Incentive Sites: Love Them or Leave Them

There are two distinct camps when it comes to incentive sites — those who love them and those who outright refuse to accept them as affiliates.

The incentive sites polarize the legion of affiliate managers because of their basic premise. These sites enable their members to earn cash and/or other rewards for doing things such as searching, shopping, responding to offers, and referring friends to a site.

Bearers of Great Leads

The incentive sites, including CoolSavings, Milesource, and MyPoints, can drive large volumes of targeted leads. These sites collect all sorts of data on their users and members that is very useful for targeting niche affiliate programs.

Gretchen Alaniz, affiliate and promotions manager for CatalogCity.com, is a big proponent of incentive sites. “They bring us great traffic and many repeat buyers. Many of our best affiliates are incentive sites,” says Alaniz.

“In the offline world, any direct marketer worth their salt is using incentives,” comments Erik Larson, president of NetFlip, one of the top incentive sites. “As long as you tie the proper incentive to the proper action, it will work for you offline and online.”

For instance, Columbia House has long based its Music Club on the incentive of free CDs to lure customers into purchasing full-price CDs. And sports fans have undoubtedly seen the branded team credit cards available before a game. Sign up for a Yankees Visa and get a floppy hat.

That same concept is employed online with NetFlip. It pays out cash to people who accept online offers, such as applying for credit cards, joining book clubs, and subscribing to magazines.

Leads They Cannot Bear

Incentive sites are not for everybody. Critics concede that incentive sites can be great for a pay-per-sale program but a risky proposition in a pay-per-lead environment. According to Keith Kochberg, president of imarketing, “In a lead-generation program, you have to be very careful. The fraud possibilities are much greater. Probably the riskiest part is in user/member quality. Incenting a user to take a lead generally results in a lesser-quality user.”

Shani Boone, business development manager for HotJobs.com, agrees and says she stays away from incentive sites: “Since we are a job board, we have two products: risumis and job listings. Our member companies purchase packages from us based on the quality of our risumi database. Accepting ‘forced leads’ is not conducive to maintaining the credibility of the database. So, to avoid the hassle, I generally do not accept them into our program.”

The Shocking Truth

The use of incentive sites as affiliates comes down to the axiom caveat emptor (buyer beware). Chris Kramer, Co-Founder and COO of NETexponent, praises the incentive sites because they can deliver very high conversion rates and loyal customers who will purchase through the site multiple times.

That said, he is ever mindful of the perils: “I do understand why certain merchants wouldn’t want to run on incentive sites (free product, CPC offer, etc.), because they could potentially drive unqualified users; but if you’re selling a product online, I think it’s imperative to work with these sites in order to be successful.”

The conversion rates from incentive sites can be a little shocking. Back when the ClubMom affiliate program started, I wasn’t familiar with the dynamics of incentive sites, that is, until I looked at my daily numbers one day, and there was this new affiliate named Spedia that had unbelievable results.

I was on the phone quick with my contact at Spedia to find out what sort of affiliate voodoo it was practicing to be able to hit such lofty conversion rates. After an explanation about the SpediaBar, the Instant Cash page, and other techniques Spedia used, it all made sense.

Probability of Good Leads

If you do not already break your affiliates into groupings with associated probability models, now is a good time to start. This will help to determine if affiliate performance merits a red flag or if it is right on target.

Look at conversion rates, activity rates, and retention rates through your affiliate channel. What percentage of these people convert? What percentage of the conversions are active for you? How long does your site retain the visitor?

Break down your various types of referring sites and get granular — what are the conversion, activity, and retention rates for each? Once you have these metrics, you can look at probability distributions and figure out which specific sites are sending you traffic that exceeds these norms.

For example, let’s say a typical incentive site has the following characteristics:

• The conversion rate is35 percent
• 10 percent of people are active
• The visitor is considered active for 7 weeks

You can then build up basic probability models to determine where the expected activity for an incentive site lies. If a typical incentive site gets a 35 percent conversion rate, 10 percent of people are active, and they stay for 7 weeks, you can expect that future incentive-site affiliates will mimic this pattern.

But if there is a 35 percent conversion rate, 1 percent of people are active, and they stay for one week, examine the disable clause in your affiliate agreement and send that site packing.

Let’s face it, some of the incentive sites are fantastic, while others stink. It’s not a bad thing to apply the philosophy from George Orwell’s “Animal Farm” to your program: All affiliate sites are equal, but some are more equal than others.