In late November 24 I was asked to write some affiliate predictions on big topics for the forthcoming year. A YouTuber publicly condemning one of the industry’s biggest affiliates as an online scam, leading to some truly epic social shit-posting, was not one of my predictions! Affiliate marketing is so back!
Honey has been in everyone’s crosshairs over the past few weeks for one of the worst offences in the online marketing world – taking credit (which is money) away from other online marketers, and in particular the protected species of content creators. This has triggered a number of other stolen valour accusations against businesses that operate in a similar way, in particular the loyalty shopping browser extension belonging to Capital One. The content creators are up in arms, the noise cancelling headphones are off and the lawsuits are flying!
Where Honey is concerned – and perhaps the world of browser extensions in general - some people will say this fallout has been long in the making. But since its launch in 2012 Honey has become one of the biggest affiliate businesses in the world - recruiting over 250 people and attracting an eye-watering $4 billion acquisition from PayPal. So it can’t be all bad…right?
Let’s take a look in more detail...
What is Honey?
Browser extensions are small pieces of software that can be added to your web browser. Honey is a free browser extension marketed at online shoppers. It provides discount codes, offers and rewards at the point of purchase so shoppers can get the best deals when they need them most. To the casual observer that probably seems a harmless, even useful feature to have sat in your browser. And 10 million consumers worldwide agree, because that’s how many people Honey claim use their browser extension on a regular basis. Undoubtedly Honey has proved popular with online shoppers.
Honey is free to download, but it has to make money somehow. To do that it uses the pay-per-sale marketing channel known as affiliate marketing. On the surface the union of Honey and affiliate marketing is a thing of beauty and simplicity. When a shopper goes to a website for a bit of online retail therapy, the Honey browser extension serves up a feast of codes and offers to help them save money. If a shopper copies one of the codes to use in their checkout then via affiliate marketing Honey gets paid for helping to drive that sale to the e-commerce brand.
Payments to Honey are normally calculated as a percentage of the shopper’s total basket value, and are commonly referred to in affiliate marketing as commissions. Honey offers online shoppers a valuable service and gets rewarded if the shopper chooses to use one of their discounts. And only if the shopper chooses to use one of their discounts.
Why do people suddenly hate Honey and are they right?
Unfortunately, Honey’s marriage made in heaven with affiliate marketing has some challenges.
The first is that affiliate marketing has lots of participants all vying to claim credit for generating a sale to a brand. And these participant businesses are all very different. Many are websites that offer discounts or offers. Some are loyalty shopping websites that offer cashback or collectable points. There are also comparison websites, companies that buy media or placements on third-party platforms, browser extensions, referral schemes, large media publishers and also a plethora of individuals that create online content for websites and socials.
We’ll refer to this group of participants as affiliates going forwards, but they are also called influencers, publishers, creators or even partners. What unites them is they are competing to win that all important commission from a brand. And crucially in the vast majority of cases only one of them can win, because affiliate marketing’s business magna carta is that it can only pay one commission to one affiliate for each sale…and the last affiliate a shopper uses before making a purchase wins.
The marketing savvy amongst you will already see the challenge Honey’s business model creates in this dog-eat-dog race to be last. Honey is a browser extension that pushes offers and discounts to shoppers when they visit e-commerce websites to make a purchases. It’s the very definition of being in the last place at the right time, and is very different to a social media owner creating content about a brand and hoping to direct potential shoppers to that brand’s e-commerce website. Honey’s likelihood of being the ’last-click’ compared to the content creator is infinitely greater simply because of the way Honey’s software interacts with consumers.
Why does all this last-click marketing-speak matter? Well, because it means Honey has the propensity to take money from other affiliate marketing participants. Which of course could piss them off a tad…and it has given the outpouring of fury towards Honey we have seen recently. But the fury is misplaced, because affiliate marketing has already largely dealt with this issue.
