A recent period of retrospection has lead me to think back to when I started working in this industry and how things have evolved.
From where we stand now, I don’t see a particularly rosy future for what has traditionally been defined as ‘affiliate marketing’ and in this article, I explore one of the main reasons for this: the persisting questions over the value that voucher code sites generate to brands. I fear that we’re looking at a house of cards about to fall when retailers seek to truly examine the incremental benefits of these partnerships.
It was 10 years ago that I moved to London and began work at a now obsolete, but once important, affiliate network called DGM. Looking back, the team at DGM was great but (and I hope nobody minds me saying this) affiliate marketing was a lot more naïve back then. We drove big volumes of sales for clients and these top tier brands wrote big cheques for the services that we provided, but the methods that were employed were questionable in a lot of cases and almost always opaque to the merchants we worked with.
We used to heavily promote the practice of allowing multiple affiliates to bid on the client's brand name and drive traffic direct to the merchant site. That’s right, the affiliate didn’t even need their own web page, just an Adwords account. We used to be very reluctant to allow direct contact between brands and affiliates, protecting our network fiefdom as the intermediary. I see the logic in this looking back but it created a very fuzzy area where brands, especially with those brands not as clued up, didn’t know the source of the traffic that was coming to them.
There are various stories about nefarious activity going unchecked for a long time by networks back then and I’m sure that people who’ve been around for as long as me all have horror stories about what used to happen in the ‘good old days’.
So why the reflection?
It does hearten me to see how far affiliate marketing has come in the last 10 years. It has certainly grown in scale, with an affiliate programme now a central and integral part of any online retailer's armoury. It has increased in sophistication to some degree, with brands, agencies and networks taking steps to better understand traffic sources and reward accordingly. However, despite the fact that you now have more and more smart people looking at affiliate marketing and attempting to determine where the value lies, voucher code sites still play a significant part within the industry, which to me is close to inexplicable.
I appreciate that this is contentious and that there are a number of voucher code sites that make up a considerable part of most affiliate programmes. I understand that there are some brands (I would argue the minority) that engage strategically with voucher code sites and fully understand the role they play. However, there are still a couple of unanswered questions relating to voucher codes and the amount of affiliate commission they are paid. Questions that, in the drive for affiliate marketing to demonstrate itself incremental, brands should be asking before paying a lot of money out.
What percentage of their traffic comes from people searching for “brand + voucher code” or similar?
A perfunctory search on any voucher/discount code term in conjunction with a brand name finds the space dominated by voucher code websites. Some of this is in the paid search space which leads to questions about how many of these sites are breaking programme Ts & Cs by bidding on brand terms in Adwords, etc. The dominance of these brands in the natural search space is understandable of course, but how much of their traffic comes through this route?
I would argue that if the customer has already decided where they are going to buy from, then searches for ‘chosen brand + voucher’ before buying, that is adding zero value to the advertiser. In fact it’s costing them a considerable amount if they are paying commission and, in some cases, reducing their margin on the sale by offering a discount.
If the voucher code sites could demonstrate some customer loyalty and clearly show that people are beginning their journeys at the code site, using that to decide where to buy and then going on to make a purchase, then great. I have never seen any evidence that this is the case and I would guess that 90% plus of voucher code traffic comes from searches for ‘brand + discount’.
How much of their traffic is consumers finding and using a valid voucher code?
Most times that I use a voucher code site as a consumer, I find it an incredibly frustrating experience. The overwhelming majority of ‘deals’ listed on the site are not voucher codes or discounts. Instead they are offers available to anyone who uses the website. There is, in my mind, a significant level of deliberate obfuscation occurring on behalf of the voucher code sites, which is understandable, encouraging users to click on their link to gain access to a deal which is available to all.
Therefore, I would suggest that a significant proportion of the commission paid out to voucher code sites is not for incrementally promoting ‘exclusive’ discounts, but simply for promoting things as banal as ‘Free shipping if you spend over £50’; a standard offer.
If I were an advertiser and a chunky part of my affiliate spend was going to voucher code sites, then I would want answers to these questions. I would want to fully understand how many of my customers had already been to my site, and even added a product to basket, before visiting a voucher code site. I’d want to know which other cookies, both affiliate and otherwise, were being overwritten by voucher code sites leading my overall cost of sale to increase. I’d want to know how many of the customers that came via voucher code sites had a satisfying experience there and found what they were looking for.
The concept of a voucher code site as a consumer’s friend, assisting them in getting the best deals available online, is a great one and I think there are excellent community elements to some of these sites. However I feel that the low barriers to entry of setting up a voucher code site have now ruined the market. It now seems to be a bunfight to gain the most search traffic and a lack of consideration for users in showing them any and every ‘deal’ available.
I understand that the dominance of these sites makes advertisers reluctant to ‘lose’ the sales that they drive, but just like when I came into the industry it still feels like there is a lack of understanding from retailers on exactly how and what they are paying for.
So when I look back on the 10 years I’ve spent in and around affiliate marketing, I wonder if things have changed too much at all.
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