Merchants Shifting Mindset When Working with Coupon Affiliates

The pandemic has spurred much more price-conscious online shoppers, but are merchants’ attitudes toward coupon and deal affiliates also shifting to accommodate that change?

For over a decade merchants and coupon affiliates engaged in an ideological battle (often contentious) over the specific value that coupon, discount, and deal publishers added to a program. Many merchants steered clear of coupons fearing the perception of a discount tarnished their brand. Some merchants worked with coupon and deal affiliates begrudgingly. Still, others enjoyed the traffic but didn’t highly regard coupon affiliates as adding a lot of value and offered them commission rates lower than other types of affiliates.

Enter Coronavirus

However, the pandemic changed everything. More people are going online for everything from basic necessities to tackling home improvement projects as they spend more time at home due to closures. 

According to eMarketer, the pandemic has accelerated ecommerce growth in the US this year, with online sales reaching a level not previously expected until 2022. US ecommerce sales will reach $794.50 billion this year, up 32.4% year-over-year. eMarketer had originally predicted an 18% growth rate for 2020.

Recent studies also show that the majority of online shoppers are driven by price or incentives as the determining factor when considering an online purchase. During a survey in May 2020, 60% of online shoppers in the U.S. stated that getting a discount when making online purchases was now even more important since COVID-19, according to Statista.

The shift is dramatically impacting consumer-product companies and chains as well, Many are rethinking marketing plans to accommodate more digital deals. Companies say they expect consumers to stick with online shopping and digital deal-seeking after the pandemic passes.

In June, Valassis updated its “2020 Consumer Intel Report”  and found that 73% of shoppers use digital coupons, up from 67% in 2019. Even prior to the pandemic, eMarketer found that incentive messages were a prime purchase motivator for consumers.

FMTC has seen an 8.6% increase in the number of merchant deals added for September 2020 versus the same period a year ago.

Baby Steps

Greg Hoffman, CEO, Apogee, a digital agency that manages affiliate programs, said things have shifted with coupon usage and wise merchants are seeing growth with the right strategy. However, Hoffman noted that he continues to field sales calls every week where smaller/newer merchants “think they are Apple and they shouldn’t have to discount. “

“They honestly call themselves premium brands and they are disgusted by the thought of discounting,” he said. “They do not understand that even the best content creators still need some type of incentive to persuade customers to click links. They believe all affiliates should promote their products based on the merit of the story told by the company. It’s all about the quality and the buzzwords for the category.”

Acceleration Partners, a firm that specializes in partner marketing, said they have witnessed a shift in merchant’s willingness to work with coupon affiliates.

Acceleration’s Partners Publisher Development Team wrote that many brands are turning to affiliate marketing and discounts as a way to move lower-demand products and unwanted inventory.

“They have the unique ability to put offers in front of their audience with a sense of urgency or scarcity.  Examples of these partners include Slickdeals, Dealmoon, Brad’s Deals, and DealNews,” Acceleration Partners Publisher Development Team said. “Leveraging the affiliate channel for product liquidation offers brands reach, volume, clearly defined economics and efficiency.”Acceleration’s Partner Team noted that “brands working are more strategically with all their performance-based partners, but especially coupon and deal sites. They are also putting more emphasis on incrementality with these types of partners:”

Meanwhile, Chris Tradgett, Co-Founder and Chief Marketing Officer of Publisher Discovery, which develops machine learning and artificial intelligence (AI) technologies to find affiliates, said that during the pandemic his business has increased. He believes this is a result of agencies and brands seeking out relevant affiliates as “mainstream advertising was hit hard and many are seeking another revenue stream.”

The Power Shift

Jamie Birch, Founder and CEO of JEBCommerce, an affiliate program management agency, said the attitude has changed – albeit slightly begrudgingly on the part of merchants. However, he noted that there is a power shift. Affiliates who have spent years building a brand are now leveraging their power and merchants are now aware that to gain access to a valuable audience they need to work with coupon sites. And in some instances, pay for that access. 

Some coupon affiliates are charging integration fees and placement fees for brands to even work with them. This has been made possible by the sheer increase in traffic volumes that coupon affiliates are experiencing as shoppers put price first when shopping online.

Get exclusive access to Birch’s full video response to FMTC’s questions on Covid and coupons in this week’s FMTC newsletter. If you haven’t already signed up, now’s the time.

The Downside

But not all merchants are changing their position on how they work with coupon and deal affiliates. 

 “Conversely, some brands went the other direction and stopped paying their partners altogether – setting commissions to zero with no advanced notice, “ said Acceleration Partners.

This was a big issue early in the pandemic as brands struggled to navigate new territory. In order to help affiliates stay on top of commission changes, FMTC had a COVID change directory, that we recently stopped updating for Q4.

Choots Humphries, Co-President of performance network LinkConnector, said that he’s not seen a change with LinkConnector merchants.

“Those who valued the relationships pre-COVID continue to do so and those who did not haven’t really changed their mindset during the COVID environment and in response to any change to consumer behavior. “

However, Humphries said LinkConnector has “seen strong interest in working with coupon affiliates from newer and niche brands.”

Humphries explained that his network skews more towards influencers and content affiliates. Many of LinkConnector’s technologies (Adaptive Attribution, Coupon Compliance, Naked Link Technology, Infinity Codes, etc.) allow merchants to accomplish recruitment with this type of focus causing content to be the number one affiliate type in their network.  

“So, while many large coupon and loyalty partners do very well in LinkConnector, the focus remains on relationships which tend to be earlier in the sales funnel,” he said.

Additionally, Hoffman thinks that brands ignoring coupon affiliates and the value they add is short-sighted – even on the best of times.

“They do not see the full field of competitors vying for the attention of affiliate promotions. They refuse to understand affiliate marketing and therefore limit their future success based on ego and ignorance of customer behavior,” he said.