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Five Questions For Derek Szeto – Founder, RedFlagDeals

_Launched in 2000, “”: uses the power of community to alert bargain-hunting consumers to Canadian retailing deals. Headed up by Derek Szeto, a recent university graduate, the site currently boasts over 800,000 unique visitors and over 12 million page views every month._
*One Degree: How does RedFlagDeals make money?*
RedFlagDeals’ (RFD) has two primary sources of revenue: traditional graphical/text advertising and commission sales. The key in terms of generating revenue is really volume. Now that we’ve proven our ability to drive traffic and conversions a lot of retailers are approaching us and we can put together some RFD exclusive packages that gives back to the community, drives sales for the retailers, and allows us to generate a bit more revenue.
*One Degree: How much of your revenue comes from affiliate programs over more traditional display ads?*

It varies month to month, but on average it’s roughly a 50/50 split. As our traffic has grown we’ve been able to sell larger advertising campaigns, but affiliate sales increase as well, so it depends on what campaigns are sold and what offers are available for a particular month.
*One Degree: I’m curious about your relationship with online retailers. Do they see you as friend or foe?*
During our first few years of operation retailers viewed us with a fair bit of suspicion. As we have grown and retailers have seen the kind of sales that we can drive to them, they have warmed up considerably. 🙂
These days retailers often send us advance notice of sales they will be having and we often arrange exclusive offers just for our readers. Our goal has always been to work with retailers, not against them.
There have been a few occasions when one of our forum users has posted something that they shouldn’t have and a retailer has called us about it. When that happens, we do our best to accommodate the retailer’s concerns. Sometimes that means removing a deal, but we are often able to use that relationship with the retailer to arrange an exclusive deal for our readers, so everyone wins.
*One Degree: Shopping portals are one of those business ideas that seem to attract lots of interest. How do you deal with the competition from big players like Airmiles or Google and little start-ups that keep sprouting like dandelions on Toronto’s chemical-free lawns?*
We got in early when it wasn’t really profitable for many of the larger players to dedicate the overhead and resources required to run a Canadian specific shopping portal. With that head start, we’ve been able to build some wonderful relationships with Canadian retailers and a large and vibrant community, both of which are difficult to duplicate regardless of size.
We’d also like to think we take the community aspect more seriously than our competitors – I can’t really think of another shopping portal that allows you to openly comment on the content that’s published. It doesn’t always work to our advantage, but it does keep us on our toes and I think our readers appreciate that level of openness.
Smaller sites do tend to pop up now and again, but many smaller sites don’t last longer than a few months once the creators realize how much work is actually required to run such a site. With over 26,000 registered members, RFD is such great community that it is nearly impossible to replicate. They truly are the backbone of our site as they provide us with the most up to date shopping information.
*One Degree: How do consumers find out about*
Word of mouth has always been our greatest promotional tool. People love to brag about the great deals they get and soon they tell everyone they know about RFD. RFD also has a “Daily Deal” in the Toronto commuter paper “24 Hours” and a national advertising campaign on G4 TechTV. Our public relations company, Sequentia Communications, has done a great job arranging media opportunities.