The effect of Discount Codes on affiliates - Testing the theory

[Barry]

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I think the practice will start to be stamped out pretty soon as its a hot topic at the moment. I have been asked by at least one network to start looking at a way to change the mechanism I use.

I dont list sites without codes so my site isnt as bad as some however I think that things are changing as its being seen as cookie dropping.

Ta

[D-Mac]

According to Hitwise, the following keywords account for around 15% of search traffic that the big players receive:

discount codes, promotional codes, discount vouchers, vouchers

If you add to this all the keyword variants it is probably closer to 20%. Using Hitwise and Google's trafic estimator, I believe the above terms and variants account for at least 50,000 visits per month at this time of year. Average CPC of say, 60p and the outlay for the month is £30K.

I imagine the conversion rates are pretty good. Perhaps in the region of 25%. So from the 50,000 visitors you get 12,500 sales for a cost of £30,000. Average cost per sale of £2.40.

What's the average commission? Maybe 7.5% of £30 = £2.25

Based on the conversion rate of 25% this makes a small loss, but builds the brand awareness of the discount code site. Maybe the conversion rates are better, I don't know. However, if you remove all the merchants who don't offer discount coupons (still the majority), you could see the conversion rate falling to 10% or less. This could make bidding on the above terms, and thus a large portion of the discount sites' brand building, unviable.

In short, the 'forced clicks' to merchants who don't provide codes are subsidising the whole discount code market.

Just my 2p. It could be that my figures are way off the mark.

[Darren M]

Maybe one day all sites will be discount sites - I wonder what the merchants will do then?

The the whole Internet will be like some virtual carpet/furniture shop where everything is 70% off

[km8]

The the whole Internet will be like some virtual carpet/furniture shop where everything is 70% off

That reminds me of the 90's (offline):

"DipstickFS SALE, this weeek only:
70% off
plus free credit
AND a bonus small child
PLUS we'll buy it back for twice what you paid after you've worn it out
- this week only!"

DipstickFS was a furniture shop which had a "this week only sale" every bl**dy week for years on end - presumably there really is a sucker born every minute.

PS apologies to DipstickFS if they still exist.