Last Friday another affiliate-marketing-may-be-dead article has been published. Authored by Jamie Salvatori, founder and owner of Vat19.com (an online store selling unique “curiously awesome” gifts), this Practical eCommerce article started by calling coupon affiliate sites “parasites that should be eliminated from the web” and argued:
Coupon and deal websites provide zero value. Sorry, but broadcasting the free shipping offer that is already plastered across my website is of zero value. And posting a coupon code that a visitor could just as easily receive by signing up for a free email newsletter is not providing value. You are not sending new customers to me. You are hijacking my existing customers! [read full article here]
It isn’t the first I hear this kind of rhetoric when merchants are talking about coupon affiliates. In fact, having entered affiliate marketing a founder and owner for an online gift store myself (over a decade ago), I’ve been in Jamie’s shoes as a merchant; and I am now (nearly weekly) having similar conversations with merchants whose affiliate programs we manage or audit.
I know, some will be offended by Jamie’s words. But if we shift the focus from the form (in which the point was put across) to the substance (of his worry), many will agree that the concern is legit. Merchants want affiliates who bring them customers, not take the existing customer from them, getting paid for a sale which they did not refer, in the first place.
Interestingly enough, earlier this month I’ve interviewed Mike Allen of Shopping-Bargains.com and brought up the topic of value add too. I said:
We often hear that coupon affiliates are seldomly adding value. What do you say in response to such statements? And if an affiliate website that’s distributing coupons and discounts can indeed add value, can you give us 3 ways how an affiliate manager can enhance this arrangement?
Here is how he replied:
Just like we can eat well or badly, a retailer can coupon well or poorly. Certain foods, like eggs and butter, often get a bad rap while the real problem is likely an out-of-balance lifestyle. The same can be true for coupons. Coupons can encourage higher order sizes or shrink them. Coupons can erode profits or expand them.
So what’s a retailer to do?
There are many options but here are three things that can make a significant difference:
Instead of banning coupon affiliates, I suggest retailers embrace them when possible: As long as coupons exist, coupon sites are not going away. If a retailer does not affiliate with a coupon site, that doesn’t mean their coupons won’t end up being posted there. Instead, it means that coupon site is not governed by any affiliate agreement so they can post anything – including unauthorized coupons and even bogus ones.
So, my suggestion is to embrace as many reputable coupon sites as possible to control or manage the space. A merchant’s affiliate agreement should clearly lay out the terms for coupon posting and, if they want to work with you and earn commission, the coupon site will have to follow your rules. It’s win-win that way.
Carefully plan your coupon strategy: Plan it just as customers carefully plan their shopping cart size to maximize coupon discounts and free shipping thresholds. You know your average order size so don’t coupon any minimum below that.
For example, if your average order size is $80 you might consider a $10 off $100 coupon. That means you and your customer both give up $10, but bottom line, you grow your average order size by $10, which, now $90, represents a 12.5% improvement. If you had discounted just $5 off $75 then you would likely end up with a lower order size than before. That would cannibalize your sales numbers and would be a poor coupon strategy. That would be a lose-lose strategy for you and your affiliates.
Make sure you can control the coupon box in your shopping cart: If possible, auto-populate the coupon code there and automate the discount displayed in the shopping cart when an affiliate link is clicked from a coupon site. If a coupon link wasn’t clicked, consider suppressing the coupon box altogether. If you cannot do that, then create a generic “placeholder” coupon and message it as your everyday low price or similar.
The goal is to discourage your customer from leaving the shopping cart to search for a coupon – you don’t even want them to think of that option. You also don’t want them to have any doubt in the back of their mind that they are getting a good buy or your best price. [read the full interview here]
To eliminate the problem of last minute coupon search I always recommend that merchants implement what I call “Macy’s solution.” You may read more about it here, but the essence of it is to discourage people from leaving your website (in search of coupons) by allowing them to “search for coupons” right within their shopping cart. I think every merchant should have something like this in place (especially, if you have an affiliate program).
