Recent developments has brought user generated content within the voucher code space to the fore front of industry discussion. It has been a contentious issue for quite some time however, the affiliate industry has yet to decide on how this area should be managed.
Firstly, let’s clarify what we mean by User Generated Content (UGC) within the voucher space. Essentially it’s where consumers share voucher codes across the Internet for others to use via several means such as website forums, email, social media etc. This isn’t something that is new. Voucher codes have been shared across the Internet for several years with some large website portals, and TV celebrities playing a key part in facilitating this. Retail Me Not, one of the biggest players internationally, recently stated that a third of its content came from their community of users posting discounts for others to use. Clearly this is a huge and growing part of consumer behaviour and it’s clear to see why UK companies would want to be part of this in order to remain competitive.
However, UGC within the voucher code space has been a contentious issue for quite some time prompting many a discussion at the IAB Affiliate Marketing Council and earning itself a reference in the Voucher Code of Conduct. However, the affiliate industry to date has struggled to find any real consensus on how this area should be managed and regulated, and as a result one of the key players in the market has embarked on their own version of UGC within voucher codes with their “social codes” platform.
At the recent affiliate conference this subject was a hot topic, which bubbled over in to some fairly tense altercations in some of the sessions. But if this has been around for several years and is clearly a growing sector, why so much fuss about another player entering the market?
The key issue appears to be that advertisers are concerned about the spread of their codes across the Internet, and resisting this change by trying to keep tighter control. I understand this reaction but there does have to be some responsibility from the advertiser. The best way for advertisers to retain control over the codes they use is to distribute unique codes, so that a code can only be used once. This completely negates any incentive for customers to share codes. Voucher code sites and affiliate networks maintain that this is the best way to work but unfortunately many advertisers still don’t have this functionality in place. So, there needs to be an element of accepting responsibility that codes will be shared across the Internet, regardless of whether that is through an affiliate website or not. That is reality.
But, there also comes a different problem. Voucher code affiliates are paid on a cost per sale basis, and if a voucher code is used that was not meant for that affiliate or even in many cases the channel, should the advertiser be obliged to pay that commission? This is where some contention comes into play; no, the advertiser is not obliged to pay that commission and most affiliate networks have systems in place that allow them to identify whether or not an “illegitimate” voucher code was used. If this is the case, they can decline the sale so that the affiliate is not paid a commission and then reward it to the correct affiliate where applicable. This all sounds relatively straightforward, but there is now an added layer of contention. The affiliate can also see how many customers they are delivering to the advertiser but not being paid upon, which results in the ROI for that advertiser decreasing. This could result in the advertiser not getting as much exposure on the affiliate site as they had done previously. The affiliate is in their rights to do this, you can see why this makes sense commercially, yet we can now also see why it has ruffled the feathers of many on the advertiser side.
In the conference this question was thrown at the panel I was on and I was accused of not having an opinion either way on this, but I’m happily sitting on the fence on this matter, as I can see both sides of the argument. Affiliates need to constantly develop and ensure that their business is sustainable. All the numbers point to UGC being part of that sustainability, yet they need to ensure that they don’t harm relationships with the advertisers that are fundamental to that sustainability. Advertisers also need to realise that they can’t control consumer behaviour and the sharing won’t stop; as such the only way to mitigate the risk is to develop a system of unique codes. However, let’s not forget that sometimes the viral nature of the Internet is the beauty of it and advertisers might just want that code to go viral. So don’t shoot yourself in the foot by damaging relationships with some of the key partners that can drive that volume for you.
I think this is an area that will continue to foster debate and contention, yet it’s also an area that is largely influenced by customer behaviour. We cannot fully control, monitor or change this, so we need to work with it the best we can for both the advertiser and affiliate. I foresee that more of the UK voucher sites will start to dip their toes in this space, so there is a need to readdress the current IAB AMC Voucher Code of Conduct and ensure that we have best practices in place, which are adhered to across the industry.
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