Kevin Stecko is the founder and president of  He's been operating the business since December of 1999.

Coupon Sites and Affiliate Programs - And Ebates

First a note on affiliate programs:

You may have heard of people making huge money as affiliate marketers. I don’t personally know anyone killing it but I do have a friend who was formerly a super affiliate and still knows a few. Super affiliates apparently lack much in the way of morals, and will promote just about anything that makes them money regardless of whether it delivers value to anyone but themselves. Also, I have heard that they have extremely high risk tolerances. Like they’ll spend $25 in ads to make a $26 affiliate commission type of risk tolerance.

So chances are these people are NOT applying to your affiliate program when you are offering 10% to 20% of the sale, or even better if they drive a lot of volume you’ll give them an extra 5%. You are SOOO generous.

Guess who I am talking about? Me, and you, and just about every site with a link in the footer to their affiliate program. At 10% commission with a 3% conversion rate and an AOV of $40 a member of your program can expect to make $12 for every 100 visitors they send your way, assuming it’s a very qualified lead. Now let’s assume that your affiliate link gets a click on 0.5% of all visitors to the affiliate site. That’s 200 visitors to get one click, or 20,000 visitors to get 100 clicks. So 20,000 visitors to get $12. That works out to a CPM rate of $12/20 or $0.60. Keep in mind this is almost a best case scenario because the conversion rate and click through rate I used are higher than you can probably expect.

Given these numbers you are very unlikely to get a content site to throw up a banner ad for your site or product. They’ll make more money using AdSense or even selling a direct sponsorship of the site.

So the vast majority of applicants to your program will be discount sites. These sites try to rank for [<<insert brand name>> + coupon or coupon synonym]. Who searches for this term? Someone who already wants to buy, that’s who. So not only are you losing out on the revenue of your discount, but you are going to pay a kicker to these worthless sites for the service they’ve provided you.

This brings me to Ebates…

Ebates is the 800 lb gorilla of discount / coupon affiliate marketers. Here is the pitch Ebates makes to consumers:

-Sign up for our service and get a rebate on purchases YOU WERE GOING TO MAKE ANYWAY. It seems too good to be true, to the point that I know of people who are suspicious of what they are up to. The good news for consumers is it’s not a scam against consumers.

Ebates isn’t a typical “click a link and get a commission” program, either. You have to be a member. Which means Ebates knows a lot about member habits and preferences. And they even know which sites you visit because the best way to use Ebates is through a browser extension. So they know EVERY site you visit. That’s some huge power right there. Check this out:

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It’s showing me sites I’ve already visited and made purchases at anyway. Very powerful stuff for them, and very worrisome for those brands.

It’s clear to me why consumers would join Ebates. What is not as clear is why merchants join Ebates. Let’s take Homage as an example since they aren’t a huge business, and they have a relatively niche offering. They sell retro athletic and pop culture printed tees as well as a line of basic apparel. They have a few stores throughout the USA, but their offering is quite niche.

Because of this Homage is never going to get a home page feature from Ebates. The math is simple. Ebates makes more money from a company like Staples than they ever could from Homage. It’s just a fact, not a knock on Homage. I dig the shirts.

So the question is why does Homage join Ebates? I can see a few possible reasons:

-Someone from Ebates promised a feature in an outgoing email or homepage real estate. Possibly this feature or real estate would be geo-targeted near their stores or maybe even psychographically targeted based on all the data Ebates has.

-Someone from Homage made a bad decision

In fact I would argue that even if Ebates promised a feature it’s 95% likely that someone from Homage made a bad decision. Ebates pays 3.5% to their members for any purchase at Homage. Homage pays them some amount on top of that 3.5%, which I’m going to assume is at least 3.5%.

Hey 7% isn’t that bad to give up for driving a sale, right? Actually as a far as discounts go it’s not too bad. But wait, there’s more. Here’s the Ebates landing page for Homage:

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Where’s the value to Homage here?

So it’s not 7%. It’s more like 27%. And chances are they were going to get a sale anyway.

Here’s what’s even worse, though…

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Ebates has the power to sell ads to competitors based on the data they learned about from your site. Due to the extension Ebates knows who visited non-Ebates participating sites. So it’s theoretically possible for them to have an ad network where they could put banner ads for Office Depot in front of any Staples visitor even if Staples wasn’t paying Ebates. But the greater crime here is that Ebates has set themselves up as a leech on multiple ecommerce sites and IMO they don’t provide enough value to justify the costs.

My recommendation for any brand paying Ebates is to find your contract, see when you can legally end the contract, and send that notification that you intend to end the agreement as of that date. Do this now, then set your calendar for that day. Then if you’d like to send me 1% of money you were sending Ebates prior to this I won’t turn it down.

Benefits of Scaling Down

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