Practical Ecommerce

Is Affiliate Marketing Dead?

This is going to be a short blog post and for that I will apologize up front.

But, I intended for this to be more of a comment-driven exploration than a “this is how you do this” type of blog post.

Recently, we switched affiliate network providers (to one of the most respected in the space) and were absolutely stunned to find that over 80% of the applications to our program are from “deal”, “coupon” or “virtual mall” websites. To me, these sites are total parasites that should be eliminated from the web.

Side note: As I think back upon the sales pitch that was made to me to get me to join, I’ve become more furious. Their questions all centered around whether or not I had a lot of existing traffic. Basically, they wanted to ensure that their filthy coupon sites would have enough built-in traffic from which to leach. Stupidly, I didn’t realize this at the time.

Back to the coupon affiliates. Let’s break down their so-called value. A customer is already on my site and ready to make a purchase. They see a “coupon code” box, open up a new browser tab, and search for my company name + “coupon code”. Google returns a bunch of slimy websites that purport to offer HUGE SAVINGS! on all things related to my site. The user clicks through to “activate” the offer, proceeds to make their purchase, and the affiliate gets their cut of a sale that would have taken place regardless of their existence. They did not send us a lead or a sale. They interrupted the flow of the sale. They’re a useless middle man. It’s almost antithetical to the entire premise of the Internet.

Affiliates, by definition, are supposed to be providing enormous value. This is why they get a cut of the action! 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!

Coupon sites are a pure SEO play. And I understand why they’re so enticing to create. You have a built-in audience. There are coupon feeds to automate content on your site. Simply put, it’s far easier than carving out your own audience.

Because these types of affiliates are essentially stealing sales that a merchant would otherwise get, my suggestion to merchants would be to start your own “coupon” or “deal” section on your website. You should rank very well for your company name + “coupon”, “promo” or “discount code”. Funnel that organic traffic right back to your site and forget those inane coupon sites! Secondly, I wouldn’t suggest allowing any coupon sites into your program. We have denied every single one… which has left very few other sites to choose from.

So, let’s return to my original question. Are true affiliates (the ones that own a niche and send their dedicated readers to your store) a dying breed? And why should they bother competing against the parasitical coupon stores? I would argue that they shouldn’t… especially since their link could be overrode at the last instant by the consumer who searches for a coupon immediately prior to placing their order.

So, logic would dictate that merchants, realizing that there is no inherent value in coupon sites, will stop offering commissions to them. Eventually, with no revenue stream, will the coupon sites disappear? Will this allow “true” affiliates to return?

What are you feelings on the matter? Let me know in the comment section!

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Comments ( 23 )

  1. Evan Weber February 22, 2013 Reply

    Coupon sites and coupon code keyword bidders are in their own segment and totally seperate from web publishers, bloggers, fan page owners, newsletter owners, and loyalty portals. The best thing about affiliate marketing is how diverse it is. Yes, a lot of coupon oriented affiliates has sprung up in the last 5-7 years, partly because of the bad economy and more thift oriented consumers looking for coupons. It’s up to the merchant running the affiliate program to recruit more of the right types of affiliates through various means such as using the networks’ recruiting tools, contacting websites in their niche, and leveraging agencies with niche affiliates in their reach. Affiliates can be advertised for in search and on Facebook very effectively. I’ve beening doing this for 10+ years. The networks are never going to discourage a merchant from accepting a coupon affiliate because they make money from it, and some data shows that people that use coupons spend more and become more loyal, which is debatable. No company running an affiliate program should pay all their affiliates the same rate anyways, the program should be micro-managed based on the value each affiliate is delivering. This can be accomplished by passing the publisher’s ID with the orders and then seeing the lifetime value of the customers over time. If the company feels they would have those sames anyways they pay a seriously reduced commission or not admit them as you suggest. The merchant can also run their own coupon code ads in Google and Bing Ads, as well as launch a page o ntheir site for organic rankings with the "official" coupon codes. They can also give a coupon to all visitors in the checkout so they never go looking for it.

