Why Do People Run Bargain Sites?

scotty on 01/05/2007 at 12:17 am, filed under Website

Have you ever wondered, why people run websites? Especially the websites that aggregate hot bargains? In an attempt to answer a question on the Whirlpool forums, I posted a list of Australian bargain sites, which got me into thinking this question (my post has been deleted but that’s another story). There have been quite a few new social deal-bookmarking sites lately (which I reviewed two last week), and a new cashback site went live just two weeks ago! I was going to write a review on that new cashback site, but I think I want to clear some things up first — why do people make bargain sites?

Here is My Soapbox

I started this bargain blog almost 2 years ago, out of frustration on how some of my friends spent their money. “Damn! You could have got it cheaper if you checked these deals first!” Since many of them are uni students who stayed in the labs whole day reading blogs, I thought I might as well start sharing the bargains I found on a blog. Here is my soapbox, where a blogger’s voice might be heard.

There are other benefits when you blog. Like recognition? Instant fame? You become more creditable in a small circle of people calling themselves the “blogosphere“. As well as some other ego-boosting intangible benefits.

So here we go. 300+ posts and 500+ comments later, I am still writing about the deals. Many bargain websites too have a small beginning. However, it is never the whole story.

Share? Share!

Pretty soon after I started bargain blogging, individuals have contacted me, sending me their own deals as well. So I redirected all the incoming deals to a small forum I’ve created here, which later on became OzBargain.com.au. Great! Now we have a “community”. Not just I myself blogging about the bargains, but many others have also shared what they have found. There is no way for one single person to find all the great deals in Australia, but when you multiple the number of heads it might become closer to reality.

However, why do people create more and more community sites for the sake of facilitating the discussion? If it is all for the “common good”, then one big site ought to be enough. A one stop shop where you can get the best one day deal, best negotiated cashback rates, best discussion forums, etc. Instead, what do we have got here? Multiple small sites where we all copy each others’ deals, and the ideas are nothing new but inferior clones of equivalent sites in US.

A few months after I started blogging here, an online retail shop popped in to show me some of their deals. Great bargains they are! Moreover, that online shop asked for the rate of advertising.

When money entered into the world of blogging and community sites, nothing is ever going to be the same.

How Are The Bargain Sites Monetised?

Australian notes Okay. So I signed up a Google AdSense account pretty much soon after blogging started here, as well as a few other monetisation schemes along the way. I’ll say that the money I earned here is nothing compare to my day-time job where I am employed as a code monkey writing software for the rich. However it still managed to pay for the hosting cost (not cheap in Australia!) + running the weekly competition at OzBargain and spare changes!

The biggest benefit for me however, is understanding how the online economy works. When I discovered a new bargains/deals site these days, I would first ask “how does this site work?” and soon follow by the question “how does the site make any money?” Usually by understanding the later, it gives you a better picture of the former, and the reason why this site exists.

That is the one question I would like to ask when I review sites here.

Direct Advertising

Advertisement is something readers really hate but is usually the life supply of a website. Personally I found balancing the two can be a struggle — how can I place just right amount of ads on this site without annoying too many readers? There are other problems when you started “advertising” for a few specific merchants — am I affiliating with a dodgy shop that really annoys its customers? My conversation with Gav in this post is just an example. Well, let me try to make myself clear here.

Currently there are four different types of ads on this bargain blog, and two of them are also used on OzBargain community site.

Google AdSense — text links on the left-hand-side and top of the page. This site gets paid a few cents when some one clicked on a link.
Text-Link-Ads — 10 slots at the top-left hand corner. People buy those slots on a per-month basis, mostly for Search Engine Optimisation (SEO) reason.
Chitika Ads — on some pages I also run Chitika Ads between the main post and the comments, and they usually show irrelavent products in US.
ReviewMe — I get paid by writing reviews and criticism on websites or products.

One important thing to note is — I am not affiliated with the advertisers as the ads are pushed out by Google, TLA or Chitika. Actually I would like to know if there are some dodgy products advertised on this blog so I can hopefully block them, but their existence does not imply my approval on these products :)

On the left-hand side of the front page you will also notice products from other several online shops — Zazz, Deals Direct, OO.com.au, Catch of the Dau and Daily Deals to be exact but more might be added in the future. Note that they do not pay a cent to have their products listed there — they were there because I was having fun with scrapping products off their home page. However…

Affiliate Sales

When I first learnt about affiliate sales, I was surprised to see how many websites out there are in fact affiliates! When you buy something from an online store by clicking through a link on another website, you might be tracked and the origin website might take commissions from the sale! Even if you are just browsing around, the chance of getting tagged by the affiliates is virtually unavoidable!

To be honest, if you buy something from either Deals Direct or OO.com.au linked from this website (bargain blog, not OzBargain), I might earn some commission! (I say “might”, because the tracking thing does not always work). Shock! Horror!! Bargain Blog is stealing my hard earned cash!!!

However the problem is — you are going to pay the same amount anyway, then you might as well tip me some :) Except if you use an affiliate who is willing to give a portion of commission back to you. It is exactly the reason why I have been advocating MoneyBackCo, as they are the only one who give back 100% commission at the moment (for a small annual fee though). No wonder I haven’t been able to make any sale for a while :)

Joining these affiliate networks (1, 2 & 3) also enables me to see how much merchants are willing to spend on commissions. I now can verify how much those “cashback” or “rewards” sites are giving back to their customers, and it turns out that the biggest is actually paying out the least (Surprise?! Not!)

Subscriptions

When was the last time you encountered a site that won’t let you in unless you have paid for the subscription? It is so 90’s, yet it seems to be a viable business model in bargain sites. Two sites that I am aware of, CheapSkate.com.au and SimpleSavings.com.au, run on annual subscription model. For $36.50 and $47 a year you can get “tips that can save you hundreds of dollars”.

Too bad that I am an even cheaper stake who wouldn’t pay a cent for good advice :)

What I Am Getting At…

It is always hard to conclude a long messy post. What I am really getting at is — not all website owners are motivated by “giving everything away for free because it is the way I like it”. I personally do not think this site is, nor are many websites that I have looked at before. Some sites are clearly created to be money-making machines without providing any value to the community — so beware!

With all these money changing hands behind each sale, a shopper need to think about whether he/she is really getting the good deal.

7 Comments

Sorry, the comment form is closed at this time.