Singapore’s Shopback chips away at Facebook, Google’s online ad dominance

Tucked away in a refurbished factory building in southwest Singapore, Shopback’s headquarters houses only 50 people – just a quarter of its workforce. The affiliate marketing firm may only have a fraction of the employees that giants like Facebook and Google have, but Shopback has big dreams: to offer businesses a more efficient way of reaching their customers.

Photo credit: Alberto Resco.

In Southeast Asia, Shopback has gained traction thanks to its cashback app with more than 8 million users and 2,000 merchants. When users open the Shopback app, they are greeted by merchants ranging from ecommerce platforms like Lazada and Shopee to ride-hailing firm Grab, and food delivery brands like Foodpanda and Deliveroo. Lazada is owned by Alibaba Group, which is the parent company of the South China Morning Post.

Clicking on a merchant redirects the user to the appropriate site, and if they make a purchase, Shopback earns a commission and shares it with the user via a cash rebate. More than US$30 million in cashbacks have been awarded up to April this year.

It is seen as a win-win for everybody: merchants only pony up fees if a transaction is made, Shopback takes a cut, and users get money back on their purchase.

“Our goal is to help our merchants [and] to ensure that the customers we bring make a purchase,” said Joel Leong, Shopback’s co-founder and head of merchant development.

“Merchants spend money on all kinds of marketing, including on Facebook and Google advertisements, which typically charge by cost per click,” he said. “For Shopback, we only charge when a sale is made.”

In the digital advertising industry, Google and Facebook reign supreme. Merchants hoping to reach the billions of users across their platforms must bid for advertising slots or keywords. The more popular an advertising keyword is on Google, for example, the more expensive it will be for merchants. Advertisers also pay for each time a user clicks on the ad, regardless of whether a transaction is made.

However, Shopback’s founders are under no illusion that they can take on giants like Facebook and Google, the latter of which employs about 2,000 people in Singapore alone.

“It’s not about superseding giants like Facebook or Google, it’s about taking away market share,” said Leong. “The pie is huge.”

In Southeast Asia, Shopback is ranked the number three publisher in terms of volume and retention, behind Facebook and Google and ahead of Twitter, according to the AppsFlyer Performance Index for 2018.

The model of referring customers and taking a commission when a sale is made is known as affiliate marketing. US firm Ebates has been operating this way for almost three decades, and Fanli in China has found similar success, with the Shanghai-based company valued at over US$1 billion. With the affiliate marketing model succeeding in the huge US and Chinese consumer markets, Shopback is confident it can work in Southeast Asia.

In just four years, Shopback has gone from launching in Singapore to expanding in markets such as Thailand, the Philippines, Taiwan, and Australia, as well as in Indonesia – Southeast Asia’s most populous country.

Southeast Asia, with a population of over 600 million and a high smartphone penetration rate, is an attractive market for Shopback’s mobile-first strategy. The region is also seeing fast growth in ecommerce amid the rising affluence of consumers and as more people come online. Already, the region is seeing ecommerce competition ramp up between platforms such as Lazada and Shopee, as well as big local players such as Indonesia’s Tokopedia and Bukalapak.