    Affiliates with niche sites that bring in new customers can be awarded greater commissions rates, however what happens is the niche affiliates usually don’t realize those good commisison rates because the company is payout out to the coupon affiliates and lumping all affiliates together, which should never be the case. There definitely are 1000’s if not 10s of thousands of great affiliates in most niches out there to affiliate with, but most copanies don’t have the connections, where with all, or staff to coordinate the recruiting effort. To really grow a large productive affiliate program, it takes years of recruiting on the network and off the network, and then making the whole program more productive by actually managing all those relationships, runnign sales contests, awarding bonuses, and other motivational actions.

    To suggest affiliate marketing is dead is completely absurd, it’s bigger than ever, however you have to have competent people running your affiliate program, actively recruiting niche affiliates and other companies to be your affiliates, and proactively managing all the relationships. I founded a company 6 years ago to focus on just that and it’s still a working a progress and can always be more effective. If you just rely on what any network brings you, it likely won’t bring much value, although some companies think it’s doing great with the coupon sites and toolbar publishers. Personally, I think there can be a place in the program for most every type of affiliate at the right commissions rate. However, I’ve had to err on the side of maximize ROI for our clients to really deliver value. Recruiting niches is a much harder effort that’s for sure because even though they are related sites they still covert much less well that a coupon site would since that person is in the buying process. I’m gald you wrote the piece to bring the issue to people’s consciousness. There is a better way forward for any company with niche affiliates, as long as the product isn’t too niche. The other intagible that can’t be overlooked is the merchant’s own website conversion rates. A lot of companies just expect their affiliates to produce and they never work on improving their own conversions, and then compplain the niche affiliates don’t produce when they aren’t helping the cause. So the issues is much broader than just coupon sites or not coupon sites. That’s my 2 cents.

  2. jasontk February 25, 2013 Reply

    My company (http://www.magestore.com/magento-extensions.html/) ran an affiliate program in the past and one day I figured out most of our affiliates are coupon sites. And I was furious just like you, Jamie. You said totally right about them! They stole our sales, not providing any value to us.
    Nowadays, I see most of affiliate programs aim at their own Customers by providing easy ways for their Customers to share links through email, social network.

  3. caneman February 28, 2013 Reply

    This has the be the most infantile post I’ve ever read. You may might to consider a new line of work or at minimum read this article on the very same site from someone who appears to have done her homework and appears to be far more educated: http://www.practicalecommerce.com/articles/3927-Online-Coupons-Pros-and-Cons

  4. dpurtzer February 28, 2013 Reply

    well stated Even Weber!

    I’ve been in the ecommerce and affiliate industry for about 10 years (for background and history of affiliate marketing go here: http://en.wikipedia.org/wiki/Affiliate_marketing). During this time, I’ve instructed many people on how (and how not) to run affiliate programs. One thing that always runs true is that those who are not educated on affiliates, or not willing to invest in an affiliate program are not going to succeed.

    With this being said, a person who is going to embark on a journey into the world of affiliates must have a plan. A plan for each vertical is also a must. Coupon/Discount sites is a vertical that exists on the web, and if you want to enter it you must have the tools to support it as well as monitor it. What always amazes me is the criticism that comes about from merchants who do not have a clue who their affiliates are, do not provide rules of engagement, and then get mad when affiliates do not operate within a set of rules that are non-existent. One thing I know for certain is that affiliates will push the envelope which is precisely why there are some very rich and successful affiliates and programs out there. Give rules and guidelines and be ready to monitor activity within your affiliates. Build a relationship for the long term and give affiliates tools to be successful. Treat affiliates like partners and get to know your partners.

    I don’t know of too many people that would admit that they would go into business with someone if they didn’t know anything about them. Affiliates are no exception. If you are not willing to support affiliates, or more specifically in this case coupon/discount affiliates, then don’t allow this to take place in the first place. The merchant is the owner of the merchandise and has control. Don’t accept affiliates, fail to support them and then hold them accountable for issues that occur after the fact. Have a plan, support your partners, grow the business and then measure the success.

