SEO-driven businesses are super fun to work on and run -- I have a few sites that rank for informational queries and thus get a decent amount of search traffic and ad revenue because of it. At scale, it can quickly become highly lucrative.
HOWEVER, and perhaps call me a giant wuss, but when you're at the mercy of not only an algorithm but also a savvy business, it's a pretty dangerous bet to hedge it all on search traffic.
Coupon codes are one of those things I could easily see appearing at the top of SERPs in no time courtesy of Google.
"Credit card comparisons" and other searches like it are a massively profitable keyword to rank for. But take a peek now and you'll see Google threw their hat into the ring, flipped one switch and magically appear above all organic rankings. They're doing the same thing with travel, weather, you name it. I can't sit here and argue it's unfair, it's their yard, they make the rules.
And truthfully, as a user, I completely applaud Google for providing these services, I love the one stop shop and trustworthy nature of their results.
As a marketer, I'm very, very wary to place any huge bets on any sort of long term business model relying on rankings. Should it be a tactic in your strategy? Absolutely. But diversification here is sure going to save a lot of headaches down the road.
But at the end of the day, as far as RetailMeNot goes, get it while it's good I suppose.
Probably a good time to mention that Google Ventures invested in RetailMeNot.
I think keeping these kind of coupon codes as a %rev affiliate model rather than CPC ads makes it easier to justify the high level of spending (much of which is cannabilizing other marketing channels) - if it was more directly comparable to adwords & Product Listing Ads CPC-based costs, I think more large brands would move faster to cut the wasteful spending going on in these programs.
Right now many rationalize it as "4% of revenue is a great acq cost" - but it's not a true acquisition cost as you already acquired many of these customers and if the affiliate sites didn't exist, 99% of these sales would still happen.
If you're a pure SEO built company, are you really betting it all on SEO? Without it you'd have no company, and if it weren't risky, there would be no opportunity left.
> you already acquired many of these customers and if the affiliate sites didn't exist, 99% of these sales would still happen.
That's only true for a small number of vendors (those that are "unique" in a relevant way, such as clothing brands). For everyone else, it's a "Red Queen" style race, where you have to run just to stay in the same place : you have to do it, because someone else did; if no one or everyone does, nothing changes - but if only some do, those who do have an advantage.
Also if you think of this from a retailers POV, they want to give as little commission to RetailMeNot as possible. From their view most customers are on the site ready to buy anyway and now just want to see if they can get a better deal cause they saw 'promo code' on the buy form.
If a large company says ok RetailMeNot we're going to pay you 2% instead of 4% what can RetailMeNot do? They can refuse the offer and lose all revenue from this retailer, only to have Google search learn people prefer to go to their competitor site who still has their coupons or take the cut. I dont see them having a lot of negotiating power.
Also if anyone wants an idea, create a browser extension that opens a dropdown on sites that have promo-codes displaying whats available. It would be a much better experience than going to a new tab and searching.
"SEO-driven businesses are super fun to work on and run"
Until they're not.
I think this is true when you run one of these as a hobby and you look it as getting something for nothing. If you make your livelihood doing it and Google changes something your whole life can change for the worse in a heartbeat. Then you're totally helpless. It's the exact opposite of fun.
You have summarized the remainder of my comment after that quote -
I would never rely on any of my pet projects as actual income; my wife jokes that it's magic internet money (she thinks it's the stupidest thing, in a humorous way of course). I'm not quitting my day job for this stuff in case the faucet gets shut off one day.
Some people take the risk, but I could never sleep at night knowing I could randomly wake up one day in the proverbial black hole of "page 2" search results.
As a consumer, RetailMeNot is great. As another website that sells products for commission, it's terrible. If RetailMeNot can find a coupon that I fail to mention, that's fine.
But RetailMeNot also steals that last click cookie with coupons that simply do not work or are not really coupons (Check out the Amazon Free shipping "coupon" for example). That's nothing but cookie stuffing, and if it were any other smaller company doing something similar they'd probably get banned from the Amazon affiliate program.
Basically, imagine you as a website owner buying a product on Amazon and writing a review about it, reading the review out while piecing together a video montage that shows it off, taking some pictures of it, and compiling it all just to get a little bit of commission if someone reads and watches your review. Then the customer searches for an Amazon coupon before checking out, goes to RetailMeNot, and then gets the "Free Shipping on 35+ deal" that is not even a deal or coupon, or even a coupon that does not even work or exist. This million dollar company has stolen your effort and will get commission on that sale. It's just rotten from that viewpoint.
