Update: Totally forgot to mention this but two added benefits of working with affiliate networks/programs and brands directly are 1. payment terms can be negotiated and often are more efficient than Amazon’s 60 days. 2. Cookie length is generally 30 days, and again can be negotiated, I think I have 180 days and lifetime on some of the offers I am promoting.
In late February, Amazon surprised the world of associates with news that they would be revamping their commission structure which in many cases meant a significant reduction in monthly revenue (20 – 40% reductions for larger affiliates seems the norm). After doing some quick math, it appeared that I’d be one of the more fortunate associates as the majority of my sales lie within the home sector which only saw commission reductions of 0.5%, which meant I would be seeing an 8-10% monthly reduction in revenue. Comparing this to friends of mine who were forecasting losses of 20 – 40% I felt lucky, but I was still pissed – 10% is still 10%…and I did not want to accept that my business would suffer a loss at all.
So, instead of sitting there crying about it, I began working on ways to counter this forecasted loss. In fact, I must highlight that I was already looking at ways of diversifying my income, even before Amazon released the news. I had taken very little action, but the plan was in place to roll out throughout the upcoming months, the Amazon announcement simply forced me to take action much quicker and I am so glad I did.
In this post, I am going to discuss exactly what I did – now before I get into it I must mention that this strategy won’t work across all Amazon Associate websites. As of right now, I’ve only done this on one of my websites and I know that it won’t even be worth trying on a few of my other sites. Having said that, this isn’t the only way of diversifying and multiplying income. For example, publishing and selling your own digital guide may be a fantastic strategy for some Amazon Associate websites, Google Adsense, CPA offers, selling leads e.t.c there is a whole array of options available it all depends on the niche.
Before I get into the specifics, I think it’s worth discussing a few common misconceptions that Amazon Associates seem to have about diversifying their website’s income.
- The classic ‘nothing converts as good as Amazon’ is complete bullshit…
Sure, Amazon can and very often does convert very well, it is not rare to see conversion rates of 10% or 15%, especially on niche websites. However, the same can be said for driving visitors to other niche specific retailers, in fact in some cases the conversion rates are even higher.
Well, think about it – if you have a website about fishing, I think it would be fair to say that most of your visitors are going to be avid fishermen, even if they’re beginners they are going to be aware of the main fishing brands. If you then go ahead and recommend a fishing reel, let’s say an Abu reel (it’s a brand of fishing reel) then the visitors might expect you to send them to Abu’s website, not Amazon – when they land on the Abu website they’re immediately comfortable, they’re in the hands of ‘fishing experts’ a well-known, established brand and as long as they (Abu) have their shit together from an E-commerce perspective it’s likely that recommendation you made will land you a sale.
All I am saying is, niche sites can definitely convert significantly better when directing people to brand specific retail websites and not Amazon – it doesn’t always work, but it can work.
I guess the main pitfalls are that retailer websites might not have an affiliate program, if they do it might be utter garbage, their retail site might look and function like it was built in the 90s. However, if all looks well, the affiliate program is competitive and the E-com side of things is good then try it out!
- You make so much more money on other items you sell…
Speaking from experience at least for me this has been another load of bullshit – I will say I definitely noticed I sold more random stuff when I was a smaller affiliate when I had fewer orders per day but I think that was simply because I noticed it more. Nowadays, most of my sales are highly related to the niches I am in, I, of course, get the odd few random sales but nothing worth shouting about, the majority of times it’s some random small value shit and then once in a blue moon some customer goes crazy and spends his life’s savings.
Let’s talk money…
Before we dig into the how and why let me just cover the revenue figures for the site we’re discussing in this post.
Prior to Amazon changing their commission structure, all of my product recommendations went directly through Amazon and Amazon Associates was my only source of revenue. Below you will see my revenue earnings for February, March, and April forecasted.
February (prior to Amazon changes)
Amazon Associates – $17,760.55
Total – $17,760.55
March (after Amazon changes)
Amazon Associates – $15,981.64
Other affiliate programs – $17,205.00
Total – $33,186.64
As you can see from the above, my Amazon Associates income dropped by 10% in March compared to February, however, my total income increased by a whopping 86.85%.
