The value of cashback sites in the US market
With advertisers increasing their spend on performance marketing campaigns, it is no surprise to see the channel coming under greater scrutiny. One of the key considerations when assessing the value of the channel is how incremental the sales generated are. When questions around incrementality arise, the promotional type that comes under some of the greatest scrutiny is cashback. With these sites offering an incentive to transact, it is often thought that cashback sites are merely converting consumers that would have purchased from the advertiser even without the involvement of the cash back sites.
How do we judge incremental?
To be able to determine incremental value, it is important to ascertain what actually constitutes incrementality. In its most basic form it can be interpreted as sales the advertiser would not have made had it not been for the promotional activity of the publisher driving it. This is far too simplistic when considering incrementality. Other metrics need to come in to consideration – it could be argued that increasing average order values, repeat purchases and lifetime value also demonstrate elements of incremental value for advertisers. Additionally, in the age of the savvy online consumer that is increasingly price conscious and prone to switching, it could be argued that cashback partners are able to facilitate customer retention which in itself could be seen as demonstrating incremental value.
Click path data
Customer journeys are complex and can vary from sector to sector. Affiliate Window has carried out extensive research into a number of advertisers across the network, spanning various sectors. This research includes looking at the number of affiliate touchpoints involved within the path to conversion as well as the crossover between the various promotional types. Additionally, it is possible to drill down to see the individual affiliates involved and the customer interaction across these.
There is a common misconception that each transaction will involve a number of affiliate interactions. This is extremely wide off the mark with typically 90%+ of transactions only having a single referrer. Although this can vary from sector to sector, recent research has shown this to be case across a number of sectors:
Retail - 94.83% of sales are single interaction
Ticketing – 96% of sales are single interaction
Travel – 95% of sales are single interaction.
In addition to this, the highest number of interactions involved in any sale through the channel is around four or five. Interestingly, loyalty, reward and cashback sites typically have the fewest interactions of any affiliate type.
Another common misconception is that cashback sites overwrite content publishers. Across various sectors the network has reported that this isn’t necessarily the case. As mentioned, the vast majority of sales show the cashback publisher to be the sole interaction within the path to conversion and where overwriting does occur, it is typically another cashback site involved. This is indicative that consumers are aware of the concept of cashback and are comparing offers across the various sites before completing the purchase.
Increasing basket values
The data has also shown that customers shopping through cashback sites have impressive basket values. Cashback provides a lever for advertisers to pull in orders to drive up basket values. By encouraging customers to spend more with each transaction, it could be argued that this in itself is displaying incremental value.
The following charts give an indication of how cashback (loyalty and reward) sites are generating higher average order values than other promotional types.
For an advertiser in the fashion sector, cashback sites had the highest average order values of all of the promotional types. For gifts and ticketing they also demonstrated impressive figures when compared to other promotional types.
Savvy advertisers have been able to work closely with cashback publishers to drive increased basket value.
By understanding the high margin items, cashback publishers can focus their efforts on driving value by concentrating specifically on these products. Additionally, by putting a minimal spend against purchases to qualify for cashback, basket values can be significantly improved.
Strategic use to encourage repeat purchase
With an engaged user base that is typically loyal to the concept of cashback rather than the brands themselves, cashback sites can act strategically to drive repeat purchase. For example, promotions have been run where customers are encouraged to transact more than once within a month. For the second purchase, a higher rate of cashback is paid (as long as a minimum order threshold is met in both instances). This allows advertisers to generate an increased order frequency and retain customers who may have otherwise purchased elsewhere.
In summary, cashback sites are able to be used strategically to drive not only impressive volumes of customers, but also valuable ones. The click path data for cashback sites as well as their average order values has demonstrated their ability to drive incremental value.
To really be able to understand incrementality however, it is important for customer journey data to be taken to the next level – across all digital channels. While data from an affiliate network can indicate what happens across the channel, it is only when you incorporate additional channels you can understand the true picture.
Additionally, to further highlight the value of the channel post conversion data should be taken into account. While understanding how the customer came to purchase is incredibly important, it is also important to understand the quality of customers delivered. While average order values can be one indication, advertisers should look at their data on repeat purchases, lifetime value and churn rates to truly understand the value of cashback sites.