EcommerceBytes-NewsFlash, Number 2564 - June 14, 2011     1 of 3

eBay Suspends Cash-Back Affiliate Programs

By Kenneth Corbin

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Ecommerce heavyweight eBay is suspending the cash-back programs that it pays out to affiliates as a trial run to determine the extent of revenue the firm was making through those affiliate programs.

The news comes as the latest signal of austerity measures at eBay, which is putting its cash-back programs with firms such as Ebates, BigCrumbs, FatWallet and KickItBack on a temporary hiatus. The company plans to reinstate the programs by October, though in the meantime, its affiliate programs will be without a key source of revenue to pass along to shoppers.

An AuctionBytes reader forwarded the following message from eBates:

"We are sorry to inform you that eBay is temporarily suspending cash back shopping with (and all other rewards-based programs) on June 16.

"Because we know cash back is important to you, we want you to have the chance to make any eBay purchases by June 15 and still earn cash back from Ebates.

"We plan to bring eBay back to by October 1 this year.

"In the meantime, don't worry ... Ebates continues to offer the world's best cash back shopping experience and will be sending out a series of special offers at your other favorite stores.

"Thanks for starting at every time you shop online!"

Programs such as eBates act as a clearinghouse for online sellers, with a business model built around the commissions received from Internet retailers in exchange for referrals.

JJ McCarthy, head of eBay's U.S. Partner Network, explained that the move is only provisionary as the company reassesses the business value of its cash-back programs, noting that they could be reinstated once it crunches the numbers.

"One of the challenges associated with running a large-scale affiliate program is understanding the incremental value of each individual partnership," McCarthy said in an emailed statement. "In recent weeks, we have been studying our cashback and loyalty publisher segment in detail in order to feel more comfortable with the ROI we are receiving from those partnerships. After careful analysis and thorough internal debate, we decided that the only way to gain a definitive (quantified) understanding of the value of these partnerships is to conduct a "go dark" test.

"While we understand that administering such a test in the live environment will create hardship for our Loyalty partners and their users, we feel this is a necessary step in order for us to maintain our confidence in this marketing method. The goal of this exercise, in the end, is not to reach a binary decision between continue/discontinue this form of partnerships, but rather to quantify the incremental value of these partnerships and to price them properly so that we can all continue working together with full confidence going forward."

eBay declined to comment on how much this might reduce traffic to its site from the affiliate services.

The company recently cancelled its eBay Plus shopping rewards program in the UK.

Note: you can read AuctionBytes' 2008 article about how the BigCrumbs cashback program worked here.

About the author:

Kenneth Corbin is a freelance writer based in Washington, D.C. He has written on politics, technology and other subjects since 2007, most recently as the Washington correspondent for, covering Congress, the White House, the FCC and other regulatory affairs. He can be found on LinkedIn here.

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