One of my favorite benefits of working with Todd and Eric on Wine Club Group is that they both really dig data. To maximize our profits on the site, we use a LOT of data analysis. Some of it is related to SEO and traffic but a lot of it is figuring out which merchants to better position on the site based on things like Earnings Per Visitor, Earnings Per Click, and Conversion Rates.
You’re probably familiar with all of those, but I have something new for you today that you may not be tracking. Whether you are adding a new merchant to your site or evaluating a current partner, do you know how much of their traffic comes from coupon sites versus content sites?
Why is this important?
First, it depends on what type of traffic you are sending. If you are sending content traffic and a program is heavily dominated by coupon sales, you might struggle to get conversions yourself. Are coupon sites overwriting content cookies because the merchant isn’t using attribution properly? Conversely, if you are a coupon site and the program is primarily paying out to content sites, maybe it is an opportunity for you because the merchant isn’t working with any of the other big coupon sites.
Second, coupon sites impact conversion rates. If a merchant is paying out 90% of its commissions to coupon sites, you would expect to see very high conversion rates because people often look for coupons after they have already decided to make a purchase. If you are a content site, don’t expect to have as high of conversion rates as a coupon (or cash back) site. If you see a program with a crazy high conversion rate and low percentage of payouts to coupon sites, it might mean that content sites are having great luck with converting for that program.
Third, knowing this information might help you understand why average commissions for a program are low but might actually be much higher for you. If you are one of a few content sites working with a merchant, you may be able to achieve better stats in the program than average, assuming the merchant has its attribution set up correctly so that those coupon sites or toolbars do not overwrite your content-driven cookies.
How do you figure out the balance?
You could just ask the affiliate manager and maybe they would tell you, but usually they will not. So if you are armed with 3 different numbers from the program (which you should be able to get either from the network or maybe even the program description), I can help you figure it out. Here is what you need:
- Standard Program Commission
- Average Sale Amount
- Average Commission Amount
Another number that is helpful but very hard to get is the rate the merchant pays coupon sites. I suggest using either 1% or 2% because if a merchant IS paying a coupon site much less than standard, it will usually be one of those.
As with all data, there can be a lot of variance. Not every merchant pays their coupon sites lower rates. Some pay the full amount to all affiliates. Some only lower the commission for the coupon site if it ranks for the merchant name + coupon. There also may be some other factors in the commission rates that throw things off like:
- Cash back sites paid lower than content sites
- “Other” affiliates like cart abandonment affiliates are paid a lower rate
- VIP rates for a large percentage of the affiliate traffic
- Flat rate bonuses
The way you will know almost immediately if this calculation is important for you is to look at:
- Average Commission Divided by Average Sale Amount
If that number is smaller than the Standard Program Commission, you can use my calculations. If that number is larger than the Standard Program Commission, it means the merchant is paying out some VIP commissions or bonuses that make my calculations useless. Except that it means you should probably investigate whether you should be asking for a commission increase or bonus!
So there you have it. It’s not a perfect science, but it’s one more data point that you might be able to use when running your affiliate marketing business. I’m including a link to a Google Sheet that I created that has a place for you to fill in the variables and it will automatically calculate the average commission and the content versus coupon for you.
Or here is the formula if you just want to plug in the numbers yourself. It’s a bit of a bear!
(Standard Commission)*x + Coupon Commission(100-x) = Overall Program Commission
Where Overall Program Commission = Average Commission / Average Sale
Solving for X will give you your content site percentage and 100-x will give you coupon. Remember that you can use either 1 or 2 for that Coupon Commission. I suggest running both if you don’t know for sure and giving yourself a range.