April 22, 2014, 6:16 PM

Commissions are for closers

A Savings.com executive responds to an Internet Retailer article describing a web merchant’s decision to stop paying commissions to coupon sites. It’s impossible to know exactly why someone buys, but it is possible to know where the last click came from, Seth Barnes argues.

It's an intriguing idea for merchants: get rid of third-party coupon sites (as suggested in a recent Internet Retailer article based on a Wine Enthusiast case study) and the sales just keep flowing in...like a fine wine.

But consumers have different feelings. In the critical moment before clicking "buy" they inherently want a trusted site with a comprehensive index of deals to ensure they're getting top value. That's when they're most vulnerable to cross-shopping and why Savings.com search click-through rates, conversion rates, and sales always exceed those on merchant-owned coupon sites. This is verified through Google's Auction Insights Report and other search tools. Retailers typically abandon this strategy, or run it in parallel with third-party coupon efforts, once they realize what their customers want.

 Top coupon sites have dedicated audiences and work with retailers to bring in new customers and drive incremental sales. But in the Wine Enthusiast example, the question isn't so much whether coupon sites drive traffic to sites (although providers like Savings.com, RetailMeNot, and Coupons.com increasingly do this), it's more "once the merchant loses the consumer off their site to a ‘coupon’ search, can they still close the sale if they own at maximum 10% of the real estate on Google?"

The digital, connected world is one of almost infinite choice and information. Until, you close a sale...well, you haven't closed a sale. Brands would love to have the Google results page just redirect to their own property but as you can see from the red boxes below denoting coupon sites on a "wine enthusiast coupon" search, retailers need to consider partnering with the top coupon sites because their customers are undecided on purchasing and looking for the best deals until the very end.

What if these sites listed competitors deals? What percentage of sales would evaporate out of the funnel? Most of these sites still list Wine Enthusiast coupons, which might be why overall sales are the same. But this probably won't be the case for long, since their commissions have been zeroed out.

There's also the issue of low-quality links showing in the organic search results, which is quite common on "coupon" searches as this bit.ly result below on Page 1 of "footlocker coupon code" demonstrates.

Attribution has a place, and certainly is the buzzword du jour, but assigning exact credit to touch points higher in the funnel is a messy business. Definitely messier than any direct-response medium. Will it ever be humanly possible to say how much Liking a brand on Facebook really contributes to a sale? The total nuances, history, and reasons behind why somebody buys something is unknowable, and we can at best hope for a rough approximation as this piece by Gord Hotchkiss states. Consider especially the conundrum he presents around building an attribution model for finding love. Sales attributed to coupon sites aren't a rough approximation. In the opaque world of online measurement, we only get paid if we close the deal.

There are other top minds in the online world that seriously question the claims and statistical methods behind attribution. George Mitchie and Siddarth Shah come from RKG and Adobe AdLens, two of the most respected and data-driven SEM software companies out there.

This isn't to say attribution is horrible and has no place in the digital marketing toolbox. Just that it tends to confuse correlation with causation. Last click driving a sale...that's something that happens with certainty. Attribution isn't a zero-sum game. Convertro CEO and co-founder Jeff Zwelling said as much about Wine Enthusiast optimizing their affiliate relationships rather than totally eliminating them. Long term, do they really feel comfortable with most of the 3000+ monthly "wine enthusiast" coupon searches going into the red boxes? And what about the fact that the average shopping cart abandonment rate is 67%?

"We weren't going to be able to stop the [coupon searching] behavior, but we might be able to control it," claims Wine Enthusiast's vice president of Digital Marketing. Well, they'd be the first brand to exert full control over Google. That's why commissions are for closers.

Seth Barnes is head of marketing at Savings.com, a Cox Target Media company.

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