Affiliate Marketing: Discount Codes and Cash Backs, Friend or Foe?
Let’s be honest, the majority of online success stories have come about from the basic concept of affiliate marketing. Amazon is by far and away the largest online retailer and most famous for mastering the art of affiliate marketing with their Amazon market place and several direct merchant partnerships. This role of affiliate marketing has contributed to the success of hundreds of online retailers from the now major players such as play.com, to the smaller independent retailers. But is affiliate marketing still working?
Many of the established online retailers find it to be more successful now than it has ever been, but does this mean the same thing for the offline late comers to the affiliate marketing party?
Traditionally the system relies on partner sites promoting a merchant’s products, either in the form of a product sale onsite, or a redirection to the merchant’s site, where if a sale occurred, the partner would get rewarded for the sale.
Online marketplaces such as the ones seen on Amazon, play.com (playtrade), ebay etc have provided an avenue in which merchants can directly sell products to consumers helping merchants widen their true reach. This obviously benefitting both parties, the merchant gets an extra sale, and the affiliate gets a cut for their help in making the sale.
There’s always been a degree of cannibalisation when it’s come to affiliate marketing though, with shady affiliates using not so honest methods and abusing the ‘system’ so to speak, ranging from brand bidding to click fraud. As a result, there have always been some fears for merchants to jump on the affiliate marketing bandwagon less they become victims of this abuse. Credit where credit’s due, the majority of the major networks and affiliate programs have successfully been clamping down on such affiliates and providing merchants the tools to help minimise the risks of them falling victim to the abuse over the past 3-4 years; this is not to say that it doesn’t happen, but less so now than before.
What has come about over the past 3-4 years is the sharp increase in online shoppers becoming more accustomed to finding online bargains. This has led to a surge in popularity for discount code and cash back sites (think myvouchercodes.co.uk and Quidco). Both offer discounts for consumers, either in the form of money off their order or cash back after the purchase, of course these sites make money through the classic online means of affiliate marketing, but is it really the same thing for the merchant?
Now, when looking at the level of performance of an affiliate program, the usual stats that are looked at revolve around 1) Revenue and 2) ROI. This is generally a fair assessment on most online marketing activity, but due to the nature of these new popular affiliate sites, it’s worth taking a step back before getting excited about all those sales. If I’m being honest, in recent times the purchase process online, for me anyway, involves a need for a product, research on how to fulfil that need, compare the findings of products, choosing where to buy it and before hitting the ‘checkout’ button, a Google search for discount codes or a scan on cash back sites for that merchant or product.
At that stage I had been ready to purchase the product regardless of whether or not I found a voucher code that would give me 10% off or free delivery, so is it really fair for an affiliate to get rewarded for that sale? This is increasingly becoming the trend among consumers who are becoming more aware of discount codes available and cash back available from online retailers. Again, this isn’t to say all cash back or voucher code purchases online are from customers ready to buy or not, but what this shows is that it’s not all about revenue and sales generated, it’s worth looking at things like how many sales through affiliate marketing are actually bringing in new customers?
Other sites such as HotUKDeals.co.uk (a forum whereby members post ‘hot deals’) does more to instigate sales through discount codes being posted as well as cash back being available for products, as appose to just collecting and storing voucher codes for people to use. An application of discount codes in this manner works, and works well. Having said this, voucher code sites do have ways in which to spark interest in their customers, through newsletter mailing, facebook/twitter pages etc. but you have to begin to wonder, how many are really helping you create demand? Not to say there isn’t any value in using voucher code or cash back sites in an affiliate program, the volume in which these sales are coming through usually counter the reduced margins that a merchant may see. Just be aware that sales may simply be being attributed a different source and not generating any real additional income.
Looking at aspects such as new customer acquisition, and AOV’s can give you better insight into how well your program is performing and not necessary top line figures such as revenue and ROI. It could mean that customers online are so used to finding discount codes, that if they cannot find one, they may turn elsewhere.
Just remember, online buyer behaviour constantly changes, make sure you know who your real friends are.