Do affiliate websites actually work?

How do voucher code websites such as RetailMeNot etc. set their commission levels and how does the revenue sharing between affiliate and retailer actually work?

• For instance if the code is 10% off when you spend $100 or more - the customer ends up spending $90 and if the commission for the affiliate is say 5% (in this case $5) does that mean the retailer ends up with only $85 (which means the overall hit to the retailer is 15%?)

• Answer:

  If I understand this correctly: the retailer creates a customer offer for the affiliate (RetailMeNot in this example) as 10% off a $100 spend. This is for the customer. The affiliate is on a 5% commission rate on sales. The 10% for the affiliate is a draw into generating the click into the retailer. If the customer spends $90 after clicking through from the affiliate, then they're not entitled to the 10% saving so the retailer only pays 5% commission. The affiliate in this example makes $4.50 Going one step further, if the customer spends $90 or $100, the affiliate's commission is the same, since a $90 spend generates $4.50 and the $100 spend is discounted down to $90 (with the 10% customer saving) from which the affiliate earns the commission, so again they end up with $4.50. In reality customers will likely spend more than $100 so it's usually better for the affiliate and in this case, the merchant pays 10% for the customer saving, then 5% on top of that. As the number is compounded, it's not the same as 15% cost to the retailer but instead slightly lower. 10% of $150 is $15 5% of $135 is  $6.75 total cost to retailer = $21.75 15% of $150 is $22.50