thieves with a full knowledge, are using us, affiliates, to take advantage of our marketing efforts to fill up their coffers. They want you to spend money on PPC to divert your income.
    What's the meaning of these two figures, 75 percent and 22 percent. I believe 78 % of traditional affiliates are doing all the work and 25% of crooked sites are taking advantage of them.

    Now, do I believe the future is in Loyalty marketing? I don't know, really. I'm sure it's a predatory practice and not viable in the long term. A few years ago, these loyalty sites were overwriting their own links and had to write software to disable the reminder software of their competitors. They had reached saturation.
    I'm not sure these loyalty sites are as much fun as affiliate marketing. Are they bringing a real service to the merchant?

  13. #13
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    I think there are a couple of key issues at hand:

    Loyalty sites are not all bad, it's a business strategy - I take issue with the parasitic models.

    Networks getting into into the publishing side of things is VERY bad. They know what works (and what doesn't) from a very privileged & confidential position. This would clearly be a conflict of interest.

  14. #14
    ABW Ambassador Joshua's Avatar
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    Quote Originally Posted by IanBookMan
    Let the merchant know what's going on just as you are doing.
    I hope if we show up someone will let us know.

    And I wouldn't say we don't care, but without the proper knowledge we're just not aware of the complete ramifications and it's real easy to look the other way or ignore it when the $'s are coming in.

    Given the right information you will see that merchants do care.

    Since I started my crusade to rid our program of these it hasn't been easy either.

    My $0.02 when contacting a merchant is give them the benefit of the doubt that they wern't aware, give them a good but brief explanation on the effects of what they are allowing and give them some time to clean it up- if they choose to.

    It might not seem fair to grant them this much lenicy, but for some, they have personal relationships now in place with some of these (one of your top performers for years, you tend to get social with them)
    Ian - Has removing loyalty sites (or parasites for that matter) from your affiliate program done anything to your bottom line? In other words, have your sales overall stayed constant after kicking these guys out, or have your sales dropped equivalently to the sales that loyalty (or parasites) were driving? This is the real proof to whether these guys have an effect.

  15. #15
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    Quote Originally Posted by teezone
    Networks getting into into the publishing side of things is VERY bad. They know what works (and what doesn't) from a very privileged & confidential position. This would clearly be a conflict of interest.
    You can compare LinkShare to your accountant. Both have private information on your business model, your partners, your success or failure, well your finance. What would you say if suddenly your accountant was buying one of your competitors and starting to take customers away from you?
    It's what LinkShare is doing. Trusted network, come on.

  16. #16
    Super Cool Affiliate Manager IanBookMan's Avatar
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    I have to be honest and say we havent got rid of all of them yet- but a few of them are gone. And I'm still finding new ones I didnt know about.
    But from what I have seen (and I check every day, all day) our bottom line has NOT been affected and in fact I've seen some new affiliates pop up with some sales I have never seen before.

    Which 1st makes me think that maybe there were some sales being misappropriated.

  17. #17
    ABW Ambassador Joshua's Avatar
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    I wouldn't associate new affiliates popping up with parasites being gone - It's unlikely that parasites would happen to siphon traffic from a few certain affiliates, but not others. I'd just call that program growth. Keep us updated a few months from now when things are all done with the purges, and there's plenty data available.

  18. #18
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    Quote Originally Posted by IanBookMan
    I have to be honest and say we havent got rid of all of them yet- but a few of them are gone. And I'm still finding new ones I didnt know about.
    But from what I have seen (and I check every day, all day) our bottom line has NOT been affected and in fact I've seen some new affiliates pop up with some sales I have never seen before.

    Which 1st makes me think that maybe there were some sales being misappropriated.
    Great observation, IanBookMan.
    If these parasites were actively promoting you, via email, ppc... you could lose some volume. If like for most merchants, they just wait for the right time to grab the sale, well, you'll see new affiliates entering the game. If these new affiliates are seing sales coming, they could even promote you more

  19. #19
    Super Cool Affiliate Manager IanBookMan's Avatar
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    i agree not to judge too quickly, it could be coincedental and there hasn't been a lot of time passed yet.

    but the reason i did think it might be, is becasue the affilaite is not new to us.
    and they have had a good amount of clicks for this year without ever seeing 1 sale.
    now i get rid of some affiliates and they get a sale.

  20. #20
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Quote Originally Posted by Joshua
    Airline miles and credit card rewards programs have millions of customers, but the popularity of their online loyalty programs is probably only a small percentage.
    I'm not agreeing or disagreeing, I just skimmed this thread. But did want to make one point about size from this anaolgy / reference...

    If frequent flier mileage somehow interfered with travel agents getting paid for referring ticket buyers... and the contract for those travel agents specifically forbid this (meaning both parties agreed this wasn't allowed)... then discussions of size might be of interest to me... otherwise, contextually mixing issues like this makes it seem like commission stealing discussion fits into these other discussions somehow.

