How can the content affiliates compete with cashback sites?

Recent weeks have seen some big UK names throw their weight into the cashback arena - The Sun and The Mirror, two of the UK's biggest newspapers now have their own cashback services and with readerships in their millions, these to behemoths will have a huge impact on the affiliate marketing world.

For a long time, content sites have struggled to earn a decent income from affiliate links, especially when web-savvy users go out of their way to shave a few pence of here and there. Sites such as Quidco and it's ilk have made huge amounts of money by taking their affiliate commissions and feeding them back to their visitors - for smaller items such as DVDs and CDs this may be a few pence, but for bigger items we could be talking about anything up to £100.

This money is set aside by merchants as marketing budget - ie to draw in sales and encourage new business. However, what cashback does is take discounts out of the merchant's hands and puts it into third parties who can do as they please. This has the potential to devalue brands and with new super-cashback sites weighing in this is likely to happen all the more.

So, now that 'Joe Public' knows about cashback and the amount of money that they can make/save by taking advantage of it. Those sites who use the affiliate programmes in the way that they were initially intended are going to suffer - tight margins are going to become non-existant or even losses and sites that have been running for a decade will no longer be able to support their increasing hosting costs (for some sites that aren't even that big, this can run to hundreds of pounds). Our own portfolio of sites are running at a marginal loss at present, and as the economy contracts in the coming years this is likely to grow. With the added problem of every man and his dog opting to buy via cashback sites, this is almost certain to be a death blow for many of us.

How are we supposed to compete? Some would suggest that this is survival of the fittest, others would question why we don't set up our own cashback sites. It makes sense - if you can't beat them, join them. However cashback isn't an easy thing to set up - there are technical concerns, security issues, payment methods and other problems to consider and when there are huge budgets there being ploughed into cashback promotion via national newspapers this would be a futile effort.

Can the networks and merchants help? Probably not - they're not going to step in when there's money to be made regardless. A million people buying via cashback is better for making money than a few tens of thousands of potential customers a content site can offer. What can they do - even if there are different terms and rates available to cashback sites, this still isn't going to stop the public using these services as all it might mean are slightly lower cashback rates.

The next few years will see the internet change considerably. Many, many content-based sites will collapse, those that remain are the ones with strong financial backers and those run by established media organisations - the best won't necessarily make it through, just those with the most money. Instead we'll end up with millions-upon-millions of blogs and on-line stores. The days of the independent sites are numbered and the internet is going to be a whole lot worse without them.