How does Honey make money, aside from the obvious data collection?
I know a few people who use it, and I've cautioned them in the past that I can't think of any savory business model that would make this profitable.
Is there one? Is it just tracking purchases for advertisers, or is there some other monetization strategy I'm missing? Their main site says they make commissions, but I don't know how to square that with the way consumers use it -- which is to find coupons from other sites.
Honey isn't like a credit card, is it? If I'm a retailer, I don't know why I'd pay a company money for them to scrape coupons from other sites -- and it's not like Honey is going to stop scraping coupons for my products if I don't pay them money, right?
I've read that part of what they do is effectively steal affiliate referrals from other websites. Say you click on an affiliate referral link from a blog that takes you to retailers website. Normally that blog would get a cut of whatever you buy at that retailer. However, if you then use your Honey extension, their affiliate link takes over and gets credit for the sale. Honey can then give you a small discount that is a portion of their affiliate commission.
In some sense Honey can steal the affiliate commissions from blogs and other websites since you use Honey right before the sale.
They capture the most valuable sales--i.e., those made with the immediate intent to purchase--and direct those purchasers to the cheapest site in exchange for a commission.
It comes down to a question of what is more valuable to the seller. The blogger may have created the intent to purchase the product but Honey created the intent to purchase from the specific seller. And to the seller, that is far more valuable, especially as a lot of Honey-generated sales may have been sales that would have otherwise gone to competitors.
AFAIK, Honey doesn’t make you got to a specific seller.
They insert themselves on the cart page which is the final step of the purchase funnel when the product, the seller and the purchase has already been decided.
If Honey is inserting themselves between the blogger and the seller and then pocketing the commission, how is this not “stealing/hijacking” the commission?
I have no special knowledge about Honey, but I think the distinction being made is that Honey redirects them to a _new_ seller that offers a cheaper price, essentially poaching the customer. The blog's affiliate never makes a sale in the first place so of course it never pays out.
For the blog, the outcome is the same as if you took the time to price shop manually and ended up picking a different retailer. Honey's just automating that process.
No, that's not correct. You can get rewards from the page you're already on, whether it's the cheapest or not. You're not redirected and you're not incentivised to switch the retailer.
I'm getting their points from doing online grocery order directly from the supermarket site for example.
Ok, I get how they do technically, but how the shops let honey insert they affiliate id and take a cut when the user has come directly from a newsletter?
> the distinction being made is that Honey redirects them to a _new_ seller that offers a cheaper price, essentially poaching the customer. The blog's affiliate never makes a sale in the first place so of course it never pays out.
Based on what you surmised, Honey essentially acts as a middle man between two businesses. Did I get that right or am I missing something here?
Honey isn't inserting themselves between the blogger and the seller automatically. The user is doing that when they use the Honey add-on after visiting the blogger's website.
This is no different then a user visiting a different website about the same product and clicking through the affiliate link on that new blogger's page before making the purchase.
What percent of the time does “using the honey add on” result in selecting a different vendor? That is, if you read a blog post and get linked to an Amazon page, does honey not try to capture a commission there? What if you open the add on to compare prices but still end up purchasing from Amazon?
Sorry if this is a dumb question, but I don’t use honey so don’t know the mechanics of how it works.
Do you work for them? It sounds like you work for them. Based on your description, the crux of it is they exactly do insert themselves between a blog / affiliate link and their incentivization towards a specific seller exactly does replace whatever commission the blog would have seen
It sounds a lot like the two of you work for one of Honey's competitors. You both are coming across as obtuse to the point where I wonder if it's intentional.
Oh wait, you say you're just a guy on the internet and you don't work for anyone in the industry? Yeah, pal, same here. The difference is that I base my comments on having used Honey as a customer, not on some random comment based on a random comment by someone who hasn't actually used the product we're all talking about it.
It's fine if you guys want talk out of your rears but at least be honest about what you're doing.
> ”and direct those purchasers to the cheapest site in exchange for a commission.”
This is incorrect. Honey does not redirect you to different/cheaper retailers.
Honey is a browser plugin which applies coupon codes (scraped from the web) to reduce the cost of the purchase from the retailer at the checkout phase.