Finally, a recent FeedFront article by Blair de Jong, affiliate manager for iStockphoto and Getty Images, has come to my mind too. It’s a good quick read on the subject of coupon affiliates, and whether they add value. It seems that iStockphoto/Getty Images is heavily relying on coupon affiliates, and does see value in the relationship. Of course, everyone’s business model is different, but Blair made some interesting observations in his article [read it in full here].
Love ’em or hate ’em, coupon affiliates aren’t going anywhere. If you have/run an affiliate program, you must learn to work in the ecosystem. I do believe that with the right approach, they can provide value. You just want to manage that affiliate program in a systematic (and firm) way, knowing exactly what you’re doing, and why you’re doing it.
17 thoughts on “Coupon Affiliate Sites: Do (and Can) They Provide Value?”
I really have to wonder what percentage of coupon affiliates are ranking for a merchant’s name + coupon as opposed to the number of affiliates who post coupons (like me) who are trying to send traffic via posting daily deals, special deals, etc to our existing audiences. I mean, realistically only 10 affiliates tops are going to rank on the first page of Google. Of those, 2 or 3 are going to get the majority of the traffic. If the merchant is ranking first, they are going to get most of the traffic to their own coupon page. If you cut out all affiliate sites (or discount their value) you are losing out on all of the coupon affiliates who send traffic in OTHER ways besides coupon search traffic, which I think is many of us.
Perhaps discounting these affiliates is only valid in cases with extremely high brand loyalty? Otherwise, in ecommerce we have to assume that there are usually a multitude of factors which contribute to the final sale.
By making coupon sites your affiliates, you immediately gain access to a number of compliance strategies you wouldn’t have otherwise had.
For example, let’s say you want to distribute a code to a small subset of customers. You choose to distribute that code via an email campaign—so you want to limit the cross-over to other channels as much as you can.
If coupon sites are acting on their own without participating in your program, they have little reason (short of legal concerns) to avoid posting this code if they find it. However, if they’re your affiliates, your contracts with them immediately give you a point of leverage.
It’s a useful strategy for keeping your coupons a bit more targeted.
Well thought out response! I don’t believe in painting in such broad strokes as Jamie did. I get his frustration but you don’t want to put every coupon/deal site in the same bucket. You might end up throwing the baby out with the bathwater. Lastly, it is important to remember that coupon redemption is a consumer behavior – not something that is caused by deal and coupon sites.
Some really good feedback on this article, Geno.
I would like to point out, like Trisha said, that most coupon sites are not able to rank with premium spots on search engines so most sales attributed to these non-ranking coupon sites are probably due to the coupons they put in front of a customer. Those sales would likely have been lost to the retailer otherwise.
Coupon sites often have their own loyal following and so they pull in customers who don’t want to subscribe to the retailer’s newsletter. They also reach those who aren’t visiting their favorite retail sites regularly to see what promotions are available. A coupon can be “plastered across” the retailer’s site but if these customers aren’t there to see it then what good is that in making a sale?
For retailers worried about cannibalizing existing sales, consider this: affiliate agreements can be customized to reward these above-noted affiliates with enhanced rates over those who win the search engine ranking games. Also, retailers need to embrace new technologies like that offered by Todd Crawford’s company Impact Radius. They have the ability to track custom or exclusive coupon codes at the individual affiliate level (even those used without an affiliate link or click). If a retailer can track then they can filter out unauthorized coupons like those send via their newsletter or posted on their site.
In conclusion, I feel these technologies (and more) when matched with a prudent coupon strategy make coupons a very powerful and compelling tool for reaching more customers, especially those who need extra nudging or hand-holding to complete the sale. I also think the evidence is solid that affiliates are especially well-suited for handling these time-consuming tasks.
I’m on the same page with Todd and you, Geno.
Not all coupon sites are created equal, the author probably got overwhelmed with low quality sites and assumed they are all alike (=only rely on SEO play).
The good/great ones have their own traffic and grow their own audience. They promote specific goods/coupons to segmented and qualified user base.