Sensing the potential for disquiet– and eager to help monetise a popular consumer tool like Honey – affiliate marketing hatched a plan. The industry decided that its rule of the last affiliate the consumer clicked on winning the sale would need to change for business models designed specifically to strike at the last possible moment before a customer purchases. These models would have to stand-down and allow other affiliates to take the credit for a sale if a customer had previously visited them in their purchasing journey. Honey’s browser extension was one of the models that would be required to stand-down for other affiliates, as were all models that engaged customers while they were already on a brand’s website.
By way of an example:
A shopper views a piece of video content about an e-commerce brand on YouTube, which has been created independently. The shopper then clicks an affiliate link in the video’s description to visit that brand and make a purchase, which will trigger the YouTuber’s affiliate credit
When the shopper lands on the brand’s website they are shown discounts and offers from the Honey browser extension
The shopper clicks to use one of the discounts, which triggers Honey’s affiliate credit
The normal affiliate marketing model would assign credit to Honey in this shopping journey, but the industry took the view that Honey’s model should not take credit away from the YouTuber so Honey’s credit would be stood-down in favour of the YouTuber’s.
We will refer to these rules as soft-attribution moving forwards. These rules smartly allowed affiliate marketing to continue to host a variety of marketing mechanisms underneath its pay-per-sale umbrella, while also keeping the peace amongst its many constituents. The rules were first published as part of the IAB Affiliate Marketing Council’s work on downloadable software in 2009 and were updated in 2015. As you can see from those dates we’re not exactly breaking new ground here, which is why it surprises me that this issue has only now got such a public airing. You can read updated commentary on soft attribution, as well as more detail on Honey’s attribution model, from affiliate marketing trade body the APMA.
As the APMA outlines, the implementation of these soft-attribution rules rests with businesses called affiliate marketing networks – a group of companies that operate independently to power the technology backbone of affiliate marketing, including the logic of who gets credited with what, and when.
Soft-attribution rules have existed since Honey’s launch and most affiliate marketing networks and technology providers subscribe to these rules. However because the rigour of soft-attribution is at the hands of the individual affiliate networks it is frustratingly difficult to assess how well these rules are actually implemented. They also aren’t exactly common online marketing lingua franca.
Therefore, YouTuber MediaLag could be forgiven for not knowing anything about soft-attribution when they unleashed a barrage of criticism about Honey’s business model recently. The video’s basic premise was that affiliate marketing’s game of last-click wins allows Honey to claim credit for sales that should actually be attributed to others, thus ‘scamming’ content creators out of money that is rightfully owed to them.
But as we’ve seen, soft attribution rules in affiliate marketing mean the scenarios of ‘affiliate tracking cookies being overwritten by Honey’ which feature very specifically in MediaLag’s video are actually far less common than people think. Affiliate marketing largely solved this issue long ago, although the industry does have work to do to make these rules more uniform and commonly understood.
The word ‘ethical’ has been used recently to detract from how Honey monetises its sizeable user base. Well…actually ‘unethical’ is the word that has been used! There is clearly a feeling Honey has bent the rules of affiliate marketing for its own gain. Effectively stealing revenue from other participants, particularly independent content creators – many of whom have ironically promoted Honey’s browser extension to their audiences.
On the contrary, Honey is simply a model that sets up well for success in a marketing channel that has used the ‘last-click-wins’ system of credit since it began. Honey are also far from the only business that operates what online marketers would call a lower-funnel form of advertising, i.e. advertising that interacts with a customer close to the point of purchase. Affiliate marketing’s pay-per-sale model has traditionally encouraged these forms of advertising. But cognisant of its strengths lying in reach and breadth of participation the affiliate industry has also tried to evolve its methodology to be as broad a church as possible.
The statement made by Honey’s beleaguered – and probably bewildered – execs reaffirming that the company follows the rules of affiliate marketing is totally true. Under the terms of participation in affiliate marketing Honey isn’t doing anything wrong in the way it earns money, and it certainly isn’t scamming other companies or creators out of revenue.
How should brands feel about all this drama?
