Coupon websites’ revenue model?

Question by Sumanth Suri on LinkedIn Answers. My answer below.

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Coupon websites and their revenue model?

I have been looking at a lot of coupon websites over the years, and am curious to find out how they make their cash. You have websites:
1. Those that offer only coupon codes
2. Those which show a product allowing you to click through to the parent site.
3. Those that have printable coupons which can be used at brick and mortar stores.
Now, for the second set, with click through to the original site, I would assume that there is some revenue they make on the sale. For the first and the third category, how do they get their cash?
The first one with only coupon codes might make not even be making money, and are OK with it. The third one is the on that really stumps me. I cannot understand how they make any money.
Can someone please explain this to me?

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My answer

Here are 2 alternatives to the whole coupon problem. I’m with the online version of a national radio network in Canada (60ish local websites). We’ve tried coupons in various formats and have never had any real success with them.

The 2 following solutions started off by looking at the problem from the user’s perspective and then how we could make money with it.

A- Points Program : Several of our sites run a type of “vip club” where members collect points which they can use to “buy” items or “chances to win” – sort of a small scale Air Miles program. Through these, we’ve run coupons where the user gets very little points for printing it (say 50 for argument’s sake) – however when the user has redeemed it (the client’s goal ultimately), the client will give the user a card with a special code on it that the user then enters in their points program to receive a lot of points (say 5000 or a lot more depending on the value of the item in question). I.e. the user’s “what’s in it for me” question is amply answered.
We sell this type of packages to clients as part of an integrated program including radio and online avertising which drive people to the coupon and encourage users to get the big points by redeeming the coupon.

B- Gift Certificates : Another tactic used is selling gift certificates. This is rather simple – we agree with a client to barter x$ of gift certificates against an equivalent media value. We give the client their media and then turn around to sell the gift certificates at 50%. The buyer only buys if they intend to use it which means they’ll go in-store to use it and hopefully spend more. This is only used with non-current-advertising clients with websites that have sufficient inventory to allow making only 50% on it. Of course you also have to pick and choose the clients according to your audience’s desires.

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