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How are online retailers ok with this? Surely this violates referral kickback ToS or something? Doesn't seem fair to not pay the _real_ referrer that leads to a purchase.
Rewards and coupon websites are notorious for leaching off the affiliate process without driving much incremental revenue. In the heyday of ABestWeb.com they coined the phrase ParasiteWare for places that stuff cookies like this.
The overall affiliate channel has become increasingly challenging to manage profitably from a merchant perspective. But it’s very easy for a “manager” to see all of the sales affiliates “drive” and assume that it’s making them money.
If you let affiliate sell for you, you had better invest in a professional affiliate manager that you can trust. If you source it to an intern you’ll lose a ton of money to leeches and fraud.
It should be noted that cookie stuffing is a term for a specific process where a site will inject cookies for thousands of sites with their own referral code on pageload of a landing site they control. It is highly illegal and people have served jail time for it, as it is considered fraud.
What coupon sites do is they tend to hide codes behind a button that onclick will load the retailer's site with their affiliate code, then show the code.
Sure, you can note that, and that's helpful, but other than in the strict legal sense, many coupon code sites do engage in other forms of coupon stuffing. For example, many display fake coupons which don't exist or which they know are expired, and which you must click to reveal. Upon clicking, the target site opens in a new window, and a cookie is dropped. The user was already buying the product anyway, and perhaps another affiliate was set to get the referral commission, but now this accidental popup has stolen it for the coupon site, and there's no coupon to be found. No value delivered for merchant or customer, but the coupon site makes money.
There's a lot of forms of cookie stuffing that are legal, or at least grey, and still seem to me like cookie stuffing, even though they aren't standard, clear-cut, illegal cookie stuffing fraud.
That's not cookie stuffing, that's just being deceptive. Cookie stuffing doesnt just mean sending a user to an affiliate link, it means specifically loading unrelated sites, usually in the background (or used with js/flash). I'm noting it because you're using the wrong term.
I disagree that there is a monopoly on the term. But even if we accept that, my example meets the requirements of the page you linked. Read it more carefully.
I don’t know anything about revlifter. But I’ve been in this space long enough that I’m skeptical of most claims.
I usually try to build flows now that don’t ask for coupon codes at checkout (because that leads to deal searching right at the last moment). I prefer dedicated URLs with embedded offers as much as possible.
If you need to go the coupon code route, I recommend how Namecheap does it: they registered a unique domain (namecheapcoupons.com) that publicly list all coupon codes. They rank #1 in organic search results.
But, as a general rule, I encourage you to avoid working with deal sites and coupon affiliates. This is a general rule, but they tend to drive very little incremental revenue. You should also disallow any PPC campaigns using your branded terms.
I imagine the retailer just cares about getting the sale and doesn't really care who they pay the 2% (or whatever) commission fee to? Shouldn't make too much of a difference whether they pay the commission to Honey or to some random blog.
It certainly sucks for the blogs and websites trying to fund their content with affiliate links though. Someone like Wirecutter can spend time and money on reviewing items and then can lose out on the referral commission in the end.
They do care. Some affiliate rates are far higher than that.
Affiliate comes out of retailer marketing budgets. They set the rates thinking they're paying for certain types of customers from certain participants. Honey is getting paid what the retailers think it's worth - they're skeptical, but it seems to be driving incremental conversion for especially price-sensitive shoppers.
Coupons affiliates typically get a lower rev share than others. It may be cheaper for retailers to have them if they don’t care about pissing off their others affiliates (most are too small to get their voice heard)
I think we're in agreement. The numbers through Honey probably look good, and the other affiliates probably don't have a good handle on how frequently they're getting scooped by other affiliates.
But if the other affiliates are more valuable then merchants do care if they piss them off. After all they want those high value affiliates to continue doing what they are doing
They have no individual bargaining power, but that doesn't mean they can be ignored. The more you ignore them the more go to greener pastures, the more you do for them the more resources they focus on your business.