    In regards to "Affiliate marketing is Dead". I would suggest that those not close to the affiliate world check out stats and growth in the industry overall. Forrester provides several stats as do sites such as http://www.affiliatesummit.com and http://www.a4uexpo.com. These particular sites are also tied to trade shows specifically aimed at the affiliate world. Having attended these shows religiously for the past decade, I can assure you first hand that there are more attendees and more opportunities tied to affiliates every time a show occurs. Affiliates have had to change per change in algorithms, and changes in the online world overall. My suggestion is to look at what successful affiliates are doing and you may learn a thing or two to apply to your own business practices.

  5. Bryan J Cardillo February 28, 2013 Reply

    Thank you Evan Weber and caneman. Both of you understand, unlike the dimwitted author here, that experience is the key, and that this isn’t an industry of rapid success that happens in mere minutes. It takes time and cultivation, like any proper business endeavor, to found the relationships with the loyalty partners, product comparison engines, and emerging markets publishers that really make this channel worthwhile.
    Next time Jamie, maybe give it a little more time before you preach. Sounds like you’ve been doing this for about 48 hours.

  6. erin24 February 28, 2013 Reply

    It’s clear from this post that you’ve never been a person that wanted or needed to use coupons. As an avid coupon user, I’m thankful to coupon websites for creating a single place where I can go to find savings. Sure, I could sign up to receive emails from merchants, but do I really want to clog my inbox with tons of emails from every store I shop at? Or search each retailer’s website for their coupon page? No, I want to go out and find a single coupon site that has everything in one place. Also, I’ve left many shopping carts without completing a purchase because I couldn’t find a coupon or bought a couple extra things on a site because I did have a coupon. So the idea that the merchant is somehow losing money by offering coupons is silly.

  7. CouponAffiliate1000 February 28, 2013 Reply

    Jamie Salvatori is right that most coupon sites drive the majority of traffic via SEO (and often SEM). So the question becomes whether or not those coupon sites are simply eating into sales.

    Now, it appears that Jamie is the founder and owner of Vat19.com If you Google "Vat19 coupons" and look at the landscape you’ll see the following:

    RetailMeNot is bidding to the top spot (PPC) and taking 20-40% of visitors to a page that features RetailMeNot’s email sign-up

    http://www.retailmenot.com/landing2/vat19.com

    In the top organic spot, RetailMeNot is showing codes for all of Vat19’s competitors

    http://www.retailmenot.com/view/vat19.com

    Tjoos.com (#2 on organic) has Adsense featured on landing page

    http://www.tjoos.com/Coupon/7346/Vat19#b

    Dealspl.us (#3 on organic search) has a prominent email sign-up and Adsense at the top of the page

    http://dealspl.us/coupons/vat19

    Couponsnapshot (#6 on organic) has a prominent email sign-up and Adsense featured on their page

    http://www.couponsnapshot.com/merchant-Vat19-coupons-deals-12139.html

    Whatsyourdeal.com (#8 on organic) is a page that says, "Warning this might harm your computer" (on Safari, Chrome & Firefox)

    http://www.google.com/interstitial?url=http://www.whatsyourdeal.com/vat19-coupons.html

    According to Google’s traffic estimator, approximately 10,000 people a month are googling "Vat19 coupons" and similar terms. Those 10,000 people are now being taken to pages that feature the affiliates’ email sign-ups, Adsense ads, or prominent links to Vat19’s competitors. The bottom line is since the coupon sites on SEO won’t make a penny from Vat19, they’re going to do whatever they can to make money in other ways, and that means that their pages are going to be built to drive traffic AWAY from Vat19 instead of driving sales to them.

    On average, approximately 70% of people abandon shopping carts (according to Comscore). A big chunk of those people are always going to be going to Google to see if they can find a good deal. The bottom line is, in every test we’ve ever been a part of, when those sites are less optimized to convert, the merchant makes less money.

    I can’t tell you if having coupons helps or hurts your margins, and I can’t tell you what commissions it makes sense to pay to coupon sites, but I’m 100% sure that you do not want to remove all coupon sites from your affiliate program. There’s no doubt that fewer people who google your coupon terms will convert because they’ll end up on crappy landing pages.

