Retailers: beware of price comparison sites!

Posted by Roy Sinclair on 05 April 2006 at 7:09pm    1 comment

Whilst recently analysing visitor data for one of our clients' ecommerce sites, we noticed some strange activity from overseas users clicking on inbound links from a shopping comparison website. As our clients pay 40p for every visitor that clicks through from this particular price comparison site, we took it upon ourselves to set up tracking and investigate why people in Romania and India (for example) were repeatedly selecting product details from a UK shopping site, at a mounting cost to our client.

What we found is a marketing/income model that appears to be common to all major price comparison sites, that presumably costs UK retailers millions every year due to organised fraud on a global scale.

Price comparison sites such as Pricerunner, Dealtime, Kelkoo and Price Guide utilise affiliate marketing schemes in order to attract traffic to their sites. These affiliate companies arrange for banner ads to be placed on third-party websites and then pay the respective webmasters a percentage of what they (the affiliate companies) receive from the comparison sites for every click-through to a retailer's site that originated from the webmaster's website ad. Thus the comparison site, the affiliate company and the third-party webmaster all take a share of the 40p being paid by the retailer every time someone clicks on an ad and then clicks on a link to the retailer.

Such a system is obviously open to abuse by webmasters, so the affiliate companies attempt to control the abuse by setting cookies and limiting the amount of click-throughs that will be rewarded in any one day. The problem with this is that it is far too easy to fool such mechanisms, especially given how simple it is to clear a browser's cache, and the fact that AOL users are usually allocated a different IP address for every single click they make on the web (due to AOL's questionable use of proxy server farms).

In June 2004, CEO Scot Blum told a conference of affiliate marketeers that affiliate programs are rife with faked clicks from 'unsavoury participants'. He and others at the LinkShare Symposium 2004 said that the affiliate industry risks losing major marketers unless it can move to more of a pay-per-sale model. So the price comparison companies must know how flawed their income generation models are, but one such global company seems to have done nothing about it. Despite their assurances that fraudulent clicks are ignored, it is plain to see by comparing our captured click-through data with their bills to our clients, that no such data cleaning is taking place. Even repeat clicks from the same IP address to the same product are being charged for!

But the story takes a deeper twist into the realms of organised theft when you consider that specialised 'cash back' websites encourage people to sign-up for free accounts with them, and then encourage their members to visit listed websites and undertake particular activities that will reward the user with points, which are then turned into hard cash. Price comparison sites are frequently cited as the quickest and simplest way to make 'easy money' for very little effort.

These organisations offer a thin veneer of respectability by suggesting that the user buys products through links on their websites, receiving, for example, 7p back on every Pricerunner-initiated purchase. But items do not need to be purchased to receive a reward – the user needs only to click on the webpage link from the comparison site to receive their points worth 7p. It does not take much creative thinking to see what the real intention is here, and it also doesn't take much to work out exactly who else is gaining financially from every fraudulent click i.e. the person doing the clicking; the cashback site; the affiliate company; and the comparison site.

But it gets even worse. Spend just a few minutes searching on Google and you will find dozens of posts on forums that list in detail how to make easy money by spending a small amount of time every day clicking on links to and from price comparison websites. The information is even collated and published on specialised websites which publish claims like this:

"It is possible to earn money by simply performing searches or price comparisons on the reward sites listed on this page to earn over £50 per week or almost £3,000 a year for just a couple minutes of your time each day.

"All you need to do is to join the survey [cashback] sites listed below, they are all free to join and in fact most will pay you a signing up bonus. Then simply visit the sites on a daily basis and for each site click on the links mentioned below [list follows] to earn yourself some money for nothing.

"To ensure you receive all the daily clicks it is a good idea to clear your cookies in between sites and to ensure your pop up ads are enabled."

Other sites list 'helpful' hints about how to clear cookies and use AOL's dynamic IP addressing etc. in order to amass a small fortune at the expense of retailers. This is collective fraud on a massive scale and when you consider how many thousands of pounds that the average retailer is paying to comparison sites each month, and how many hundreds of retailers are listed on such sites, it is staggering to think about how much money is being unjustly paid out by retailers to price comparison sites, affiliate companies, cashback sites and fraudsters ...absolutely staggering!

Roy SinclairAuthor: Roy Sinclair trained as a graphic designer in 1982. He started Sinclair Design in 1987, initially as a design consultancy but then as a strategic communications consultancy.   G+