  21. #21
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    And Zeus, I agree with your position on this issue, LinkShare (and other networks doing this) should be professionally embarassed that this is going on with their support. They are relying on complexity of tracking and the common misunderstanding of trust placed in sales reports to legitimize garbage thievery.

  22. #22
    Full Member jtoskey's Avatar
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    Glad I stumbled in here I don't have much to say about the networks owning their affiliates. I think there's been plenty written about LinkShare, PepperJam, etc. and I don't have any new insight to add.

    But having spent almost 10 years on the merchant side, I do feel that there is some serious mischaraterization of loyalty shopping here.

    Many of our clients have asked to do a software download. We're not talking about drive-bys or bundles, but a true opt-in toolbar or widget that would remind users that they could be earning miles/points/whatever currency. We've consistently pushed back on them, not because it steals from affiliates, but because its predatory to merchants. It intercepts organic traffic (that usually has a cost already associated with it) and causes the merchant to double pay. There's no value added whatsoever.

    Our clients actively market and promote our merchants to their members through their existing marketing channels, many of which are too expensive or not available to them otherwise. And in most cases, they don't pay for it outside of the commission. That's a value-add plain and simple. Their brands are marketed to millions of users - users with an extremely valuable demographic profile at that.

    There is not one single touchpoint of marketing that produces a sale. Its a mosaic of marketing channels and impressions that close a sale. The commission that our site is paid is part of an overall cost for that sale. Instead of just looking at "normal" affilates versus loyalty, you need to consider paid search, internal email campaigns, portal deals and other costcenters for merchants. Affiliates are the only CPA player in this mix usually. That means that all of the other efforts, even if there's no last click associated with it, they pay for it. That means that a sale credited to your content site still had other costs associated with it, whether you believe that or not.

    Its certainly possible that your user has had several other brand impressions before visiting your site. And those impressions weren't free. But YOU closed the deal, and for that, they will pay you a commission. In your case it was maybe a great article about a product or some SEO work, and in my case, it was the allure of frequent flyer miles or credit card points. I'm not sure why one would think that one was more legitimate than the other.

    But just saying that loyalty sites don't provide any value-add to merchants in a cost-effective manner is simply not true. You can complain all you want about software intercepting users that you refer (I concur wholeheartedly), but I don't think its fair to claim that any of our websites are somehow providing a less legitimate referral than any other.

  23. #23
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    Quote Originally Posted by jtoskey
    That means that a sale credited to your content site still had other costs associated with it
    Now this is a fact I am WELL aware of!

    My comment in this thread indicated that I feel (non-parisitic) loyalty programs are simply another business model. It's really up to the customer how many clicks it takes to make the decision to buy...

    It serves me well, as a content site, to promote merchants who don't participate in incentive-sites. Also, I try to build my own brand of visitor loyalty.. it's not incentive-based, but they know they get fresh information & the latest in my specialty. Not unlike when I choose to shop in a store that doesn't participate in my air miles rewards program.

  24. #24
    Outsourced Program Manager DaveAMWSO's Avatar
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    Loss leader....it's a powerful concept in certain circumstances. I believe many merchants that participate with loyalty sites are just employing this concept. Customer acquisition being the overriding principle.

    Are they paying a higher cost for sales they might have already gotten, or for sales from existing customers, sure. Will they get some new customers out of the deal...new happy returning customers that might make referrals to friends? Probably...and that's worth it's weight in gold for an opportunity at that type of customer.

    Also the long view: Never underestimate the inherent laziness of the consumer. In the future, they will probably quit the loyalty program, forget about it, or just decide it's not worth the hassle.

    And consider this....if you have a coupon site, or any type of site, do you ask your visitors for an email address? (if not you should). Do you send them out occasional newsletters? Doesn't this action make you a de facto loyalty site?
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  25. #25
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    Quote Originally Posted by DaveAMWSO
    And consider this....if you have a coupon site, or any type of site, do you ask your visitors for an email address? (if not you should). Do you send them out occasional newsletters? Doesn't this action make you a de facto loyalty site?
    Nope, any website owner should encourage loyal buying behaviour. A newsletter without incentives don't make you a loyalty site.

    A loyalty site offers rewards to buy that loyalty. Loyalty should be natural, the quality of your site, of your products should be enough to push loyal shoppers to come back and buy from you.

    If you have to kick back the customer to buy from you it shows you have a problem. I see rewards as bribes to manipulate customer loyalty. I see it as corruption, lack of integrity or honesty.

    A collateral damage done by these loyalty sites is the transformation of a customer in a competitor. If you teach a customer how to get money back from a merchant thru loyalty sites, you're making him de facto a competitor for affiliate sites.

    Some affiliates are polluting the pond, others like these loyalty sites are shrinking the pond.

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