    You should also allow some/several affiliates to bid on those keywords (PPC). The reason is that a good PPC site will convert better than anybody else, so it makes sense to have as much traffic as possible going to the sites that convert the best. You can’t control who’s at the top of SEO, but you can control where about 30-50% of your search traffic is going by using TM+ bidders. Ultimately, you’re never going to be able to stop people from looking for coupons for your store (even if you don’t have any), and if people are looking for your coupons, you want to make sure you give them the easiest, best path to conversion.

  8. CouponAffiliate1000 February 28, 2013 Reply

    Correction….there are about 400 people a month searching for "Vat19 coupons" and similar terms.

  9. Durk Price March 1, 2013 Reply

    We manage about 100 URL’s mostly in the retail space. Our clients give us 100 different perspectives on what makes a successful affiliate campaign. We have worked successfully with cashback, offer, deal and coupon sites. While we may not 100 separate strategies, we make sure the value proposition from these affiliates is in keeping with our client’s sales goals.

    We also published some research about what value cashback, deals, offers and coupon sites provide for customers. Download for free at: http://www.eaccountableopm.com/coupon-report/

    Oh, and recently, we had a client remove ALL coupon style sites from their program. Affiliate sales plummeted of course. But after parsing the data they we surprised to see, though we weren’t, that coupon affiliates did, in fact, generate new customer acquisition. They are now testing with a coupon affiliate and we should be adding more soon.

  10. Jamie Salvatori March 26, 2013 Reply

    Hmm, most of the highly negative comments appear to be from affiliates or companies that provide affiliate-related services. They seemed to take my point of view very personally. Perhaps there is some truth to what I’m saying?

    I haven’t seen much from other merchants other than one who agreed with me. It would be very interesting if other merchants chimed in on their experiences with affiliate marketing and how things are going these days, specifically with the boom of coupon sites.

    Is it a fad that will disappear when (hopefully soon!) the economy improves? Or do merchants believe that sites like retailmenot.com are helping their business grow?

    What are your thoughts on offering coupons?

  11. ObviousGuy March 28, 2013 Reply

    Or perhaps it’s because no one agrees with you?

  12. Exclu Siv April 13, 2013 Reply

    There is a new site which was build to help businesses find affiliates and affiliate managers online, It has no costs, you simply go to affiliatesR.com and start searching for affiliates by categories.
    Membership is free of charge.

  13. Nancy Do November 13, 2013 Reply

    I think Affiliate Marketing will never die if we try to diverse this program to attract more partners.

    Here is an essential tool for who are using Magento platform.

    http://www.magebuzz.com/magento-extensions/magento-affiliate.html

  14. Jack November 28, 2013 Reply

    OK Gang,

    Fact Remains: Affiliate commissions are being stolen from righteous affiliates that are actually promoting the products/service in the right manner…

    …And What You can Do About it, if you are an affiliate?

    An affiliate can promote a product/service on their site that provides a ton of value, and have done a ton of research & time in building that page…

    And as far as coupon sites — nothing gets me more frustrated knowing that a customer could have spent a week on my site, reviewed all my products, decided to click my affiliate link to arrive at the MERCHANT sales page, then see the coupon field…. then decide to do a search in Google as: “PRODUCT-NAME” coupon — then for them to see 20% -to- 50% on that specific product Link, which they ALMOST DEFINITELY will click to arrive on an THEIR Merchant Sales Page with THEIR Affiliate LINK dropped…..

    And the “Coupon Affiliate Site” provided ABSOLUTELY NO VALUE — just buttons that state “click here” or “get deal” — only to be redirected with their new affiliate link to arrive on the same merchant page they were on, but with guess what? No 30% -to 50% off like they promised…. but they will still get my sale and **steal my commission**. But what do they care?! Most of these coupons sites only intention is to steal money from affiliates and to get paid undeserved commissions.

    And you notice that most of these Coupon Site Links in the “Googles SEO results” are not updated, and don’t give specifics as to what coupon codes they are getting. And most of the times they don’t get a coupon!

    *** So What Can You Do? ***

    Contact your affiliate manager, and explain this situation to them, and tell them you need an “exclusive coupon code” which will at least impede people from navigating off my site to search for other coupons in Google….

