I've said before, and not too long ago, that only people with poor impulse control buy things at retail prices. But I've recently come to understand that deal-seekers, people who habitually try to save money by using social-shopping sites like Groupon or coupon directories like RetailMeNot, may actually be even more valuable to the retail industry than people who buy stuff at list price. Because they spend more.
Cotter Cunningham, CEO of WhaleShark Media, which runs RetailMeNot, explained to me recently why his straightforward coupon site is working well, and how the Internet is changing how pricing and consumer marketing is done.
Affiliate marketing--paid links to commercial destinations--is the third-most efficient way for consumer goods and services companies to get online business, after e-mailing existing customers and doing good SEO. Coupons make for very effective and trackable affiliate links, because users have to click on them to get the deal, not just visit the site selling the product they want.
And coupon sites succeed because the business of aggregating coupons is very strong: each link is a CPA, or cost-per-action link, which pays out at a much higher rate than CPC, or cost-per-click advertising links.
The goal is to become the big site with the most coupons, as getting into that position makes for a virtuous SEO cycle: the more coupons you have, the more people link to and visit the site, and the higher you rise in the search engines. RetailMeNot pursues this strategy by including even nonaffiliate coupon deals in its listings. Unlike some of the original coupon sites, where each coupon has an affiliate or CPA link attached to it, RetailMeNot encourages its users to submit coupon codes they find around the Internet. These coupons don't generate direct revenue for the site (although pages they're on do serve ads), but they do serve the incredibly important function of improving RetailMeNot's depth and thus its SEO juice and its traffic, making its paid links bigger revenue drivers. … Read more