Are Coupon Aggregator Sites Worth Retailers’ Investments?

Jul 22, 2013

How valuable are digital coupon websites? On Wall Street at least, RetailMeNot, the largest one, just received a whopping valuation of $1.05 billion in its IPO, with a 32-percent leap on its first day of trading Friday.

RetailMeNot featured digital coupons from over 60,000 retailers and brands in 2012, with its partners realizing over $2.4 billion globally in sales driven by its coupons. Its main sites are in the U.S. and in the U.K.

For consumers, RetailMeNot provides one source for a wide array of coupons across categories, better assurances against invalid or expired coupons and personalization, such as coupon alerts from preferred stores. Digitally downloading also ends the chore of hunting down newspaper coupons.

According to its prospectus, RetailMeNot offers four core solutions for retailers:

  • Access to a large consumer audience: In 2012, RetailMeNot’s websites had on average over 24.2 million unique monthly visitors, more traffic than the majority of its retailers’ own websites;
  • Multichannel engagement with consumers: In 2012, RetailMeNot had over 450 million visits to its websites. It has had more than six million mobile app downloads and has more than nine million e-mail subscribers. It also offers in-store solutions tied to mobile devices as well as social media programs;
  • Trusted partnerships and strategic approaches: RetailMeNot said it actively works "with our paid retailers to curate their digital coupons to drive sales and build consumer trust;"
  • Quantifiable, pay-for-performance model: Retailers pay a commission to RetailMeNot only after a consumer has made a purchase and are able to track the performance of their digital coupons.

With 94 percent gross margin, RetailMeNot is already profitable. With its low expense base, however, investor concerns include ease of entry. Large competitors include and

Groupon’s poor IPO also brings worries that RetailMeNot may largely cater to non-loyal cheapskates. The Wall Street Journal found one company, Jewelry Television, which no longer uses coupon sites. Its chief strategy officer, Tim Engle, told the WSJ, "We ended up discounting a lot of products that didn’t need to be discounted."

A difference is that RetailMeNot offers a solution for national retailers versus Groupon’s local concentration.

"For RetailMeNot, they’re being a traffic driver to large-scale e-commerce sites and helping consumers find coupons for these sites," Tom Forte, an analyst at Telsey Advisory Group, told Bloomberg. "It’s an effective business model — they’re catching you on your way to your shopping choice with coupons."

A Toys "R" Us spokesman, Kathleen Waugh, also favorably told the WSJ, "We’ve had great success with these sites and consider them an important part of our overall marketing strategy."

What do you see as the pros and cons of coupon websites from a retailer’s perspective? What questions should retailers ask when working with coupon sites?

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7 Comments on "Are Coupon Aggregator Sites Worth Retailers’ Investments?"

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Mark Heckman
8 years 10 months ago
As a life long retailer, certainly one of our biggest phobias is giving up our customer and their information to a third party. Further, many of the largest retailers have heavily invested in their own internal ability to create digital coupons, other offers, and communication with the retailer’s own website, not a third-party aggregator. These aggregators represent a real threat to the retailer’s own equity and their control of “their” shoppers. With that said, the consumer is loving the ability to find deals across multiple retailers on one site. Few shoppers have the time or inclination to jump around to four or five retailer sites prior to each shopping trip, looking for the best deals. The consumer will ultimate win this battle and retailers, no matter how much effort the retailers put into their individual sites. They will eventually have to acquiesce to these new emerging digital deal venues. How they do that remains to be determined. Third party deal aggregators have the potential ability, in time, to create a single view of the shopper… Read more »
Liz Crawford
8 years 9 months ago

If I were a retailer, I wouldn’t touch this.

Looking at industry reports from eMarketer and others, it appears that shoppers are using retailer sites and mobile apps overall much more than the “retail-agnostic” coupon aggregator sites. Even the popular Retailmenot. The reason is that retailers offer coupons beyond the manufacturer’s deal, and provide special deals on their frequent shopper cards as well. The retailer site or app works like one-stop coupon shopping, for many.

But from a strategic perspective, retailers should want to encourage their shoppers to be loyal not only to their storefronts, but also to their sites and apps… eschewing the retail-agnostic coupon aggregators, because those can be used at any outlet. Further, simply getting their shoppers in the habit of visiting their site is worthwhile from a branding and adverting perspective.

If anything, these kinds of sites are more strategically worthwhile for brands. But in my view, retailers are better off using their resources on their own digital interfaces.

Robert DiPietro
8 years 9 months ago

This follows the logic — every consumer loves a deal. The pro for the retailer is the perception of the deal, since it is on RetailMeNot, is a good one and lends credibility to the retailer offer.

The con for the retailer is the mass distro of the offer. It is not targeted and it is not serialized so you can limit the exposure.

Bill Hanifin
8 years 9 months ago

Coupon websites provide the benefits to drive traffic to retailers as well as manage the outflow of date merchandise. However, using an aggregator site is tactical, not strategic in my opinion.

The consumer mindset of those frequenting these aggregator sites is the “disloyal,” bargain hunter and magnifying a discounter site which is disconnected from the sponsoring brand won’t build long term brand equity or customer loyalty.

There is progress in the offer space and companies such as TrialPay and others are offering services and technology to intelligently link brands and consumers to encourage desirable behavior, not just fuel the discount waterfall.

Of the 4 core solutions for retailers mentioned in the article, I have the toughest time identifying with building “trusted partnerships and strategic approaches.” The model does seem to center on building an audience and accessing/serving that audience in multiple channels.

That said, I hope the investor market will recognize the solutions providers that go beyond audience gathering and provide solutions that help retailers build their business in a profitable and sustainable manner.

Jerome Schindler
8 years 9 months ago

There is a segment of shoppers who are not really into putting much effort into saving money by using coupons, etc. They buy recognized brands at full price. There are others who would buy another brand or PL if they did not have a deal on a specific brand name. So these coupons help to stem gravitation to store brands.

DealYour Day
DealYour Day
7 years 11 months ago

I actually see more advantages than disadvantages for coupon websites from the retailer’s perspective. The retailer gets more number of views or clicks by all the times the name is mentioned while promoting in social media sites. It also creates awareness and generates new consumers/users to the retailers.

Tonya Allen
Tonya Allen
7 years 6 months ago

Well my point of view is different; as a customer I have used, and I think these websites are creating great awareness about different brands to the customers and if you see it from the retailer’s view point, they are in a win-win situation as they get more clicks and a huge amount of traffic and obviously, the customers.


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