Dealing With The Amazon Affiliate Rate Cut
The more things change, the more they stay the same. Changes to the Amazon Associate Program’s payment structure is nothing new. “Bloggers are panicking over changes to Amazon’s affiliate system,” reads the headline from a 2017 article in The Verge.
Within adversity, there is an opportunity. Consumers are shopping online more than ever. This shift in behavior will not change for the foreseeable future. That’s why we’re looking at different ways Amazon affiliate marketers can benefit from the current circumstance.
There is no better than adversity. Every defeat, every heartbreak, every loss, contains its own seed, its own lesson on how to improve your performance the next time.– Malcolm X
Background on Amazon’s Change to Affiliate Fees
Amazon isn’t slashing its affiliate fees on everything. The changes are undoubtedly drastic, with up to 80% decrease. However, the commission cut seems to be focused on product categories like home improvement, lawn and garden, and groceries, products that are already flying off their shelves. Payout rates for other groups such as luxury beauty, music, and physical books, remain unchanged.
According to Digiday, Amazon’s not the only one that doesn’t want all that traffic. Walmart, too, is struggling with demand and has asked publishers to stop sending them traffic. Keep that in mind when we get to the part about diversification.
But there are other things we need to talk about first.
Why is Amazon’s Affiliate Payout Change a Big Deal?
It’s hard to find an affiliate marketer not affected by the change to Amazon’s Affiliate Program. No one knows precisely how many people. But according to geniuslink, there are over 900,000! That data comes from an Amazon.co.uk Associates page in 2008, so the real figure is anybody’s guess.
The big problem is that a large number of these sites rely exclusively on Amazon as their primary if not sole source of revenue. A lot of affiliate marketers have become hooked on Amazon affiliate marketing, but it wasn’t always that way. Once upon a time, a website would have more than one affiliate marketing program under their belt.
Could we see a return to multiple affiliate networks? Perhaps.
Amazon’s Dark Affiliate Cloud Has a Silver Lining
I think Ian Howells says it best. Your site continues to be a valuable asset that’s still ranking and can even earn. But you’ll have to work more and do things differently. You’ll need to handle more affiliate accounts, develop more relationships with affiliate managers, and do a lot more testing.
How to Profit From Amazon Slashing Affiliate Payouts
Affiliate marketing isn’t as passive a source of income as some would like to have you believe. There’s real work to be done. Here are some things you can do to fix the problem.
Assess Your Business Model
Website owners that rely on Amazon as its primary income source already know they have a problem. But merely switching to a different affiliate program still carries the same amount of risk.
Understand that you’re really in the performance-based lead generation business. As such, there are a few components of which you should be aware before looking to diversify.
You’re sending traffic to an affiliate site, a certain percentage of which will convert (your conversion rate)
Some of those buyers will make additional purchases or buy something completely different (you need to establish your average order value).
You’ll get a commission where the percentage may vary across product categories (you need to know your average rate)
These figures are essential when it comes to revenue diversification. Multiply all three to get the real value. You’ll need this when it comes time to seek out other income opportunities and evaluate a potential commission structure.
Understand What You Have to Offer Affiliate Program Managers
Affiliate publisher sites are typically full of content designed to appeal to the upper funnel. You may get some mid-funnel but most likely have little bottom-funnel traffic.
Using UTM parameters on your links is a simple way of letting affiliate program managers see the value in the referrals you bring. They can change the attribution model in Google Analytics to First Interaction to observe that referral traffic’s impact on revenue.
But you’ll need to find affiliate programs with the technology place to capture the first interaction and credit the appropriate commission. Not all plans are capable of doing so.
Build Your Brand and Your Expertise
Take a look at the most successful Amazon affiliates, and you’ll notice they have something in common. They have worked hard to build their brand. Being recognized as an expert in your field brings trust. To achieve that status, you need quality content.
Take your site to an entirely new level. Use MarketMuse to ensure that every piece of content you create is of the highest quality possible. Look at rewriting and optimizing existing content. Write new reviews about better products to give more value to readers. Look at creating content that’s not product-focused but contributes to your expertise.
Expand Your Expertise Into Other Areas
Since there are several product categories on Amazon that continue to be profitable, determine if it’s possible to branch out from your existing niche to an adjacent one with a better affiliate commission rate. If the connection doesn’t seem to be that direct, consider how to connect the two niches with intermediary content.
Diversify Your Revenue Streams
Given Amazon’s actions, affiliate programs will be looking to win those upper-funnel content sites and get them away from Amazon. Before, it was tough to do. Not so anymore.
Most affiliate marketers will consider moving away from Amazon towards affiliate programs that offer better commission plans and terms, like longer cookie lengths. You’ll need the three figures we just talked about to ensure you’re actually getting a better deal.
For example, let’s take a new affiliate program with a commission rate that’s 50% higher. It all sounds good. But what if their average order size and conversion rate is only 80% of your current values? Not so good. When you multiply those figures (1.5 * 0.8 * 0.8 = 0.96), you’re four points behind!
Here’s a list of affiliate programs you may want to consider.
Approach Brands Without an Affiliate Program
When Amazon made everything so easy and profitable, there was little incentive to seek out brands without an affiliate program. Now that things are different, it may be worth exploring this possibility. Just be cognizant of the amount of work and education required on your part. Here’s a useful resource about setting up an affiliate program.
Consider Display Advertising
Some affiliate marketers believe that display advertising can negatively impact revenue. Other’s like, Greg Elfrink at Empire Flippers, have “only ever seen the opposite happen.”
Greg believes the use of ads can help build trust. Visitors are used to seeing display ads on big media sites and are more comfortable seeing ads on unknown websites. If you share a similar belief, then perhaps it’s time to pursue this way of revenue diversification.
Buy Content Sites
Discouraged by these recent events, some affiliate marketers will look to sell their sites and get out of the business. With downward projections in revenue, these sites will sell at a discount compared to the price they would have fetched just a few months ago. This can be a bargain if you’re able to source better affiliate programs. If you’re going this route and have little experience, consider joining Traffic Think Tank. They have an excellent course on buying a website and a community from which you can learn a lot.
There’s no getting around this; you’re going to have to test more than you ever have before. It’s a skill that’s definitely worth developing if you haven’t already. Here are a few ideas worth testing out.
Embedded text links are standard fare for affiliate sites. If that’s all you’re doing, consider testing out some big fat “BUY NOW” buttons. Refer to Google Analytics to see how far people scroll down the page so you can optimize their placement. Look for dramatically different changes that you can institute to really move the needle.
Offer The Choice of Where to Purchase
Don’t want to completely leave the Amazon fold? Offer readers a choice of where they can buy the product. GeniusLink is one way to do this, and I’m sure there are others.
Evaluate Different Copy
Update old content and test different copy to determine what works best. Dramatic results usually require equally extensive changes. So don’t be afraid to mix things up a little. Use MarketMuse to optimize your content and ensure it’s topically comprehensiveness.
Consider the User Experience for Long-form Content
MarketMuse will guide you into crafting the appropriate length content. If your niche is the type that lends itself to long articles, look for ways to improve the user experience. Try including a sticky table of contents that remains visible as you scroll down the page. Use TLDRs to distill the most critical points of your content and provide a way to click through to the product.
Affiliate marketing is a business, and like any business, there are inherent risks involved. Your job as a business owner is to minimize those risks. For many, changes to Amazon’s affiliate program has brought those risk out into the open. Now the real question is, “how will you respond?”