Just because Honey aren’t breaking any rules doesn’t necessarily fully answer the question of is Honey actually good – for marketers, brands and consumers? So let’s have a think about that in more detail.
Critics of Honey over the past few weeks have cited that they routinely publish codes that aren’t necessarily the best codes and offers available in the market. Honey have also been accused of publishing offers that are meant to be exclusive to other channels a brand might be using for advertising, like content creators.
These points can be grouped into a broad topic: the quality and accuracy of Honey’s content. Do the codes work, are they really the best deals and should Honey be advertising those codes in the first place? To look into this issue let’s take another look at my screenshot of Honey in action.
In this example Honey served me 26 discount codes for my purchase of a new Hoover vacuum cleaner. None of the codes worked for my purchase. Just bad luck? Well, I have been a regular user of Honey for a number of years and my personal experience is that non-functioning or irrelevant codes is a pretty common occurrence. Which sucks for me, but look…10 million others can’t all be wrong, can they!? So maybe my experience is unusual.
You might think the quality of Honey’s offers primarily affects its users like me – shoppers who download it for free in the hope of saving a bob or two. And if you don’t save anything then no harm no foul…it was worth a try and I’ll just go ahead with my purchase anyway. But actually this scenario really impacts the brands whose codes and offers are the foundation of Honey’s browser extension. Here’s why.
Brands pay affiliate marketing commission when one of their affiliate partners has played an important role in driving a customer’s purchase. In the case of Honey, the action of a customer clicking to copy a discount code is the prompt to say ‘hey, Honey has played a part in this customer’s purchase’. Influencers fear not though…we already know that with soft attribution rules in play Honey won’t get the credit for a purchase if the customer has engaged with a previous piece of affiliate marketing, like an Instagram post or a YouTube video.
However, soft-attribution rules are designed to look after affiliate marketing’s bacon. Not the bacon of the brands that pay the industry’s bills. So if there is no reason to stand down, I could click to use 26 different Honey codes, none of them work, and as long as I still go ahead and make my purchase then Honey will still get a commission for that sale. But how much can Honey really claim to have influenced my purchase when none of their offers worked? That’s the online marketer’s equivalent of a giant ouchie, and it’s why brands, rather than influencers or other affiliates, need to be wary of Honey.
Here is some data from an e-commerce brand. Honey promote this brand’s discount codes and they work with them as an affiliate with soft-attribution rules in place. In 2024 43% of the sales credited to Honey by this brand were for customers that didn’t use any discount code in their purchase. Yet in all of these cases the brand still paid Honey commission for the sales. In another 15% of cases sales were credited to Honey using discount codes that Honey should not have been promoting because they were given to other marketing channels.
I would conclude that for more than half the sales credited to Honey in the above example the browser extension delivered little to no marketing value. Soft-attribution rules could be seen as affiliate marketing’s way of admitting that not all affiliate models are created equal when it comes to their advertising value.
How does discount code attribution help social creators make more money?
The other big question about Honey’s discount codes is are they actually allowed to be promoting all the codes that they show to users? This question will light up affiliate marketing’s other attribution snafu – discount code attribution.
Affiliate marketing’s tweaking of its once sacrosanct last-click attribution model didn’t end with soft-attribution. If anything soft-attribution taught the affiliate industry that some meddling with the natural order of things was important to ensure the partners with the most marketing value would rise to the top. Enter attribution by discount code or for the purposes of our word count – code-attribution.
Code-attribution is designed to support the common online marketing technique of brands issuing an ‘exclusive’ discount code to a marketing partner or channel to help drive sales. The affiliate then owns the code and all sales that use that code will be credited to that affiliate. Code-attribution typically overwrites all of affiliate marketing’s normal rules of engagement, including the need for a user to actually click on an affiliate’s website, social channel or software.
Again, this is another well-meaning attempt by affiliate marketing to embrace a number of different marketing tactics under the pay-per-sale umbrella. But just like soft-attribution it has unintended consequences which are exasperated by browser extensions like Honey due to their reach and inclination to promote discounts that brands have not specifically approved them to use.
