Coupon Hoopla

You’ve been there. You’re at the grocery store to buy one single item. You have your groceries on the counter, your cash in your hand. But the person in front of you has a never-ending stash of coupons. The cashier enters in code after code. You start looking for an open clerk, cursing the customer ahead of you.

Well, coupons aren’t nearly as annoying online. Frugal shoppers can save money in the privacy of their own homes, redeeming as many coupons as their hearts desire. And it doesn’t slow other shoppers down one bit. Everyone wins. Especially people like Mike Allen.

Allen not only has an eye for a bargain, he loves to offer good deals to others. “I saw that coupon codes sure could save you a lot of money,” says Allen, who speaks in a slow, soft Southern accent. “But they sure are hard to find.” That’s why he decided five years ago to devote an entire Web site to online coupons. Shopping-Bargains.com features 500-plus merchants.

Coupon sites say their revenue varies widely month to month, but some gross more than $10,000 a month and the ones contacted by Revenue say they’re expecting a whopper of a holiday season. EdealsEtc says months in the fourth quarter sometimes result in six-figure revenue.

“Q4 is always good for us,” agrees Joel Comm, who runs DealOfDay.com. “But 2004 is gonna be the best year for coupons so far.”

The uncertain economic outlook combined with a long-running trend toward value shopping has created vast opportunities for affiliates to promote sales by providing coupons to people who just can’t live without them. In 2002, according to Forrester Research, consumers downloaded 242 million grocery coupons, coupons they print out and take to brick-and-mortar stores. That’s almost one coupon per American, and that’s just for groceries.

A raft of online coupon sites exist. Large sites like CoolSavings and CouponCart.com let you print coupons to redeem in offline stores. Others like FatWallet, UPromise, Spree.com, eBates and KeyCode offer cash-back incentives or rewards to shoppers. If a merchant gives an affiliate, say, a 5 percent commission, the affiliates might pass on 2 percent of that to their customers.

But even the sites that offer savings on online purchases range from small niche hobby sites to larger companies like CouponMountain, which employs eight people in Los Angeles, has 750 merchant partners and does a lot of marketing. And with about two-thirds of the US households now online, there’s still plenty of room for affiliates who can build a site that rises above the crowd.

Adam Schwartz and Craig Nelson were eating sushi in San Francisco and saw an ad on the window that read: “See our coupon on the Internet!” They thought online coupons were a great idea and started CouponSurfer in September 1998.

Brad Wilson started DealsDuJour.com with his brother Campbell in 2001. The 20-something brothers bought things, mostly electronic gadgets, online and when they scouted a good deal, they told their family and friends about it. Their hobby started as a pastime, soon blossomed into an email newsletter and then later became a business.

How many sites are devoted to online coupons? A lot. DealzConnection tries to list destinations for online bargain hunters. It lists 42 with forums, 41 that have price comparisons and 232 other bargain sites, plus 104 dead sites (not all coupon sites survive).

Site Design

As in many other areas of affiliate marketing, design is critical. Having a home page that is fresh every day is a great start. The best coupon sites list the deals in a variety of ways so that consumers can easily find what they want.

Many have current deals ranked and listed by popularity. New coupons occupy their own space; expiring coupons are placed somewhere else, so users can find deals before they’re no longer valid.

Many sites let you search alphabetically by merchant to find the store you prefer. And most have a category breakdown, so you can scan that to find a coupon for a gift for your Aunt Hilda’s birthday, whether you are looking to get her a karaoke system or a trip out of town.

Affiliates need to think more about aesthetics and the user experience. “Sites aren’t making it appealing and clean and idiot-proof,” says Wilson. “I sit my mom down. She is absolutely useless online. I see if she can make it through the user interface and if she can navigate, then we go with it.”

“A simple interface that has agreeable color schemes is important,” agrees Travis Bowman, president of EDealsEtc.com. “You also need to optimize for speed and test for speed and multi-browser compatibility. A good logo is also critical.”

But design and navigation aren’t the only considerations. Deals are ever-changing, and keeping up in the coupon biz definitely isn’t for the faint of heart.

Update Your Deals

“You cannot neglect it for one minute. You have to be on top of it,” warns New Yorker Abe Rapaport of JumpOnDeals .com “There are merchants whose coupons are expiring. Others are putting new deals out there. Customers contact us with their concerns. We have to keep up with all of them.”

Keeping up and using legitimate coupons is a full-time job. There’s nothing more frustrating to consumers than taking the time to pursue an offer that already expired. Burn your customers, and you’ll burn yourself.

“You need to link deals into a searchable database,” offers DealOfDay’s Comm.

Shopping-Bargains.com’s Allen and his wife revamped their site and hired ColdFusion programmers to help make the static site dynamic with a database that automatically schedules coupons to expire. Since they relaunched in January, keeping the site updated has been “dramatically easier,” says Allen.

“Users expect accurate and current deals,” says Allen. “They want a comprehensive listing. It’s very hard work to keep merchants happy and users happy.”