Sure! But just 17 million user by itself isn't worth $4 billion. It's the value brought in per user. There's no figuring out what you want and what are your interests like with social media platforms, it's straight forward giving away info about what you want to buy, what will make you buy it etc.
Just look at Honey Droplist https://www.joinhoney.com/features/droplist. Let's say that I wanted to buy a product but I think I'd rather buy it at 5% off. Or let's say that I just put it on droplist for no reason and am not that interested to buy it. Honey could literally provide this information to retailers and suggest price drops and email honey users to create demand. Now, when you see a 10% price drop notifications, you being prone to scarcity are so much more likely to buy. And that's why this data is so valuable.
Now on top of this, you got rewards programs, payment splitting programs (https://www.joinhoney.com/honeypay/overview) (which provide yet another advantage, you got a discount but still can't afford to pay, how about you only have to a quarter of the price right now?), a mobile app with 100+ stores integrated in a single app, it adds up!
Those are all good points. I believe paypal wants Honey for one thing, to insert themselves in the middle of the checkout process and offer incentives to complete checkout using their payment service.
Are you sure it's not worth that much? That's only $235 per user. Given how affiliate revenue can easily approach 10%, and their average user probably spends thousands of dollars online per year, it seems easily within the bounds of reason to me.
It's interesting to compare this discussion with how adblockers are treated. Either we're in favour of the user having control of the operation of their browser, including delegating that to extensions, or we're not.
Major retailers typically have affiliate programs in which if an affiliate (say Honey) refers a customer to the retailer and the customer then makes a purchase, then the retailer will pay out a commission to the affiliate.
This model is substantially similar to RetailMeNot, except Honey will automatically try every coupon they know of for you automatically.
But when does Honey ever refer a customer to a product? My impression is that you only ever use Honey when you're already about to make a sale -- you go to the product page, and Honey finds a discount for you.
I'm not super familiar, does Honey run any advertisements or recommendations for products? It makes sense why I might pay a blogger affiliate revenue for referring a reader to my product, but I'm not going to pay someone an affiliate link to someone who claims they influenced a purchase decision where the customer is already sitting on the checkout page. If I go to an Amazon product page, will Honey give me a recommendation for a different product that's lower priced?
If you were going to buy something from Amazon and Honey tells you it's cheaper at Walmart, Walmart would reasonably want to pay Honey for driving business to them.
Most affiliate networks are pretty shit about tracking. Last click attribution is how it generally works. Some have started keeping track of when you landed vs when you got the affiliate link, but it’s a grey area as far as user intent.
Let’s say I got to checkout and after tax and shipping the product was too expensive. I use Honey or search for a coupon and the price goes down and I complete a sale.
That happened to me literally an hour ago. I checked out and when the shipping was added the price felt high. I left the cart open and started browsing Reddit. I was waffling on the purchase. Then I remembered to Google for coupon codes and I found one and put it in and at the new price I checked out.
> does Honey run any advertisements or recommendations for products?
They can drive a sale by tracking prices and notify you of a drop in price. That might be one case where they help make a sale that wasn't otherwise going to happen.
I don’t like to hate on acquisitions especially by smart companies like PayPal but I don’t understand this one at that price. I’ve tried Honey several times and it’s mostly annoying. I suppose one could save a buck or 2 here and there but that’s about it. And you’ll end up at a retailer with lousier total offering.
Not a huge fan of honey, but I'm happy to extract back any stupid money that went into marketing rather than the product. I saved ~$200 directly over a few months and got $100 voucher waiting. It's not a huge amount, but it's also more than pocket change. That's without actually switching retailers, just using it where I'd buy things anyway.
What are the privacy implications? Do they have access to your full browsing history? Or can you limit them to just amazon.com and a few other domains?
They do have access. Whether they use it or not... not sure. It would be interesting to check. I assume everything in the same browser profile is compromised either on purpose or by accident.
I agree with you on the value of honey as a consumer, although I'm guessing we're not the main targets for this kind of plugin. But, I think you have to look at it from the perspective of PayPal's core business: payment services. My guess is that paypal wants honey because honey lives in the checkout of every website when the plugin is installed.
