Do The New Super Affiliates Spell The End Of Affiliate Marketing For The Rest Of Us?

Newspapers as we know them are dying a slow and painful death. Which is hardly surprising when 24 hour TV channels and the internet allow us to stuff our faces with news around the clock, leaving little room for a newsprint dessert.

The latest ABC figures certainly make grim reading. The Daily Mail’s circulation was down 7.21% year on year, the Daily Star down 9.63%, the Daily Mirror down 6.96% and so it goes on. Despite dropping its cover price to 30p and launching a huge marketing campaign, even The Sun’s circulation dropped by 2.12% year on year.

The day is surely approaching where the newspaper as we know it will no longer exist.

A small number of people will always be willing to pay a premium for a quality newspaper, and commuters and letterboxes will no doubt continue to receive freebies aplenty – I can see the red tops being given away in the not too distant future – but the newspaper industry, like so many others, is having to adapt to survive in a rapidly changing market place.

Of course you can now read all of the national, regional and most local newspapers online. And the day is surely approaching where you will only be able to read them online.

While looking at The Sun’s website today something struck me that hadn’t really registered with me before. On its homepage, sandwiched inbetween the usual tabloid headlines and celebrity gossip, were banner ads of various shapes and sizes. Just as you might expect.

But every single ad was Sun related. Sun Bingo, Sun Bet, The Sun Gardening Shop, The Sun Travel Shop. Even Mystic Meg was hoping to tell your fortune. I’ve been back a few times today to see if it was a fluke, but I’ve only seen one other advert appear all day.

The Sun has worked out that it doesn’t need Gala Bingo or Littlewoods Bingo to advertise with it. It can just launch Sun Bingo. Who needs holiday company advertising when you’ve got your own Sun Travel Shop?

One ad that has permanent priide of place on The Sun homepage is for The Sun’s cashback website which was launched two weeks ago.

It offers cashback on purchases from hundreds of retailers – an offer that’s bound to appeal to its millions of readers caught in the middle of the worst economic meltdown since the Great Depression. And launched just in time for Christmas too. Perfect timing.

Today, The Daily Mirror hit back and launched its own cashback site, offering its own readers cashback on their shopping at more or less the same websites.

A cashback site makes its money either by charging a membership fee and / or splitting commissions received from sales with its members. Both The Sun and the Mirror’s cashback sites are free to join and have therefore opted for the latter business model.

Given the fact that they have such huge marketing muscle behind them and can negotiate preferential commission rates with retailers because of their size, they stand to make millions.

In a stroke, both The Sun and The Daily Mirror have become super affiliates.

Where this ends, I just don’t know.

Traditionally, retailers (or merchants in affiliate lingo) pay affiliate commission in the hope that the cost will be recouped by the new customer making future purchases without going through the affiliate again. Cashback sites are different though. If I can get money back every time I buy something from Retailer X througfh a cashback site, I’d be a mug not to do so.

But if enough customers bought everything via cashback sites, many retailers would not survive, so thin are their margins today.

There will be talk of it being good for market share, but the truth is that many retailers have only just been hanging on in there anyway, hoping that they would outlast their competitors and survive until better times came – hence the almost permanent sales we now have on the High Street. And that was during the second half of a decade of credit fuelled spending. What hope now with the credit crunch, wafer thin margins and cashback consumers?

One solution would be for retailers to artificially raise prices to take the cost of working with cashback sites into account – something that might prove difficult for the foreseeable future, especially if inflation turns to deflation as it may well do.

Another would be for retailers to turn their backs on cashback sites – but that might come at the expense of market share and the herd mentality will make that very difficuilt to do.

Smaller cashback sites will inevitably suffer because of the increased competition. Some will no doubt go to the wall very quickly. Others will fade away.

And the same is true for content sites like my own that rely on affiliate marketing for at least part of their revenue. The bigger the dependence, the harder you’ll be hit.

I can produce fantastic quality content until I’m blue in the face, but it won’t do me any good if a visitor to one of my sites reads a review, makes the decision to buy – and then heads off to his cashback site of choice to make the purchase instead of clicking a link on the page that I prepared.

And the point will come when I stop producing that content because it’s simply not worth my time to do so.

Like I say, where this ends, I just don’t know. But one things’s for certain. Now that cashback has gone truly mainstream, the affiliate marketing world will change dramatically.

And those who currently make a living from it will have to do what the newspapers are doing.

Evolve or die.