But once you have a site that is designed well and is updated regularly, you’re ready to tell people about it.

Marketing Moxie

Sites that focus on online deals must do a lot to separate themselves from the pack. Wilson says his goal is to give consumers the better things in life at a better price. The company’s motto: “Shop smart, live rich.” Wilson says it still takes a lot of work to get attention.

“Paid search can work but you really need the right metrics,” says Wilson. “Search engine optimization is incredibly competitive but it’s always worth the effort.”

Many of the affiliates contacted by Revenue simply love search engine optimization. Tagging pages properly isn’t easy, and getting someone with expertise to help can be expensive. Bidding keywords and buying PPC advertising – Google has a 5 cent cost-per-click minimum; Overture has a 10 cent minimum – are also tested tactics. But they aren’t for everyone.

“Keyword placement is too expensive for this niche,” argues Comm. Instead, he’s syndicating content. That way, his site gets double the exposure, and search engines are twice as likely to pick up his pages.

A few sites like PhatDeal.com and eDealsEtc.com say they are even considering buying offline advertising -newspaper ads, billboards or radio time in their local markets to attract traffic, a tactic described in Issue 3 of Revenue (Beyond Search Engines).

The smart coupon sites also let you sign up for an opt-in newsletter that gives shoppers links to popular deals, turning first-time visitors into repeat buyers. And many use “Tell a Friend,” which lets users click on a link and do the viral marketing for them.

“The best is when an affiliate manager recommends us to other merchants,” says Bowman. “Word of mouth works for consumers as well as retailers.”

A few sites have added email notification systems that help convert browsers into customers. Bedford, Mass.-based CouponSurfer.com has set up a “Coupon Butler” service that informs users when a particular product they are interested in is available at a discount. Such newsletters and notices help.

But the best means of attaining visibility? Word of mouth. “The goal is for people to have an easy experience, become repeat visitors, sign up for emails and tell their friends and family about us,” says Wilson. “One of these visitors is worth five of the other kind.”

Everyone loves loyal customers. That’s why many sites encourage visitors to click a link to bookmark their sites as a favorite, sign up for an opt-in newsletter and tell a friend.

DealsDuJour.com recently received the Titanium award at the LinkShare awards ceremony, which Wilson says has helped it to garner a lot of positive attention. Mentions in the press don’t hurt either. Dan Baxter founded DealCatcher.com, which gets 3 million page views per month and promotes more than 500 merchants. He says appearances in the The Wall Street Journal, PCWorld and USA Today have been boons to his business.

But even if you get the best media attention and the greatest industry awards, you are still going to have to work hard. Your challenge is to get people interested and coming back. Content is important, too.

“You have to save your members either time or money or both time and money,” says CouponSurfer’s Schwartz. “You have to offer them value.”

Thinking about your audience is the key to success in the discount game. Luckily, online retailers are always trying to invent and offer new promotions. DealsDuJour.com’s Wilson has witnessed an increase in merchants in 2004 getting their holiday marketing plans in place earlier this year.

Work With Merchants

“I’ve been impressed. Merchants were already concerned in July about Q4,” says Wilson. “The usual suspects think ahead. Overstock.com and those guys are really focused on affiliate channels.” Then again, Overstock.com has 10 people focused on affiliates (see story page 40). But other merchants would be wise to think about offering discounts and disseminating deals.

“Merchants mistakenly think people will buy no matter what,” says Rapaport. “But if you aren’t offering deals, your competitor is. So you really need to offer coupons to people.” Rapaport suggests giving visitors a variety of coupons from which to choose – whether it’s a dollar amount off, a percentage off or free shipping. “Test and see which codes do better,” he says.

So what sorts of deals perform the best for merchants? Rapaport thinks free shipping offers are better than no special offer at all, and JupiterMedia’s Patty Evans hails them as a great deal to offer, especially this time of year.

“Free shipping is the master plan. It is consumers’ top concern; they react to it better than other discounts, even if they aren’t saving as much as they could with different offer,” says Evans. “It’s tangible and definitely priority around the holidays.”

Work Around The Clock

“It’s a juggling act,” says Joel Comm of DealOfDay.com. “It’s nearly impossible to keep up with all the offers. There are so many merchants and there’s so much competition.”

Maintaining a coupon site is so much work that Mike Allen realized last year he needed to make a choice between his job as a marketer and his job as a governmental training specialist at Mississippi State University. So he quit his university job and devoted himself full time to being an affiliate this year. Because he has four kids at home, he had to rent office space. “It’s too noisy at home,” he laughs.

And the business has ups and downs. Online savings affiliate sites see their business fluctuate with retail cycles. It’s not predictable income, and you have to be prepared to work when the shopping fevers strike.

“This is the hardest easy money you’ll ever make,” says Allen. “It’s only easy because you aren’t sweating.”

Keep in mind if you want to dance in the discount disco, you better be ready to work your tail off. There’s no break in this business. Says Rapaport: “We will be here on Christmas and the day after doing the after-holiday sales.”

DIANE ANDERSON is managing editor of Revenue.