    And list that “Exclusive coupon code” on your the “Top Feature” section of your site. Most themes and wordpress have this feature. You can also build your coupons as an Image — and if using wordpress, it works good in conjunction with the plugin “Dynamic Widgets — which gives you full control on which pages your “Coupon widgets” will appear. And you can even set times for when coupons expire.

    I always ask for coupon codes that are not set to expire, it just makes it easier especially if you run a lot of wordpress site’s… You can just list it as “Today’s Coupon Special”.

    However, this is not even a good safeguard… (however, I think it’s the Best we can do?) – because let’s say that your affiliate manager gives you a 15% discount coupon to put on your site… when that customer reaches the merchant page, they may still may wan’t to go to google to search for better coupons — and may not find anything better… but GUESS WHAT!? You still got your cookie over-ridden… and your commission STOLEN! And the SCAM COUPON SITE get’s a commission for not ONLY stealing YOUR COMMISSION… but also probably not even giving them a COUPON… like what happens in most cases.

    YOU WANT TO TALK ABOUT THE BIGGEST SCAM IN AFFILIATE MARKETING HISTORY…. HOLY %#!*. I honestly don’t think it can get any worse than this!?

    This is Cartoon-Level thievery, and it doesn’t take much of a brain to figure out this is wrong.

    IN A NUTSHELL: Coupon Affiliate Sites are basically getting paid commission for either a) stealing commission from the original affiliate that referred them, or b) getting paid commission when probably over 95+% of people were already to buy!

    SO, ESSENTIALLY, THE BAD GUYS ARE WINNING, AND THE GOOD GUYS ARE GETTING SCREWED. PERIOD!!!

    So, if you still defending “Coupon Affiliate Sites” — then that means that you think it’s a good idea that “Coupon Affiliate Sites” steal commissions from Good, Honest, Hard-Working Affiliates that Promote their Affiliate Products on their own websites… and provide Real Value?!

    Please, at least admit this is what you think! Because this is exactly what happens! The truth is the truth!

    And Like “CouponAffiliate1000” said in this same comment section ==>

    “On average, approximately 70% of people abandon shopping carts (according to Comscore). A big chunk of those people are always going to be going to Google to see if they can find a good deal…”

    …So, as an affiliate that initially provided all the VALUE, for that person was on my site, and clicked through my links, but then I lose A big chunk of those people –> upwards to 70% of my sale to a “Coupon Affiliate Site” that provided NO VALUE… and the “Coupon Affiliate Site” Didn”t initially sell them… and MOST LIKELY didn’t even give them a coupon… WOW!?

    Please anybody, try to rebuke this? I dare you!?

  15. Paul January 9, 2014 Reply

    I’m an affiliate/publisher (who has been promoting merchants on proper content websites for 10 years) and I feel your pain, as I lose out to these parasites too.

    I’m shocked to hear that 80% of the sites applying to join your affiliate programme are voucher/coupon sites. I wasn’t aware this was happening to such an extent!

    To look at it from a “genuine” affiliates viewpoint; someone clicks on an affiliate link on my site, then proceeds to make a purchase from the merchant. At the checkout, the customers see the voucher/coupon box so search Google for a voucher code and then click through one of these coupon websites, which means they get the commission rather than me (as they’re the last referrer).

    So even though I introduced the customer to the merchant and created a sale, the voucher site will get the commission.

    Of course it’s impossible for affiliates to tell how often this happens (as there’s no way to tell how many sales you don’t get, if you know what I mean), but affiliate networks must know how often this happens (with all the data and statistics they have available) and reading this post has made me realise the scale of the problem!

    I don’t think the networks should allow voucher code sites at all but they’re obviously doing very well out of it, so I can’t see them stopping. Some merchants do state that they won’t accept any coupon sites onto their affiliate programme but most don’t, unfortunately. I actually think a lot of merchants probably don’t realise what’s happening and think these parasites are bringing new sales.

    I had a merchant suspend me from their programme about 18 months ago because they said I wasn’t generating enough sales(?) but they’re still listed on loads of voucher sites [with active affiliate links]. This kind of behaviour leaves a really bad taste. Luckily I managed to switch my links to their main competitor and over the last year sales have been almost doubling month on month as my site has been growing in popularity very quickly (I wish more merchants would bear in mind that a small affiliate may one day become a big affiliate, but I’m going off topic now, sorry).