“Otherwise, in ecommerce we have to assume that there are usually a multitude of factors which contribute to the final sale.”
Yes, but that’s not what most do. They disregard testing to quantify the relative contribution, and instead arbitrarily pick a attribution system that BOTH ignores the multitude and excludes large slices of it as well.
There is no inherent evil, just performance based value, which certainly does vary.
If you don’t analyze, segment and strategize well, then it is easy to paint this with a broad brush –> A Zamboni driver doesn’t face or present mortal danger each day, but put a 4 year old at the wheel and everyone’s a bloody mess. Don’t blame the Zamboni.
If you’re the type of store that has a 4-year old driving your Zamboni, well geez, then do have the Zamboni completely removed from the building.
Here’s the silver lining, Pat:
By discounting the value of certain affiliates and cutting them from the program, a merchant actually creates opportunities for competitors. Other merchants can take advantage and tap the potential of all those disregarded affiliate sites (coupon or not).
Of course, coupons may still appear on coupon sites. But the added friction of expired codes, fake codes, and other issues can easily end up hurting the merchant who cut those affiliates from their program.
Zambonis don’t kill people. People do.
Someone tell the president: We don’t need Zamboni control!
I think the question of the value of coupon sites in a program depends a lot on what the affiliate does to drive traffic and how much they care about complying with your terms and conditions.
I don’t see a ton of value in coupon/deal affiliates that base all of their value on ranking for TM+Coupon and do nothing else to actively promote the merchant. On the other hand if that same affiliate active promotes a merchant offer via social/email/enhanced placements they can add some value.
My biggest issue with Coupon channel is policing – I’m beyond thankful that BrandVerity has added some pretty useful features to help with policing restricted codes. I’m also pretty tired of the b.s. argument from some of the sites that “anything goes as long as it’s user submitted.”
In some cases, it’s borderline extortion – stay engaged and lose some margin to keep them from running wild with your codes, or cut them lose and have them send traffic from the pages they built out on your trademarks + coupon to competitors… I’m shocked no one has sued on that yet with some of the biggies.
I think Wade highlights one of the big challenges. The big coupon sites will appear organically for brand + coupon regardless of whether they are part of any given program. Just check out a search of “Zappos Coupons”, a company that has never offered coupons. None of those organically ranked sites are part of the Zappos program.
I don’t know that I have an opinion on the optimal strategy for a merchant yet. The data is surely there for a merchant to figure it out, but I agree with Pat that few merchants are actually doing the analysis (correctly), let alone applying it to their programs.
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The well managed affiliate programs always win with coupon sites. It’s all about how it’s done and that was a major point of this article. I have a rotating showcase on my coupon site that visitors can watch all the latest coupons be advertised. That is invaluable advertising that the merchant would never get from their own website.
Also, to add to my previous post… another thing that merchants need to consider is that when customers go looking for coupons then it doesn’t really matter if there are 10 affiliates or 1000 affiliates promoting that coupon, only one affiliate will get paid for the sale. In most cases it will be retailmenot since they are virtually assured of the no 1 spot by Google for nearly everything.
I can’t see any harm in sharing the sales around so if a smaller affiliate manages to get in just below retailment and makes the sale instead then that can only be a better outcome for all. The first thing is that the affiliate will realize your program converts and will be inspired to put more effort into promoting the merchant in other ways as well. So there are many benefits not seen on the surface by some affiliate managers but good experienced AM’s do know a lot of this and therefore accept coupon affiliates as part of the whole picture.
Recently I starting putting a new website together and I wanted to find some good converting merchants to place their product links on. How did I find the best top merchants for this? I looked back at my accounting software and found the most consistent and converting merchants over the last 5 or so years. many of them were ones I made sales for on my coupon site. If I hadn’t made those sales then I would have gone to ones that would. That is an example of how an affiliate is working on things that AM’s might not realize goes on.
Wow this was a great article on affiliate couponing. There are great benefits to merchants joining the coupons affiliate. Being able to govern what they do is probably the most important.