The Business of Display Part 7: Making Money With Coupons

Is it possible to make money on Display by giving away coupon codes?

Coupon sites are one of those “sexy” internet business models because they require a little overhead to set up. You don’t have to create a physical product. You don’t have to create a digital product. In fact, there are no deliverables whatsoever.

Plus, it’s pretty easy to build goodwill with your visitors because you’re not selling anything. You’re giving them deals on stuff they already want to buy.

Seems like a dream business model, right?

However, like most “sexy” business models, turning a profit on a coupon site is a lot harder than most people assume. Coupon sites make 99% of their money off of advertising revenue and affiliate commissions. A coupon site needs A LOT of traffic to become profitable.

So how exactly are sites like Coupons.com and RetailMeNot making hundreds of millions of dollars in revenue each year?

It’s all with the help of Display advertising.

How Exactly Do Coupon Sites Make Money?

Most large coupon sites spend millions of dollars a year on paid traffic. This begs the question:

How in the heck are they making money?! 

Each of the advertisers you’ll see in this blog post has its own unique strategy. Plus, these sites definitely have behind-the-scenes revenue streams that aren’t obvious or immediately visible. However, most coupon site revenue is generated in three different ways:

  1. Affiliate Commissions

Coupon sites will either use affiliate links or affiliate discount codes. The site will then receive a small commission whenever someone buys a product through their link or with their specific coupon.

Later, we’ll see how Offers.com sends traffic to landing pages with long lists of affiliate links.

2. Direct Media Buys

A direct media buy is when an advertiser purchases inventory directly from a publisher. The advertiser can purchase a creative or–as you’ll see is the case for Crest and Coupons.com–they can purchase an entire page.

3. Ad Arbitrage

Ad arbitrage is the process of buying and selling ad impressions on ad exchanges and networks and making money on the margin. It’s basically a cheap way to buy traffic. The site can earn money by monetizing with Google AdSense or another network that gives a nice payout.

For example, Coupons.com has brought in an estimated $181,088  in publisher revenue over the past six months through Google AdSense and direct buys:

coupons-publisher-revenue

 

There are probably other ways that some of these sites are monetizing, but these are the basic methods.

Cotter Cunningham of Whaleshark Media (owner of RetailMeNot) on how they make money:

“We make money two ways. We make money off advertising — it’s a very valuable consumer. You’ve held up your hand and said you’re going to buy something today. That in-market consumer has enormous value and advertisers are willing to pay for that. For about 10% of the merchants on our site, we have a small commission. Commission is actually a bit bigger in revenue, it’s funny because when I originally got in the business I thought advertising would be bigger. Maybe over time, that’ll change.”

Now let’s take a look at how these sites are running and optimizing their Display campaigns.

BeFrugal.com

BeFrugal’s Ad Spend

BeFrugal.com has spent an estimated $1,169,152 over the past six months. BeFrubal allocates most of their ad spend to the Google Display Network.

be-frugal-ad-spend

Ad Creatives

BeFrugal’s only advertises coupons for restaurants.

Their ad creative formula is pretty simple:

  • First, they start with an image of a tasty looking dish.
  • Then, they add the restaurant’s name followed by “FREE COUPONS!”.
  • Next, they include the same call-to-action on every ad, which is simply, “Get Coupons.”

Here are a few creatives that BeFrugal has recently run:

befrugal-ads

Publishers

The first publisher you’ll notice is printable-coupons.blogspot.com. You’ll want to make a mental note of this publisher as you’ll see it appear again and again in this post.

be-frugal-pubs

You’ll also notice that BeFrugal buys inventory on Ask.com and About.com. However, they don’t buy ads on random pages. They specifically target placements that are related to food or food deals. Here are a few of their placements on About.com:

about-placements

As we’ve mentioned before, sites like MSN.com, About.com, and Ask.com can be fantastic sources of traffic if you buy ads on pages and channels that are relevant to your offer.

Landing Pages

BeFrugal uses templated landing pages. Every one of their landing pages has the same basic design. The only differences are the headline, the logo next to the headline, and the picture of food to the right of the opt-in form.

befrugal-landing-pages

ShopAtHome.com

Ad Spend

ShopAtHome.com has spent an estimated $1,341,696 over the past six months. ShopAtHome allocates most of their ad spend to the Google Display Network. They have also spent approximately $81.5k on MediaMath.

shop-at-home-ad-spend

Ad Creatives

Unlike BeFrugal, ShopAtHome runs ad creatives for various types of deals. Their most recent coupons include auto parts, aquariums, and movies.

shop-ad-home-ads

You’ll also notice that each ad creative has a dotted border to give it that Sunday-paper-coupon look. It’s worth mentioning that the CTR of an ad creative can be affected by simply adding or removing a border.  A dotted border with scissors might not be appropriate for your market, but you should test ad creatives with borders vs. ad creatives without borders.