Note: I only added other affiliate programs to the site from the 10th March, so these figures don’t even represent an entire month.
To add perspective, this is my forecast for April:
Amazon Associates – $12,171.09
Other affiliate programs – $28,461.60
Total – $40,632.69
All in all, if you look at the growth from February to April (forecasted) that’s an increase in revenue of 128% which in all honesty is fucking ridiculous, obscene, ludicrous.
So, how the heck did I do this?
Let’s find out… be warned, there is no major secret, crazy strategy, it just entails a bit of business know-how and common sense.
It all began at the start of the year, the site has been performing very well, however, I was missing out on a large portion of the market which did not sell on Amazon. I knew at some point I was going to have to begin reaching out to these companies and start establishing direct relationships with each and every brand and try to come to a deal for me to review and recommend their products on my website.
Side note: it may come to a surprise to some of you, that not every company wants to sell on Amazon, it’s definitely worth researching the main brands in your market and to see whether or not they list their products on Amazon. Also, if they do – do they actively promote their own Amazon listings, some companies have a product placement on Amazon but don’t actively promote it – usually they have very few reviews, it’s out of stock or its priced higher than their own site price.
Throughout January & February, I created an Excel document which listed all of the main brands in the market, whether or not I could sell their products via Amazon and also included other information such as:
- Brand URL
- Affiliate program (direct or through an affiliate platform)
- Commission rate (commission % or flat fee)
- Contact address (E-mail / Contact form)
In many cases, the commissions offered by these companies were significantly less than Amazon (pre-Amazon commission changes) so you can kind of see why I didn’t pursue it with haste. However, when the rumors began being released about the Amazon commission changes, I did begin to brick it, thinking the end of the world was coming. I then decided to begin taking action, many of the brands on the list were part of a handful of affiliate platforms such as:
Most of these platforms (I think all) I had accounts already set up on due to previous offers I promoted on a toy website I used to run, so I was familiar with the interface and I also didn’t need to wait for manual approval. If they weren’t part of an affiliate network, they either ran a public affiliate program directly from their own website or appeared to not have an affiliate program at all.
Side Note: I said appeared to not have, doesn’t mean they do not have – I found that several brands had private affiliate programs which were not publicly promoted but were easily accessible once you contacted the brand directly. Basically, they just want to ensure they can assess and manage the quality of their affiliates, it also allows the brand to easily manage the messaging as well as where affiliates promote and display the brand, gives the brand significantly more control.
I requested to join their affiliate programs via the platforms or messaged them directly with an E-mail that followed a similar template as follows:
I am the founder of xxxxxx.com and we’d love to review and potentially recommend your product on our website. We currently receive xx,xxx organic visitors per month and we’re growing at a significant rate. To date, we’ve sold more than xx,xxx products and are currently top affiliates for xxxx brand and xxxxx brand.
If this is something you may be interested in then please get in contact with me.
- Always mention their competitors and the fact that you are promoting them and selling their products.
- Always mention traffic stats, brands love traffic stats.
- Always E-mail from email@example.com, not a Gmail or Hotmail or some other email messaging service.
- Always include a professional E-mail signature with logo, position e.t.c
Once I had begun a dialogue with the brands I continued to E-mail them, discussing partnership opportunities such as free swag for competitions, free swag to review, other products they have that I might be able to review and promote and most importantly negotiating the commission.
Fuck, we need an H2 tag for this: Negotiating Commissions
Joining affiliate programs is easy, adding links on your website is easy but what most affiliates forget to do is negotiate commissions, especially Amazon Associates. We’ve never had the opportunity to negotiate before and most people automatically assume if a brand is offering 5% then that’s what they’re offering, no less and no more, right? Wrong.
You should always ask for more – what can they do for you? It’s you who is in the driver’s seat, you don’t need them, they need you and don’t you forget it. Now the way you go about negotiating really depends on what leverage you have at your disposal.
