Greatest Twitter Marketing Thread Ever

Just read the entire thread ... every word (click here). Every word, please.

Don't have Twitter? I did you a solid ... here is the text. Everything that is wrong about digital marketing, corrupt vendors, and muttonheaded marketers at brands who can't be bothered to ask simple questions is on display here.

My team built the leader competitor to

@honey

This "scam" story is absolutely wild to me.

In his video today,

@MKBHD

makes two claims about Honey's foul play:

1. Honey effectively steals commissions from their affiliate partners by being the last to drop their cookie when a user checks out.

2. Honey's value prop to retailers is dubious since they are giving customers discounts on products they were already about to buy. So, why is this wild?

Because this is exactly how it has been since the beginning.

In 2016, I was at a startup that aspired to take on Amazon by consolidating every product on the internet via a Chrome Extension.

Turns out that's pretty hard to do, and after working at it for years, we were coming up short.

Our business team noticed another e-commerce Chrome Extension (guess who?) seemed to be making waves and growing fast. They dug in a bit, and while I wasn't in the room, I gather their reaction was something like this: They're getting paid HOW MUCH to do WHAT?! From the start, it sounded ridiculous. A user on the checkout page is at the bottom of the funnel. They are the highest-possible-intent customers. Right on the cusp of purchasing of their own free will. At full price. Of course consumers were loving it -- it was the closest thing to "free money" they could get.

But the retailers? Why the hell were they paying for this?

It all makes sense -- sort of -- when you understand how affiliate marketing works.

(Feel free to skip this part if you already know it)

The original purpose of affiliate marketing was to enable hardworking content publishers (like Marques) to get paid for referring customers to retailers (like Best Buy). (This is just an example, I don't know who he has affiliate agreements with, if anyone). It's a brilliant idea, and it makes quite a lot of the internet go round. It's largely done via "affiliate networks" -- companies like Rakuten, Impact Radius, CJ Affiliate -- who make it easy for retailers and publishers to pay and get paid.

It's quite obvious why Best Buy would want to pay someone like Marques (again, just an example) for referrals -- he *sends* customers who otherwise wouldn't be shopping right to Best Buy's door. That's value!

I'm not an expert on the history of Affiliate Marketing, but I gather it went roughly something like this:

1. Some time in the early/mid '90s: Affiliate Marketing invented.

2. Affiliate Marketing catches on like wildfire since it drives tons of new customers to online retailers and is much easier to measure ROI than, say, television ads. (Somewhere in here, Affiliate Networks are invented) 3. Online retailers begin hiring Affiliate Marketing Managers -- and even entire departments -- thanks to its overwhelming success. 4. Affiliate Marketing Managers are granted increasingly large budgets to spend on Affiliate Marketing initiatives. 5. ... < next section >

6. Honey is accused of massive scam

1. User lands on retailer (Macys, Foot Locker, etc) checkout page.

2. Chrome extension pops up, saying "We found N coupons. Want us to try them?"

3. User clicks "Yes."

4. -This one is critical- Chrome extension marks its territory by:

a) redirecting the browser with a retailer-specific affiliate link, or b) dropping a cookie, or c) running some custom javascript in the page.

Importantly, only one publisher can get attribution for a sale. And it's always the last one.

5. Chrome extension tries coupons, and applies the best one if any. 6. Customer finishes checking out (with their coupon discount, if applicable).

7. Retailer forwards sales data back to Affiliate Networks, who pay out commissions to publishers like Honey (and influencers like Marques).

So, why were retailers like Best Buy, Macys, Home Depot, etc paying Honey (and us) to give discounts to customers who were already about to buy a product at full price?

For us, the pitch was straightforward: "You're already paying Honey for it; why not pay us too?" (Thanks, Honey!)

But for Honey? The trailblazers?

In short: bad incentives, and incompetence.

Note: This is a bit of speculation on my part. I'm not referring to any one person or organization here -- this is broad strokes.

Here's how (I think) it went down:

Retailers set Affiliate Marketing budgets for the quarter or year. Their Affiliate Marketing teams are encouraged to spend -- if not rewarded for spending -- their entire budget.

Bonus points for discovering trendy new channels that customers love! Honey had a great brand, great user growth, and (I can only assume) a killer sales team. Some affiliate manager probably got promoted for bringing Honey on early! Honey's pitch? Something like: "Customers are more likely to convert (buy the product in their cart) when they've tried coupons first. It gives them confidence that they're getting the best deal!"

Note: This is a completely testable hypothesis...

I am 99% certain that Honey was *never* challenged on that claim by any of their retailers.

Why am I so certain?

In the throes of building our Honey competitor, I once asked our (absolutely killer) BD guy:

"How many retailers have asked you for hard data showing that trying coupons on the checkout page actually increases conversion rates?"

Those were data that we could easily collect. It's the obvious litmus test of whether we're adding real value, or if we're just parasites exploiting a (what we believed to be short-lived) loophole. His response? "One."

Thousands of e-commerce retailers paying us to try coupons on their checkout pages, and only one ever asked us to back up our central (dubious) claim.

It was site #537 or so in terms of priority. Boutique farm equipment reseller or something. The guy who asked was the CEO, if I remember correctly -- the kind of person who would actually care, or even think, to ask about ROI. Our BD guy's response to this CEO's more-than-reasonable request for evidence?

"Go pound sand!" (in so many words).

The crazy part about this Honey story coming out now is that we all saw it coming back in 2016.

Quite frankly, we thought this moment was so right-around-the-corner that we nearly didn't bother building the thing ourselves.

8 frickin' years ago. But we did, and we got acquired for it.

So did Honey, to the tune of $4 billion.