Are Traditional Voucher Code Affiliates Under Existential Threat From Advertisers?

Words: Richard Wright

If you’ve been in the affiliate marketing industry for as long as I have (16 years and counting!), voucher code or coupon publishers have consistently dominated affiliate programs the world over. According to this report from Research Reports World,the size of the worldwide Digital Coupons market achieved USD 6337.99 million in the year 2022.

It makes sense, too – it’s the perfect business model to take advantage of the demand for discounts and the last-click CPA model. Over time, voucher code publishers became highly adept at creating a great user experience, formed partnerships with all the top brands, while dominating organic search results for branded discounts. 

Voucher codes and incremental value

Countless affiliate programs have been built on the back of this model, however there has always been some doubt about incrementality, particularly from outside the channel. Despite various reports and white-papers over the years demonstrating voucher code does in fact drive incremental value, doubts still persist. 

I saw this first-hand working advertiser-side when we observed that over 80% of users left the basket to search “<insert brand> discount code” in a search engine, only to come back through an affiliate link and convert with a discount. This was problematic for three reasons:

1. Commercially – incurring CPA commission and associated costs while taking a lower gross profit margin with the discount 
2. Incrementality doubts – raised by the wider marketing teams on to what extent did the affiliate interaction influence the sale 
3. Customer experience – a third party is involved in completing 80%+ of our sales! We had limited control of that experience and also risked losing customers to competitors in the journey

What does this mean?

Issues around points 1 and 2 have been, and will continue to be, discussed extensively which I won’t add to here. But some recent developments that have really got me thinking about point number 3… 

At a recent round-table, with representatives from across e-commerce, we were discussing Scott Galloway’s ‘Clock Model’ of Brand Strategy. (In case you’re not familiar I recommend this video to get you up to speed). 

In this model, traditional affiliate models would fit into the pre-purchase phase and driving customers into the purchase funnel from external platforms. However, if you think about the journey of those 80% of transactions in the example above – are voucher code publishers also heavily featured in the purchase phase? Not for every advertiser of course, but those that use voucher codes extensively I suspect have seen similar patterns. 

What does the future hold?

If you accept Scott Galloway’s observations and predictions, this is territory advertisers are increasingly looking to invest in and control, and I think there are increasing signs this is already happening and accelerating with the below examples:

• Voucher pop-ups
  Served by the advertisers and typically offering a discount in return for first party data e.g. email address, phone number, sign up to newsletter etc. These discounts are often the same value as what the voucher code publisher has published, and as recently highlighted by James Little in his article (link here), can overwrite the affiliate cookie, too.
• Verified audience platforms
  Student verification has been around for over a decade now and allows advertisers to selectively give this audience a different (i.e. better) discount than the general public. The idea is to foster brand loyalty among young shoppers with a high customer lifetime value. The likes of StudentBeans and UNiDAYS have offered this either with a traditional voucher code publisher experience, or increasingly via an iframe embedded on the brands website. Thus giving the brand greater control of that user journey. Following the Covid pandemic, GoCertify started an expansion of audience verification tech to include health workers, teachers, armed services, key workers etc which offers brands yet more control over who does and doesn’t get access to their discounts. At what point does the majority of people of shopping age in the UK fit into a verified audience segment?
• Technology partners
  There are now solutions that offer advertisers the ability to host, publish and manage their own voucher codes on their own domain. RevLifter has been powering personalised discounts for some time, while more recently GoCertify are giving brands the ability to publish all their verified audience codes in one place.
• Loyalty programs
  Brands are frequently offering points-based loyalty programs where customers can build up discounts by completing various actions with them e.g. first purchase, sign up to newsletter, recommend a friend etc. This encourages repeat purchases, but also gives the customer less incentive to go searching for public discounts when they have their own “exclusive and personalised” offers direct from the brand.
• Browser extensions
  A B2C solution giving shoppers the ability to get best-in-market vouchers popping up in their browser, eliminating the need to leave the advertiser’s website. This is a convenient time-save for the shopper, but arguably helps the advertiser retain the shopper on the website. An extensive report about this model was very recently published by affiliate network, CJ Affiliate and suggests these do in fact improve conversion rates.  Advertisers aren’t in control here, but it’s more transactions bleeding away from traditional voucher code affiliates.
• Brand- to-brand partnerships
  One of the key trends in affiliate marketing of the last couple of years, complimentary brands are now partnering up to offer each other’s customers exclusive offers and discounts in the checkout journey itself. Technology partner, BrandSwap, are making these partnerships very easy to implement and offer yet another way that a brand can control the purchase phase of the transaction.

Why should we care?

Considering the above, my guess is we’re already seeing a significant volume of transactions being transferred through the traditional voucher code channel, and that the trend is likely to continue. 

Voucher code affiliates themselves obviously care and will need to adapt, but the risk to the wider industry is that solutions come along that sit outside the affiliate channel and budgets are siphoned away. Affiliate networks will certainly suffer from that. 

The good news is most of the solutions listed above are coming from within the industry, which is testament to the innovation it’s renowned for. 

Richard Wright is an affiliate marketing and partnerships expert with over 16 years experience spanning advertiser, agency, network and publisher side roles. He’s worked extensively with major brands and led global affiliate programs such as eBay Partner Network, Avis-Budget Group and Myprotein to name but a few. 

Richard is an advocate of the view that the affiliate industry is above all driven by relationships, enabled by technology, and characterised by a performance based commercial model. Here, Richard shares his insights on voucher code or coupon publishers and their role in affiliate marketing…

This content has been produced for Affiverse by a contributor and expresses their own views, in their own words. If you would like to feature as a contributor on Affiverse platforms, please email [email protected] with your article suggestion.

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