Publishers

Who is the first publisher you see on this list?

 

shop-at-home-pubs

printable-coupons.blogspot.com!

This site must work pretty well for coupon advertisers.

ShopAtHome matches the ad creative’s content with the publisher’s content. For example, they run Las Vegas coupon ads on Vegas.com, movie coupon ads on Gofobo.com, and general coupon ads on general coupon sites (Thekrazycouponlady.com and Coolsavings.com).

Landing Pages

ShopAtHome.com also uses templated landing pages:

shopathome-landing-pages

You’ll notice that the landing page is the same for all ad creatives except for the tiny coupon box at the top, and the left to the left of the opt-in box.

RetailMeNot.com

Ad Spend

RetailMeNot.com has spent an estimated $667,264 over the past six months. They allocate the majority of their ad spend to the Google Display Network.

retailmenot-ad-spend

Ad Creatives

RetailMeNot has fairly general creatives. Their most-seen ad creatives are those that include the “we save our users over 1 billion” copy. Their ad creatives are somewhat less compelling than those of the other advertisers in this post.

retailmenot-ad-creatives

Publishers

If you look at the trend lines to the right of each publisher, it appears that RetailMeNot’s most successful publishers (the longest running) were Thekrazycouponlady.com and Hotdeals.com. They also tested buying traffic on Thesaurus.com but cut that campaign off after a brief period.

retailmenot-pubs

Landing Pages

RetailMeNot’s landing pages are these two web 2.0-style landing pages. The first page is a general page that just lists many of their deals. The page on the right is for RetailMeNot’s latest venture, Deal Squad.

retailmenot-lps

Coupons.com

Ad Spend

Coupons.com (aka Quotient Technology) is the big kahuna of coupon sites.

Coupons.com has spent an estimated $8,322,048 over the past six months. They also allocate the majority of their ad spend to the Google Display Network and Direct Buys. However, you’ll also notice that Coupons.com has tested out Yahoo’s native ad network, Yahoo Gemini.

coupons-ad-spend

Ad Creatives

All of Coupons.com’s ad creatives are for specific products:

coupons-ads

 

Publishers

Coupons.com matches the product shown in the ad creative to the publisher’s content and audience. For example, they advertise feminine products on cosmopolitan.com. You’ll also notice that they spent about $119k on printable-coupons.blogspot.com.

coupons-pubs

Landing Pages

Coupons.com uses two different styles of landing pages. The first is a general page that shows a list of coupons for various brands/products. The second page appears to be a “sponsored” page. It shows items, banners, and even a video for one specific brand.

coupons-landing-pages

Offers.com

Ad Spend

Offers.com has spent an estimated $235,168 over the past six months. It is one of the few coupon sites that is testing out Native ad networks (Taboola and Outbrain).

offers-ad-spend

Publishers

Offers.com buys ads on a variety of different publishers related to the products being advertised on their ad creatives.

offers-pubs

Ad Creatives

Offers.com is running traffic on both standard ad networks (like the Google Display Network) and Native ads on Outbrain and Taboola. You’ll see that they’re using different strategies for both types of networks.

Standard Ads

Offers.com’s standard ad creatives are all text ads on the Google Display network. These ads send traffic to a landing page with a large list of different coupons, offers, and deals. You’ll see what those exact landing pages look like in the “Landing Pages” section, but here are what their text ads look like:
offers-text-ads

Native Ads

All of Offer.com’s Native ads are related to credit cards. After the prospects click on the ad, they are taken to an advertorial-style landing page with affiliate links for various credit card offers.

offers-native-ads

Landing Pages

Here is Offers.com’s main landing page (slightly modified because it was so long):

offers-google-lp

This page is simply a list of different coupon offers for the product being advertised (in this example, you see all of Offers.com’s deals for Apple products).

Native Landing Pages

Here are the landing pages for all of Offers.com’s native ad traffic:

offers-native-lp

The first landing page is for many different credit cards. It’s written like a review you’d find on a personal finance blog. The second landing page is just for one credit card offer. There’s no doubt that Offers.com receives an excellent affiliate commission if someone applies and is accepted for one of these credit cards.

Conclusion

Coupon sites are a viable business model if you’ve got the time, money and resources to invest. However, it’s not one of the easiest business models to make work. On the other hand, there will always be a demand for resources that help consumers get products they want at a discount. If you’re interested in creating this sort of business model, then it might be worth it in the long run.

1 Comment

  1. I’m interested in this niche. Can you recommend a source that I could get more specific information and possibly someone who I could work with in this market from a mentoring position?

    Reply

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