EricEwe.com

Today Microsoft announced that they are officially going to cease operating the Bing Cashback program on July 30, 2010. The Bing Cashback program was setup as a loyalty program that offered consumers a percentage of their purchase at selected partner online store in terms of a cash back. The primary goal of that program was to support the Bing Search engine by cultivating loyalty through cash back and the partner online stores will have their Bing Cashback appear above the sponsored ads on Bing. At that time, Microsoft could have turned that application into an affiliate marketing network or become a super affiliate, but I have no idea why the executives did not have that foresight.

The birth of this program started with the acquisition of JellyFish in 2007, and that morphed into Bing Cashback when it launched in May 2008. When the program launched in 2008, they signed up 700 online stores or so from Sears, Overstock to eBay. Within the last two years, they signed on another 300+ online stores to have 1000+ online stores.

Bing Cashback was never thought out before implementation from strategy to execution. Although they announce the death of Bing Cashback, I would spin this around and turn the program and platform into something else which would see a positive cash flow in 6 months. They just need to think beyond using that to support the Bing Search.

I have been in the affiliate realm for quite some time and I have seen a lot of changes, from the rise and fall of cookie stuffing affiliates to networks imploding. Within the last 3 years, I have seen a surge in not just super affiliates like Fatwallet, SlickDeals but rather what I would call MEGA Affiliates that make those super affiliates look like dwarfs.

Don’t get me wrong, in order to reach a status of a super affiliate, that particular affiliate should be driving a substantial amount of traffic to the retailer and generating a decent revenue. Commission Juction categorizes larger affiliates as “Top Performers” and it order to qualify, one must have a CJ Marketplace account and have been paid at least $10,000 USD in commissions per month for the last three months.

Over the last 3 years, companies that are typically merchants are getting into the affiliate game. A good example is DiscoverCard. They came storming into the scene and in 2007, Discover was recognized as the “Best New Affiliate” in the Linkshare Golden Links Award in NYC on June 19, 2007. It is no surprise that they are not only a super affiliates but Mega affiliates with their millions of DiscoverCard customer. One of their biggest angle is to offer a CASH BACK to the consumer for their purchase by clicking through the Mega affiliate’s link. Another notable Mega Affiliate is Bing which is supported by Microsoft.

What really puzzles me is the fact that the retailers have with these Mega Affiliates. Yes, it is imperative to have a relationship with them but at what cost? If you are paying your public affiliates 2% on all goods bought on your website and you offer these Mega affiliates more than 10% commission, where is the logic behind this? I have worked at an electronics retailer and competition is fierce and consumers are not only price sensitive, most tech savvy consumers will scour the ends of the world to save a penny. Thus, one is often squeezed by manufacturers to be competitive. I noticed that there was an electronics retailer offering 10% cash back to Bing’s users when they purchased through Bing’s links.

Today, I noticed that Wal-Mart is offering 20%. Yes, 20% on Bing.com. If you do some quick math, 20% is basically 1/5 off on a product. On Average, they are offering 1%-4% through their affiliate program on Linkshare and have been constantly shaving commission via their Linkshare program. So if Bing.com is able to offer 20% kick back to their customer base, then either Wal-Mart is offering at least 20% or Bing is subsidizing 16-19% on each transaction for their customer base.

Let’s look at this in a logical way, I am a firm believer in rewarding for performance but not to the extend where it cuts into your profit margin. In the long run, this is not a sustainable strategy where the merchant will bleed to death. And if the Mega affiliate is dumping money to promote a merchant, that is a great relationship for the merchant.