It seems enough to fix on Amazon's end. Just credit the commission to the last click cookie as of the time the user reaches the checkout page (assuming the customer actually does close the purchase within a short amount of time).
I remember submitting coupons on retailmenot and getting them erased. I actually remember contacting them to post coupons that could eventually help their end users and them informing me that they wouldn't post it because it's not an affiliate code and they wouldn't get paid.
As a user, I wasn't getting paid either just wanted to help out since the coupon I found was superior than anything they posted for that store at the time.
Is their mission to help users find deals or pad their affiliate revenue? If it was the latter, their reason they gave me would make sense.
"We take no stance on RetailMeNot’s business model. (We like getting coupon codes too!) We also have no idea how the company achieved its SEO dominance. The company has no doubt put a lot of work into conquering Google."
The answer could be simple. As far as I know, RetailMeNot was one of the original coupon aggregators. (The domain was created in 2006.) It also seems to concentrate on natural SEO and does not seem to be cheating. Combine that with good quality content and you have solid SERPs.
I'd love to know the nuts and bolts details of how they do it. I dug up some paid blog posts[1], but the links are rel=nofollow, so it doesn't seem like a link spam thing.
Anyone know any more details about their success in this area?
Finally, some confirmation! The similar names made me instantly wonder if there was a connection when I saw their booth at a career fair. During the entire interview process, though, no one I asked had even heard of BugMeNot, or knew if they were connected. It's just sad, really...
I run an SEO fueled business and it scares the crap out of me; especially as we hire our first full time employee. The fact that Google could literally shut down my business at any time keeps me up at night.
My business started as a hobby and has grown significantly (due to SEO ranking improvements) over the last couple years. We're now at a point where we (my wife and I) can no longer handle the volume that's coming in. Our options right now are a) hire an employee to help reduce the load or b) remain small and stagnant because Google could cut the cord any minute.
I'm trying like hell to find alternate traffic streams like Adwords, Facebook, Mobile, etc, but I can't quite figure out how to make a reasonable profit with them. So for now I guess I just have to take the risk. No guts, no glory.
If your profits will increase after paying a new hire, then absolutely, positively, go for it while you can. It is so difficult to work yourself into your current position that you must maximize your return while there.
Also, if you have more business than you can handle, then the only certainty on your decision tree right now is that you will lose revenue if you don't hire someone to help. Google may hose you (and that may even be likely, at some point) and you may be able to find alternate traffic streams, but they are not certain occurrences, nor is the timing of any of these scenarios (including a Google hosing).
And, of course, if you get help then it may free up some of your time to pursue the other streams without impacting your current revenue.
If you can mitigate your hiring risks by offering 1099 or contract-to-hire, or otherwise, that may be prudent.
But, again, you gotta' maximize your profit while you can. Congrats on having a "good problem" and best of luck!
If it was just my wife and I like it has been, I wouldn't mind the risk. We've gotten this far. My fear is in hiring a new employee and having their livelihood dependent on my business that has a single point of failure. Granted, it's a fairly entry level customer service position so it's not like someone's going to retire from the job, but I would still feel just awful if I had to let them go because we had no traffic due to something like a "mysterious" Google penalty that I can't figure out and will get no help from Google on.
I'm hoping we can use the free time we'll have from mundane tasks to think about how to make the business work with other traffic sources.
>My fear is in hiring a new employee and having their livelihood dependent on my business that has a single point of failure.
Man, I have absolutely been there! I mitigated this concern by hiring part-timers who also had other jobs. An added benefit was that having multiple part-timers vs. one full-timer also gave us redundancy in the event of vacation, illness, etc.
BTW, my situation was primarily with customer service reps as well.
Hiring multiple people does require additional training and administrative overhead, etc. and your business needs may or may not allow for such a solution. But, you can also mitigate your legitimate concern by being completely transparent with candidates with regard to the company's position. You might even consider offering a little upside bonus for the good months/quarters or paying slightly higher than market to offset their downside risk.
Given the current labor market, you will possibly find that candidates who would otherwise have no prospects are happy to take on the risk of having even potentially short-lived employment.
In the end, you can find a solution that works for all. Communication and openness are the keys.
I run a coupon related site that's targeted at a specific segment of the market. I was ranked at the top 1 or 2 sites for a few pretty popular keywords for a while, until the summer of last year when I changed the domain, and my rankings dropped off within about a month (despite setting up correct redirects, updating in Google Webmaster tools, etc. Believe me, I spent a LOT of time making sure I did it right).
I never could figure out why the search traffic dropped off. I didn't partake in any seo tactics (I honestly wouldn't have known how to), and my search traffic hasn't really recovered.