PayPal can increase their own revenue by offering incentives for people to checkout with PayPal (instead of another payment service). Maybe someday they could even offer payment services on sites that don't even accept paypal, at least more easily integrate with those sites for Honey users.
They could also sell extended warranties, or resell 3rd party ones as many retailers now do.
No, Honey knows about "intent to purchase" - which is very valuable. And same intent will be sold to a million merchants even though the person will only buy from one.
There is money to be made, it is theirs to lose. However, considering it is PayPal.... who knows.
I don't think Amazon works with them anymore for referrals? Other websites might though.
Rakuten/ebates works the same way. You go to a website, turn on the referral program, and then the plugin will send you a physical check in the mail once you hit a minimum amount (and it will be at most quarterly).
If you have customers spend $1B+ quarterly using these plugins and you get maybe 1% cut then you're getting $10m cash/yr plus all kinds of browsing data to sell analytics on.
> We earn a commission from stores when you find savings. What we don't do is sell or share your data (you can read our Privacy Policy here)
> We're building a better way to shop, one that saves you time and money, even if there's less in it for us. If this sounds like a new way of doing things, you're right.
They're very specific about the actual meaning of "your data". By any basic understanding of "selling your data", Honey does exactly that.
> We may also share information in the following cases
> with your express consent
> in an aggregate or anonymized format that does not identify any specific person;
These cases are ORs, not ANDs. Whenever any company sells your personal info, it's always anonymized and aggregated. I can't just buy Facebook or Google data of a specific person, and I think almost anyone would agree those companies do "sell your data."
Also the 5th item in that list says they may sell your data if:
> with a buyer or successor if Honey is involved in a merger, acquisition, or similar corporate transaction. If that happens, you will be notified via email and/or a prominent notice on the Website of any change in ownership, as well as any choices you will have as a result.
You can just not use the service or delete your data. It's a CA company that by law must abide by CCPA so you know your data is deleted except for regulatory purposes
I don't use the service, and for the reasons I mentioned in my comment. But saying they do not sell your data because some non legally binding webpage says so is not true and that is the point of my comment.
They work with other companies, and these companies give them a unique code to apply for discount. When users use these code they get a commission. It's like CJ (commission junctions www.cj.com) that many other websites such as slickdeals uses. I used to work for one of these start up that does slickdeals like websites.
They're exactly like Rakuten.
You use their browser extension and they'll apply the code for you automatically. I believe all of these codes are via cookies.
> ”How does Honey make money, aside from the obvious data collection?”
Online retailers typically pay a “referral fee” to websites that direct traffic to their store using affiliate links.
There has long been a whole genre of “cashback” websites which take advantage of this by paying the referral credit (or some of it) back to the end user. This UK link lists some and explains how they work:
Honey is a bit different, because they pocket the referral fee for themselves, but attempt to save the user money by automatically checking/applying coupon codes that they scrape from the web.
Honey claims they do not make any money from selling data to third parties.
Honey also does not, in my experience, attempt to redirect you to other retailers as some other comments have suggested.
Last click attribution, baby. Get those affiliate fees for 30 days after click on some sites.
I worked on a competing product some years back there is much money to be had in the deal/affiliate/coupon space.
Our biggest mistake was going hard on SEO. We got the google rug pulled out from under us and quickly burned all of our capital trying to do click arbitrage.
Going after browser installs is a pretty ~sneaky~ savvy way to keep a user base.
Generally these coupon sites all make money the exact same way - through affiliate programs that pay them some % of the purchase price for referring a customer to their site.
I think honey by itself probably doesn't make much if anything. Integrated with PayPal however has the potential to become a big earner in terms of fees and new customers.
I know a few people who use it, and I've cautioned them in the past that I can't think of any savory business model that would make this profitable.
Is there one? Is it just tracking purchases for advertisers, or is there some other monetization strategy I'm missing? Their main site says they make commissions, but I don't know how to square that with the way consumers use it -- which is to find coupons from other sites.
Honey isn't like a credit card, is it? If I'm a retailer, I don't know why I'd pay a company money for them to scrape coupons from other sites -- and it's not like Honey is going to stop scraping coupons for my products if I don't pay them money, right?