Yesterday as I was adding new coupons for a ShareASale-based affiliate program I have noticed a little (but a very significant) addition to one of the fields you can fill out when adding a coupon/deal to the network. They now have a field for special commission to be applied on coupon/deal transactions. The fine print (and an important rule) may have been up there for some time, but I certainly don’t remember seeing it a couple of years ago. Under the special commission field it says (highlighting mine):

So “this commission amount cannot be less than your advertised global commission rate for public offers” and “for private offers, it must not be lower than your designated commission rate for that specific affiliate.” Very important rule!

I couldn’t help but recall Todd Farmer’s “ShareASale is My Network of Choice” post. For affiliates it is extremely important to have such an understanding mediator between them and the merchants.

It isn’t unusual for merchants (including some of the largest online brands) to offer lower commission rates on coupons (or to coupon affiliates). I like what I see ShareASale doing above. If the merchant doesn’t want to offer coupons through affiliates, that’s fine. Institute such a policy, and have your affiliate manager police it. If, however, you do choose to use the affiliate channel to distribute coupons, factor in the commission affiliates will receive into the discount you’re offering, and still pay the full affiliate commission. Kudos to ShareASale for supporting affiliates there.

Having surveyed over 8,500 consumers on questions related to online coupon use, Deals.com together with MyType have released a very interesting study that many online marketers should find of help.

The study profiles the demographics and psycho-graphics of both coupon “lovers” and coupon “avoiders.” One of the more surprising findings was that six-figure earners are actually twice as likely to actively seek and use online coupons than consumers with a lower income.

Here are also the profiles of both a coupon “lover” and a coupon “avoider”:

Coupon “lover”:

• Consumers with household income of $100,000+ per year are roughly two times more likely to be coupon lovers.
• People who score as extraverted and imaginative on a standard psychological assessment of personality are respectively 47% and 25% more likely than others to favor online coupons.
• Women are 67% more likely than men to be coupon lovers.
• College-educated people are 78% more likely than the non-college educated to be coupon lovers.
• Parents are 48% more likely than non-parents to be coupon lovers.
• Northeasterners are 66% more likely than West Coasters to be coupon lovers.
• People who identify social responsibility as the most important element of a good work culture stand out as 151% more likely to be coupon lovers than avoiders.
• Devoutly religious people are 31% more likely to be coupon lovers and substantially less likely to be coupon avoiders.
• Libertarians are 47% more likely to be online coupon users.

Coupon “avoider”:

• People who score as insecure or temperamental on a standard psychological assessment of personality are 33% more likely to be avoiders.
• Detached, sophisticated, careless and procrastinating people are also each at least 20% more likely to be coupon abstainers.
• Men are 27% more likely to be coupon abstainers.
• Insecure, low-income men are the quintessential coupon abstainers, being 130% more likely to avoid online coupons. Though they have household incomes of less than $50,000 per year, they are only a fifth as likely as others to be coupon lovers.

There is much more in the report, and you may download the full 45-page Coupon Study 2010 in PDF here.

In case you haven’t seen Eric Nagel‘s tweet this morning, here it is:

This affiliate is selling his ClubCouponCode.com website. In my opinion, this project/site of his is a great proof of the fact that affiliate marketing is alive and kicking. Of course, the coupon/discount focus of the website (a huge advantage in any economy, but especially in current one) is one of it’s biggest advantages. Another one (equally important) is that it is automated to display only the most current deals.

Traffic-wise within under a year the site went form zero to as many as ~6,700 unique visitors per month:

Earnings-wise it appears that it has gone from zero to $37,000 within one year. That’s approximately an average yearly salary in the US (which judging by the data from the Department of Labor and the US Social Security Administration is around the $40,000 mark):

Impressive job, Eric! Good luck on the sale, and thank you for this example which clearly illustrates that with proper approach and persistence an affiliate marketer can still quit their day job in a year.

If you’re in affiliate marketing, you’re more than likely already aware of the fact that Tim Storm, the founding CEO of FatWallet has been named finalist for Entrepreneur of 2010 awards by Entrepreneur Magazine. That’s a huge achievement for an affiliate marketer, and congratulations are certainly in order.

There is another achievement of FatWallet that I’ve suddenly discovered the day before yesterday (while searching for a GoDaddy coupon looking to renew registration of a domain name I own) that I’d like to share with you today.

As always, I went to Google, typed in a [merchant name]+[coupon] key phrase, and guess what I saw? The Google Suggest‘s dropdown showed me:

Wow! Now that is an achievement! Without even seeing the top 10 search results, I already saw an affiliate site. When I clicked the link (remember, it was 07/31) I saw a thread on FatWallet’s forum where multiple suggestions for GoDaddy coupons were listed, and FatWallet-exclusive ones topped the list (all naturally hyperlinked to set the affiliate cookie):

Next day (08/01) I decided to email FatWallet about two merchants whose programs I’d love for them to partner with. I am currently in Russia (Moscow time zone). So my late morning was their late night (FatWallet is headquartered in Illinois, hence the Central Time zone, hence 9 hours behind me now). It was also Sunday. Nevertheless, their response followed 2 minutes after the submission of question (or at at 2:32 am CST):

I guess, a business like this truly deserves to be highlighted.