    So to sum up; merchants are paying commission to voucher sites for sales they would have got anyway (from repeat customers etc. who search for a voucher code when already at the checkout) and genuine affiliates that send merchants new customers (which is meant to be the whole point of affiliate marketing) are losing commission too. And then there’s the customer, who in most cases won’t get any benefit – have you noticed that the coupon sites don’t have any discount codes available for the majority of merchants listed on their websites? This is not how affiliate marketing is supposed to work!

    Affiliates and merchants are also losing out to cashback sites, but I’ll save that rant for another time…

  16. Mark January 24, 2014 Reply

    The bottom line is this: whether you like it or not, a HUGE percentage of your customers are leaving the shopping cart to search for coupons. You might not like it, but this is the norm. You are doing yourself a disservice to swear off all coupon/deal sites. You said it yourself, these guys are SEO experts and their sites are conversion machines. They are going to get the traffic from your cart regardless of if you are partners with them. If you do not pay them, they will use their expertise to convert the traffic to other stores that pay them. Sucks, but that’s the facts jack. Best thing you can do? Find out the coupon sites that rank on the first page of google for “Your Store Coupon Code”. Build a strong relationship, and make sure they are displaying your message the way you want it with only valid coupon codes and sales. I agree that it’s not the best scenario, and they may not provide as much value as some more targeted affiliates to your specific service, but to say they are worthless and you will make more money without them? Good luck.

    • Jamie Salvatori January 25, 2014 Reply

      I don’t buy a lot of that. Sounds like they’ve scared you with their magic koolaid. First, we were able to debunk the SEO angle easily. We just created a page on our site called ” Coupons” and explained to our customers the only way to get them — sign up for our newsletter (and that coupon sites do NOT have them). We rank #2 or #3 for the KWs we care about. This effectively eliminates the coupon sites from the equation. Second, their sites aren’t conversion machines. They don’t convert anything. They simply insert themselves in the middle of an existing conversion. Remove the coupon code box from your site and nobody will look for coupons. Coupon site = dead. Coupon sites will not bring you new customers. Therefore, they are the antithesis of an affiliate. Finally, I do say that they are worthless and we do just fine without them.

      • Mark January 26, 2014 Reply

        I’m sold, death to coupon sites!

      • Jesse December 7, 2014 Reply

        Agree with you completely Jamie. I run the search marketing program for a very well know brand with an e-commerce presence. 95% of our sales from coupon affiliates are in the middle/last click of the conversion funnel. We’ve gone to only crediting those affiliates with a sale for new or reactivated customers. Plus we’re building out a coupon page on our website and well as planning to create a feed driven official “brand” site on a separate domain to gain two organic spots when someone searches for our “brand” + coupons. Easy pickings to improve conversion and reduce wasted spend in our opinion.

  17. Bob V February 10, 2015 Reply

    I was brought here after searching for a GE coupon (before pressing “submit order” on the GE site) that brought me to RetailMeNot. I’ll keep this short, EVERY coupon was garbage. This frustrated me. This site should be called RetailMeJOKE.

    Jamie is “right on” target and has obviously struck a nerve with many folks (Evan Weber).
    Yes I like a good deal as much as anybody but coupon sites are really starting to piss me off.
    But I am just an ordinary consumer who feels compelled to voice an opinion…. and there you go.

  18. eric July 23, 2015 Reply

    Good article. I too think it is best practice to exclude coupon sites from affiliate sites. The problem is that affiliate managers are often incentivized by management to increase affiliates sales, and letting coupon sites in surely helps do that.

  19. www.CouponerStore.com October 25, 2015 Reply

    even after many rumors and talks about “no more affiliate marketing”, it’s still working and also one of the hot online marketing tactics specially for coupon sites. I’ve been user of Retailmenot and now affiliate w/ CouponerStore and in both these coupon sites affiliate marketing is still the king.

  20. mark December 31, 2015 Reply

    What about rebate sites e.g ebates. They provide no new traffic, yet they get affiliate commisions from retailers.