If you have an established site selling a considerable amount of products, they’re competitors products (even better) then you have solid leverage. If you have huge organic and targeted traffic = huge leverage. If you have a large, highly engaged social following = huge leverage. Use this, simply contact the brand and discuss the possibilities of increased commissions, whether it be increasing the standard commission from 5% to 7.5% or adding in performance-based tiers for hitting xx number of products sold in any given month or adding a fixed fee bonus for hitting xx number of products, discuss them all. The important thing is asking if you don’t ask you don’t get.
What have I been able to negotiate?
So far, I’ve been able to negotiate a few commission increases from standard commissions of 5% to 8% or 10% to 12% and fixed fees from $50 to $75 or $100 to $150. However, my biggest win so far has been negotiating commissions from $100 to $150 and then negotiating further an additional commission based on volume, not much just another $5 per sale for every additional unit above xx and then another $5 on top of that above xx. Interestingly, we’re now discussing additional flat fee bonuses to be added when hitting xxx number of units sold. All in all, these negotiations have probably banked me a further 25% of my revenue and if the flat fee bonuses get implemented next month, that will no doubt be another 10% on top of what I am currently earning.
The never discussed bonus of promoting products outside of Amazon
I don’t think I’ve ever come across someone that’s discussed the really awesome added benefit of promoting products that are not listed on Amazon. What’s that I hear you saying, well the fact that every other man and his fucking dog are not promoting the product.
If it’s not on Amazon, then it’s more than likely that those 100,000 other Amazon Associates are not all writing about how it’s the bees fucking knees of coffee grinders or kitchen knives or blenders or whatever else it is you promote.
What I am trying to say is that from an organic SEO perspective, it’s significantly less competitive which means you rise above the shit quicker and reach the top where the air is crisp. OK, so I am just chatting a bit of shit now but you get the idea.
Not on Amazon = less competition = easier to rank = more monies for you
And that’s it…simple as that folks!
No jaw dropping secrets here, just basic business.
As I said at the beginning of the post, this won’t work for every market – but I can guarantee there is a way of diversifying income and multiplying revenue no matter the niche, sometimes you just have to get more creative.
If you have any questions, please leave me a comment below and I will get back to you asap, also be sure to join the Facebook group!
Personally, I am not 100% sure if this will happen on the 1st March 2017 for everyone, if Amazon reps are contacting certain people individually then it suggests to me that they maybe rolling it out to a smaller number of affiliates first to examine the impact. On the other hand, they could just be telling a few affiliates first and letting it spread via word of mouth, as it is doing right now.
I don’t think there telling just the biggest affiliates first as one of my friends is generally on a similar revenue as myself (except for Christmas), so if they were targeting certain tier affiliates then would have probably contacted me as well.
Does Amazon care about its affiliates anymore?
Yes, obviously they do – they’ve invested a significant amount of time and money into the Amazon Associates platform throughout 2016 and continue to do so in 2017 with the interface updates, shopping ads and their latest update the official WordPress plugin, and there is more to come.
This change, if it does happen is obviously just motivated by Amazon’s margins, but what annoys me is that they already charge sellers 6.5% as a referral fee when they sell on Amazon, so they’re covered up to 6.5% on every single sale from a third party vendor. If we just assumed 25% of sales were generated via affiliates then they’d be covered by the 6.5% they charge sellers.
Is changing to a category based model the best idea?
No, it’s not – if they want to increase their margins and have the least impact on their affiliates then perhaps change to a revenue-based model, rather than a volume based model – this way they can ensure their affiliates are motivated to seek out higher ticket items (those which make Amazon a higher percentage based on their own Amazon seller fees). Meanwhile, it ensures affiliates are not getting 8.5% commissions on small, low margin items.
If this happens, what’s my plan of action?
Whether this happens or not, next week I will be downloading all of my sales data and highlighting any singular brands where I sell a lot of products. I will then research if that company sells directly and also if they have an affiliate program, if so then I will make contact with each company and begin negotiating commissions if I were to sell directly. We may as well be prepared for the worst case scenario!
Note: I just threw this article together very quickly, I am entertaining guests tonight, so I am supposed to be cooking dinner right now. I will update this tomorrow with a larger, more in-depth reaction and look at this potential change. For now though, please share your thoughts in the comment section below!