Let’s take a look at another example. This e-commerce company does not have a commercial relationship with Honey, but in the interests of providing a good service to its users, Honey lists discounts for them anyway.
The only discount available here is a discount code that has been created specifically for a content creator - INGRIDAG15. You can tell because creator codes normally contain a reference to the creator’s name or social handle, rather than just 15OFF. A bit of insider knowledge here tells me that this code is associated to the creator via code attribution. Every time this code is used by a customer the lucky creator will get a commission, while Honey will get nothing.
In another situation I worked on last year a brand issued a multi-use discount code to a specific marketing promotion. The code got shared on Honey and ended up generating £75k of revenue (and associated commission for the marketing channel) in a month, which is a chunky number for this brand. Unfortunately 97% of the sales never touched the platform which was originally given the discount code. The vast majority of the sales were credited to the affiliate because the code was circulated by Honey. This not only demonstrates Honey’s incredible reach, but also directly contradicts the claims of content creators that Honey and associated browser extensions are skimming money that is rightly owed to them.
Honey often unwittingly turbocharges the earnings of content creators by circulating discount codes that are exclusive to content creators even though the commission for sales generated by using those codes will always flow back to the creators. Soft-attribution, combined with erroneous code-attribution, actually means largescale discount circulation platforms like Honey help social creators make more money from affiliate marketing than they otherwise would, or in fact deserve to. Again, brands are really the ones suffering here. The brands are potentially paying thousands of pounds to social creators and ‘code-owners’ for sales that had nothing to do with them!
These issues around incorrect code-attribution aren’t unique to Honey, all discount affiliates are affected. But Honey’s size and position in the purchase path means it has the potential to move the line in terms of misappropriated commission in a way that few others can.
Let’s sum things up
The criticism that Honey (and other browser extensions) are claiming commissions rightly due to other online marketing participants like social creators are at best dramatically overstated. Honey is not scamming content creators out of money.
Affiliate marketing has attribution rules in place to protect the revenues of participants from being claimed by conversion-orientated marketing models like discount browser extensions
Honey definitely promotes codes and offers that do not work, but they are by no means alone in this. It is the e-commerce brands responsible for paying affiliate marketing commissions that need to be watchful regarding how this affects the marketing value Honey and similar services bring to them
Honey also promotes discount codes that are owned by and associated to other marketing channels. While Honey will benefit from this commercially on occasion, the practice of code-attribution means marketing channels like social creators also benefit from undeserved revenue credit when their codes are circulated beyond their social media channels by platforms like Honey
So…what happens now?
Hopefully nothing, we can all just draw a line under this mad five minutes and get back to work!
I do not believe there is any case to answer for browser extension companies that stand accused of taking money from other participants of affiliate marketing. The claims are spurious, lack substance and ignore some basic rules of the channel. Hopefully we’ve demonstrated that here.
But mud sticks, even if it’s being thrown without warrant and in the wrong direction! We can expect more scrutiny on Honey and other browser extensions from brands, particularly regarding its viability as a channel for customer acquisition. I am sure there will also be users who reevaluate their use of Honey as a result of all this hoopla.
Honey is also a smaller cog in the wider PayPal business. Honey was a very large acquisition for the affiliate marketing industry, but is pocket-money for PayPal, which is valued at $77bn. I doubt PayPal are particularly thrilled about one of their subsidiaries suddenly becoming a lightning rod for controversy and legal action.
On the other hand, PayPal needs profitable growth right now. The company suffered a dramatic post Covid slump when over $50bn was wiped off its value in 2022. In 2023 active user accounts declined for the first time, and for a stock once valued at over $300 per share, it currently trades at around $90. There is little foundation in these baseless scam accusations so any legal threats should be waved off pretty quickly. But where that leaves Honey and the browser extension market from a reputational perspective will be interesting to follow.