A few days ago, having registered that in April 2010 “35 million consumers visited coupon sites” (a number that was up 5% from the year before), Compete reminded us of the findings of their “Online Shopper Intelligence” study originally released in February 2010.

In the ranking of sources / tools on which consumers depend while shopping online Coupon Sites (used by 35% of online consumers) are second only to Search Engines (used by 61%):

The numbers of Coupon Sites’ users are growing as it was expected [see my Bright Future for Coupon Affiliates December 2009 post], and it was interesting to review Compete‘s findings regarding online coupons and coupon shoppers:

1. Coupon codes can make or a break a sale — 57% of consumers who used a coupon code during their last online purchase said that if they had not received the discount, they would not have bought the item(s)
2. Consumers who use a coupon spend almost twice as much — The small discounts consumers receive encourage them to spend more money ($216 AOV with coupon versus $122 without coupon)
3. Coupons can increase customer satisfaction — They are an effective way for retailers to build good will with their consumers. Of those that did use the coupon, 92% were satisfied with their shopping experience (as opposed to 88% who didn’t have a coupon to use). The difference of only 4% may, however, be deemed a pretty insignificant one to make a conclusion. Hence, Compete’s usage of the word “can” there.
4. Coupons can increase customer loyalty — Those who used a coupon said they are more likely (91%) to buy from the retailer again when compared to those who did not use a coupon (86%).

More (with charts too) in the Coupons Are Good For the Bottom Line post on Compete’s blog.

If you’re an affiliate, and aren’t using merchant coupons in your marketing mix, I hope the above convinces you otherwise, and another big reason for that is that coupons help increase affiliate conversion (substantially, I must add). The above study didn’t look at things from the affiliate marketing angle, but comparing conversion rates of coupon versus non-coupon affiliates, I see a significant difference in conversion. It doesn’t mean that all affiliates should turn into “couponers”, but adding coupons into the mix will benefit any type of affiliate.

This month’s Internet Retailer magazine featured an article on the growing use of coupons, the ways these value-conscious consumers shop online, and what some merchants do to keep the frugal shopper yet by-pass affiliates. At this time the article is also available online here. It opens with these words:

Staffers at Macys.com detected a new pattern in customer behavior last spring: consumers would add items to shopping carts, leave the site and then return with discount codes they had found on the web sites of Macy’s affiliates. Only then would they complete their purchases.

“We said, maybe we should just do this ourselves,” says Kent Anderson, president of Macys.com

And they did — by adding a “Find one now” link next to the customary promo code box that many online merchants have on their shopping cart pages:

As a result, “consumer no longer has to search the web for those savings” and can complete the checkout without leaving the Macy’s website, which “also saves Macy’s the affiliate fee, typically 4-5% of the purchase amount,” says Anderson. Read more about it works in Michael Vorel’s post here.

Here’s an interesting detail though:

1. I go to an affiliate website that is focused around Free Shipping (either directly, or because I was looking for a free shipping deal at JC Peney, or Kohl’s, or some other Macy’s competitor) — FreeShipping.org — and while originally looking for something totally different, I decide to click on Macy’s link:

2. Upon reviewing the free shipping offers for Macys.com, I pick one, and click it (setting the affiliate cookie).

3. I get to Macy’s website, add the items I want to my shopping cart, and proceed to checkout; and I see exactly the same “Find one now” link again.

My testing has not revealed any affiliate cookie overwriting upon clicking the links in the pop-up window (shown after following the “Find one now” link), but I can definitely see some affiliates getting extremely uncomfortable about the way it all works now (it’s really just a step away from turning bad).

Additionally, if a customer originally comes to your website from an affiliate’s website (coupon or not), is offering them a coupon really gonna save your margins? Say, it was a shopping comparison affiliate that didn’t push coupons, but you are now offering the consumer an additional discount.

Macy’s current system obviously has some holes to patch.

Are There Better Solutions?

I’ve had a merchant bring up the question of paying too much (discount to customer + commission to affiliate) to me literally two days ago, and this is certainly an area of concern for many merchants with affiliate programs. I understand their worries, and I have seen some banning coupon affiliates altogether, while others deciding to pay from low to no commission on coupons. My opinion is that neither of these decisions are good. You can still work with coupon affiliates, and not let the system devour your profit margins. Using coupon affiliates to push offers like Free Shipping on orders over a certain amount, or Deal of the Day/Week offers, or discounts only on select products/services are just a few of the techniques a merchant can use.

What are your thoughts on this?

Not too long ago I’ve blogged about the bright near future for coupon affiliates. It seems that loyalty affiliates have a future as well, and certain strategic factors will make (or are already making) some of them significantly more competitive than others.

For instance — according to the data from a CMO Council study entitled “Leading Loyalty: Feeling the Love from the Loyalty Clubs” provided to eMarteter on January 25 and published today — over 50% of Internet users strongly prefer loyalty programs that provide personally relevant offers. Common sense, isn’t it? You’d think… But not all loyalty affiliates are taking advantage of the opportunity to customize, and truly target their offers.

