Can Coupon Affiliates and Merchants Get Along? By Travis Jacobson

by Colleen on January 12, 2011

As an Outsourced Program Manager, I find myself in the middle of the debate between coupon affiliates and merchants quite often. There have been reports of merchants reducing commission rates for coupon affiliates, not allowing them into their program altogether and even completely eliminating their affiliate program due to their frustration with coupon affiliates.

There must be a way for coupon affiliates and merchants to get along and work together to help each other generate more revenue. Kicking affiliates out or lowering their commissions can’t be the solution, can it?

One argument I have heard repeatedly against coupon affiliates is that they are taking sales away from merchants they would have already received. During a recession people are looking for ways to save any way that they can. Who is to say the merchant would automatically receive that sale?

One could argue that the coupon affiliate helped close the sale because they provided a discount to the consumer. The merchant had to pay a commission on the sale, but they may have received a customer for life in return.

Another popular argument is that coupon affiliates are outranking the merchants on their branded keywords. Several coupon affiliates have very large sites with a lot of loyal followers. These sites will occasionally outrank merchants on their branded keywords in natural search. It is likely that consumers will go to the coupon site instead of the merchant’s site to see if there is a discount. The merchant may end up paying a commission on a sale he may have ended up getting, but is that a bad thing?

The risk for the merchant in this scenario is that the consumer will always go to the coupon website first. If the merchant does not have a coupon on the affiliate site, the consumer will likely be directed to a competitor. Merchants can effectively use coupon affiliates to their advantage by boxing out their competitors on their branded terms in paid and natural search.

Wouldn’t merchants rather pay an affiliate commission to gain a lifelong customer, rather than have that customer go to their competition?

Affiliates and merchants can effectively work together to make sure their branded keywords are protected and all searches will result in the consumer ending up at the merchant’s website. In addition to protecting branded keywords, coupon affiliates are also very beneficial in gaining traction on non-branded keywords, which will help pull consumers away from the merchant’s competition.

Ultimately I believe coupon affiliates and merchants can create a mutually beneficial partnership. While merchants may have to pay commissions they would not have to pay if coupon affiliates didn’t exist, this commission is minimal when you consider the affiliate just helped them achieve a lifelong customer. In my experience, by eliminating coupon affiliates, merchants are simply pushing potential consumers to their competitors.

Travis is the Affiliate Manager for affiliateCREW, an outsourced affiliate program management company.

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{ 1 comment… read it below or add one }

Hero grigoraki January 12, 2011 at 2:57 pm

I agree with your points, but we also have to take profitability margins under consideration. As a network, Webgains proposes that sales with a voucher code have a different commission rate, regardless of whether it’s a voucher affiliate or a normal affiliate. This way, the merchant is assured they can afford to pay both the discount and the commission. Our voucher management tool allows them to specify howuch cmissiom will be attributedto voucher sales in line with margins and can also allow for assigning vouchers exclusively to specific affiliates.

There’s no need for blanket approaches to issues and affiliate networks should be providing the technical solutions to address the concerns. But of course the first point is to have in depth discussions to understand those concerns, in order to address them correctly.

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