Interestingly, my traffic recovered based on direct and refferal traffic, so it wasn't as big of a problem as it could have been, but it does sadden me that I am missing out on a significant portion of the current market (to get new users), but I'm completely lost on why my ranking dropped.
Yeah from what I've heard changing domains is one of the hardest things to do successfully in SEO. This is especially true the older the domain is and the more authority it has.
The previous domain was a little over a year old, but yeah, that could very well had something to do with it. I'm not sure if the domain name change was worth it, but I can say that it made the domain easier to remember, which is always good, and makes me less susceptible to Google changing algorithms.
I don't buy the "don't have all your eggs in one basket" mantra here. I get that idea if you rely on SEO and you have risky tactics, but in RetailMeNot's case, they have the best user experience and also, up to date coupons and for that reason are the best result most of the time in the vertical.
If this was a publicly traded company that bought links and had a site with a shoddy user experience, I'd get the argument that there's significant risk.
In the history of Google there are very few, if any case studies of sites that A) did the right thing B) were the best result that ended up losing significant traffic. Most of it is "yeah, we were doing this wrong, but it's still not fair..". In Rap Genius' case, they clearly did something wrong.
The only exception to this rule is if Google moves in on the vertical and steals traffic, which is possible with coupons - but there's a significant difference between completely destroying a vertical and impeding on it somewhat. Google has moved in on the airline tickets vertical but the businesses there are still doing just fine (Expedia, Priceline), as shown by their considerable growth in the last year+. It seems likely that if Google moved in on this vertical, it would be a similar impact.
In this article, there's little to describe what RetailMeNot does wrong. Yes, they are somewhat of a parasite, but in many ways they do these businesses a service by lowering purchase friction by creating an elegant experience for users. If their UX was substandard, it's possible customers would get lost and never complete their purchase - this happens time and time again, which is why CRO professionals can get hundreds of thousands of dollars to optimize a conversion funnel. In many ways, RetailMeNot is a piece of that elegant conversion funnel, so they are rewarded as an extremely profitable affiliate for that reason.
Disclaimer: I haven't taken the time to evaluate their link profile so there's a possibility that they are doing something risky there, but from an on-page perspective, they are the best result.
There is a sort of arrogance in assuming that risk = factors outside of your control. Risk is also the likelihood and potential effect of your own mistakes. Think of it from the perspective elf an employee. What are the chances that current of future employees or executives will do something to make Google ban them. Add that to the risk that Google will penalise them for something not previously considered risky.
Anyway, the hole thing strikes me as fairly risky. That’s not bad, you just need to consider that this business is less likely to exist in 10 years than most businesses of its size. That's because of reliance on SEO. It's also the reliance on the coupon codes themselves. That’s not terrible in itself. Risk is allowed.
"When a consumer executes a purchase on a retailer’s website as a result of a performance marketing program, most performance marketing conversion tracking tools credit the most recent link or ad clicked by the consumer prior to that purchase."
Lots and lots of people are still on old school last click attribution models. It is more common to actively manage your affiliates and prune those that "steal" last clicks instead of drive new traffic.
I think more people want to use more sophisticated models but existing tools doesn't allow you to do it across channels well.
I have no clue about the SEO dynamics but I do know RetailMeNot used to be more legit and organic user generated. At some point they made a change and got coopted by companies paying to post codes. Maybe that original popularity is what gives them search result rankings.
I think businesses that are giving retail me not a commission are largely throwing their money away.
As described the vast majority of sales being generated are from people that have already started the purchasing process on your website and are looking for a discount coupon. Without having any hard numbers from my experience in ecommerce I think the majority of these people are going to purchase anyway, regardless of whether they find a coupon. There is a good chance the people actively trying to find a coupon have already checked out the competition and are relatively satisfied with your offering.
Price discrimination can be good but I don't think throwing away 10% to companies like this is the way to do it. I also dislike how they end up ranking really highly on a lot of your brand terms where I'd prefer my business, pages we control and 3rd party reviews to rank. Ideally you could get a coupon page of your own to rank well for the "x coupon" search to get the same effect without having to give up the 10% or whatever the commission level is.
The point which the article makes about Google Ventures having invested in the RetailMeNot speaks volumes. RMNs business model is absolute cash-cow until a mass of advertisers change their commission policies, which they won't as they are amongst one of their biggest affiliate partners.
So for Google, this is a great way for them to monetize their SEO SERPs. Invest in a company like this, get them to maintain clean SEO practices, reward them with obscenely dominant rankings against their competitors and then get the return from the IPO.