Here is a detailed breakdown of how popular various factors that encourage U.S. web users to join loyalty programs are (highlighting mine):

Savings and personalization seem to be the keys to success, and these certainly remind me of that earlier-quoted coupon affiliates post. The secret to success of the best couponers I know is precisely in developing their own intricate blend of these two components that make customer stick, click and buy.

Once again, the full eMarketer’s post on the topic may be found here.

A merchant has emailed me:

A newly-joined affiliate is asking if we can offer them exclusive coupon codes. He says these are extremely popular and convert especially well for them. What exactly are exclusive codes? [underlining mine]

The technique of enticing coupon affiliates with exclusive codes is a widely-spread one. In simple language, it entails offering an affiliate a coupon code (or a few) that would be available exclusively through his/her website. So, for example if you already have a $10 off deal available for all affiliates to market, but offering a couple extra bucks off still makes economic sense to you, putting together an exclusive coupon for $12 off and making it available through one (or limited number of) promising affiliate(s) would be a good move.

If, however, you cannot offer any better discount that the already-existing ones, you can still put together special affiliate-specific coupon codes (not as powerful, but certainly more personalized).

I recommend that the very code reflects the name of the affiliate’s site (good co-branding opportunity that benefits both sides). Let’s say their website is called CouponDaddy.com, and you want to have them offer a $12 off coupon. I’d name that code CPNDAD12 then.*

It is a really simple concept, which frequently yields good results.

_________________________
* Flee from use of zeros (which may be misread for letter O), capital letter “I” (which may be misread for number 1), and any other confusing characters

MediaPost has published some information that coupon affiliates should find of extreme interest. Referencing a recent report by Borrell Associates, MediaPost wrote:

…Borrell Associates estimates that the $8.3 billion value of online coupons redemptions in 2009 (including via the Internet, email and mobile) will jump more than 50% to $12.7 billion in 2010 and to $22 billion by 2014.

So the report projects a really steep growth of online coupon use: by over 50% in year 2010, and almost two-fold between 2010 and 2014.

Another interesting observation:

In explaining the growing reliance on digital distribution, Borrell pointed to a study by Nielsen partner NeuroFocus tracking consumer brainwave activity, which found that online coupons outperformed print ones in categories such as attention, emotional engagement, memory retention and effectiveness.

I am not surprised.

Neither am I surprised by the fact that most of the coupon websites quoted in MediaPost’s article are either active affiliates themselves, or are partnering with active affiliates for the distribution of online coupons. Having analyzed some of the top coupon affiliates using Quantcast.com, here are the monthly traffic averages that I see:

1. FatWallet.com – 3.2M
2. RetailMeNot.com – 2.7M
3. DealNews.com – 2.6M
4. CoolSavings.com – 2.0M
5. CouponMountain.com – 1.3M
6. TechBargains.com – 987.8K
7. DealsPl.us – 885.9K
8. CouponCraze.com – 830.5K
9. CouponCabin.com – 694.5K
10. DealTaker.com – 657.0K
11. Savings.com – 632.9K
12. MomsView.com – 490.0K
13. DealCatcher.com – 444.7K
14. CouponAlbum.com – 392.4K
15. Bargainist.com – 388.0K
16. CouponShare.com – 325.1K
17. UltimateCoupons.com – 305.0K
18. Offers.com – 284.8K
19. PromotionalCodes.com – 139.5K
20. CouponWinner.com – 134.4K

With the projected growth in demand for online coupons, there is still room for new affiliate players to enter the market. While the couponing niche is already quite crowded, I do believe that there is still room for new and innovative affiliates to come in an grab their share of the pie.

The pre-Christmas shopping season is gaining speed and volume every day, and it seems appropriate to look into what seems to be the best converting, and most demanded holiday offer.

Many consumers will be looking for coupons, but merchants that cannot offer these can still offer something for their affiliates to market aggressively. I am referring to what seems to be the most beloved Christmas offer from a consumer’s standpoint — the free shipping offer. It will be especially actively sought for over the next few weeks, and it is one proven way to increase conversions.

Hitwise Intelligence has published some statistical data which shows that the “the sharpest increase” in free shipping demand historically occurs “at the end of the year for the holiday shopping season”:

It is also interesting to note that since 2006 the “search breadth” for the “free shipping” key phrase “has been accelerating earlier each year” reaching its pinnacle “is the first week of the New Year, as online buyers look for post-holiday sale items” [more here].

A few days back the Internet Retailer has also published an article with stats and patterns that the top 100 e-tailers follow in regards to deals, discounts, and free shipping. Here are some of the key points that have been made about the subject of this post:

• The number of e-tailers who offer free shipping this year has grown from 61 to 63
• 44% of them attach the free shipping deal to a minimum order value
• Minimum order value ranges from $30 to $699, but in most cases the bracket is $30-$75

If you are not yet offering free shipping through your affiliate program (and/or any other online marketing channels), now is the time to do it!