After IPO, wean off their reliance on Google with a push into mobile, as Google doesn't need to protect their investment any more and could disappear at any moment...
Pretty obvious how/why they have such dominant SEO results across practically all their markets, including arguably the second biggest market, the UK, if you ask me.
I've been looking at the coupon search business recently and, while I have not done a comprehensive competitive analysis, I can tell you RetailMeNot just works a lot better than Coupons.com.
I was sitting outside Macy's using Coupons.com "local search" and got no Macy's coupons. Oh but they are a "featured coupon!" You have to use that category to find them. Bleah.
All the coupon sites are limited. But RetailMeNot isn't overtly lame. They don't pretend to do things they can't. Local search works. The mobile apps work. They stay away from stuff that would not work on mobile and that burdens the user. They suck less. That's often a winning strategy.
RetailMeNot has a completely different business model than Coupons.com, so it is an unfair comparison of two sites that look similar.
RetailMeNot makes its money through connections with LinkShare (LS) and Commission Junction (CJ). And LS/CJ make their money by establishing relationships with the online vendors for major brands/retailers with online coupon codes.
Coupons.com makes its money through connections directly with major CPG (consumer processed goods) brands, where Coupons.com provide CPG's with distribution of printable manufacturers coupons.
RetailMeNot has been trying to get in Coupons.com game (bc of the less reliance on search/affiliate networks) but to date, they have been relatively unsuccessful.
I think its a combination of a few things. Their on page content optimization is great and each merchant landing page is very well targeted. They have great domain authority and are known as a comprehensive source of coupons for the merchants they work with. They promote user interaction with voting and comment mechanisms which increases time on site and decreases bounce rate. Their page also loads incredibly fast and they load in non essential user content after the dom has been downloaded. Not too familiar with their linking strategies but I bet they are pretty good. Basically they have a huge team who focuses on it all day long.
I don't know anything about Google's current algorithm, but I would be surprised if they don't factor click-through and other user "satisfaction" metrics into page ranking. Someone searches for XYZ coupon, clicks the RetailMeNot link and doesn't immediately hit "back", RetailMeNot wins some PageRank.
That is definitely a ranking factor although not influencing pagerank.
I think that coupon codes get lots of natural links and sharing because they drive immediate value.
Also, by updating their content constantly to be fresh, that also helps. Google definitely has a way to see which site has the freshest coupons.A site like RMN with the freshest/most recent updates might rank higher.
Its nice to see Goodsearch showing up on the board as a competitor these days. I've been working as an engineer and the primary technical SEO there for the last year and a half. Goodsearch takes this somewhat shady business model and at least tries to do some good.
I've been able to 5x our organic coupon traffic over the last year but you reach a certain point where the top competitor is just too entrenched. I definitely worry about this being a parasitic practice and Google has been favoring brands more and more in the SERPs. I'm surprised they are getting such a high multiple on their revenue considering the risks.
I'm always astounded at what some SEO positions can generate. Coupons.com is also worth around $1.5 billion. Or take Demand Media for example. They've been less prominent since the first Panda update hit them, specifically eHow took a beating. Their stock has languished, but their sales have continued to climb (almost $400m over the last four quarters).
Does anyone compile an estimate for how much revenue Google is directly responsible for generating for other sites via referrals off their search engine? I'd be curious to know how that compares to their take via AdWords and AdSense.
Great post and they are really doing it right. That amount of traffic from search is impressive. On the other hand this industry is about to die. One of the most exploited niches in affiliate marketing right now. Retailmenot actually is doing it right, but sites trying to mimic their success by generating totally bogus promo codes are rising to the top of the SERPs, dropping their affiliate cookie and profiting.
HOWEVER, and perhaps call me a giant wuss, but when you're at the mercy of not only an algorithm but also a savvy business, it's a pretty dangerous bet to hedge it all on search traffic.
Coupon codes are one of those things I could easily see appearing at the top of SERPs in no time courtesy of Google.
"Credit card comparisons" and other searches like it are a massively profitable keyword to rank for. But take a peek now and you'll see Google threw their hat into the ring, flipped one switch and magically appear above all organic rankings. They're doing the same thing with travel, weather, you name it. I can't sit here and argue it's unfair, it's their yard, they make the rules.
And truthfully, as a user, I completely applaud Google for providing these services, I love the one stop shop and trustworthy nature of their results.
As a marketer, I'm very, very wary to place any huge bets on any sort of long term business model relying on rankings. Should it be a tactic in your strategy? Absolutely. But diversification here is sure going to save a lot of headaches down the road.
But at the end of the day, as far as RetailMeNot goes, get it while it's good I suppose.