Ah, isn't internet marketing fun? There's always something new to learn, something new to cheer about..and something new to get angry about.
You could argue that getting angry about the Amazon affiliate program is nothing ‘new', but that's besides the point. There's never a dull day as an affiliate marketer. Let's leave it at that.
Today's post is not a rant. I think the changes Amazon made to its payout structure will suck for a lot of people, but I'm not here to complain. I wish it didn't happen, but I was over it before it was even confirmed.
I'm actually incredibly excited about working with Amazon over the next few months. 24 hours before the US program announced its changes, I had a 30 minute phone call with the head of the EU program, and what he told me has me feeling pretty darn confident about Amazon's attitude towards its affiliates moving forward.
I know, it kind of sounds counter-intuitive that Amazon actually cares about its affiliates, but hear me out. I'll explain more at the end of the post.
To highlight my thoughts about Amazon going forward, I'm going to share with you all a couple of stories from my own affiliate marketing career, in the hope that you'll see why I'm not too bothered about the changes. I also want you to understand why I STILL think Amazon affiliate websites are fantastic, and my overall thoughts on how you can navigate these new changes.
The short answer, nothing has really changed for how you make money online, it's just your mindset that needs a confidence boost.
Before we get into the long answer, I want to quickly get everyone up to speed on what's happened over at Amazon US.
Amazon US Announces New Payout Structures
Starting from March 1st 2017, Amazon will move away from a “volume-based” payment system and switch to the same category-based payout style that Amazon EU has been using for some time. Essentially this means you will get paid a fixed percentage based on what category your product falls under, regardless of whether you sell 1 or 1000 items.
This is great for new affiliates in some categories, as it means they might get a slightly higher % than they would otherwise have had, but for most affiliates, it means a pretty big pay cut.
For some people who were earning $20,000 per month at 8.5% and are now only going to be 5% or less, that is a huge reduction in Amazon commissions.
I can understand how angry people feel, I've been impacted too, and it really does suck, but such is life as an affiliate.
If you want to read more about the finer points of the changes, I recommend this article by Jon Haver, or this one by Will Blears. Both of them have done a decent job of summarizing the changes and providing their own thoughts, so I don't need to repeat the same thing. I'd rather build on their good work with a “Bigger picture” post.
What I will do is talk more about “What we should do about this”, and what I'm planning to do.
Try To Avoid Getting Angry
I know a lot of people will be crying foul about this. I've seen comments already around the web that look like this:
These comments were taken from Jon's article here. Credit where it's due.
I don't mean to single out Art or Luca. I picked these comments because I felt they summed up a lot of the sentiment that I've seen in Facebook groups, in comment threads, on Reddit, and in my inbox. I want to address these comments, but please don't interpret this as me trying to argue with Art or Luca specifically.
Here's the thing.
Amazon is more committed to its affiliate program right now than it has been for a long time. They have recently released new plugins to help affiliates, they've redesigned the back-end dashboard, and they have even more things coming out which will help affiliates even more. Some of the most talked about pain points with being an Amazon affiliate are being addressed.
I'm now part of the UK Focus Group which is essentially a testing ground and communication platform between Amazon UK/EU and its affiliates and there are some great people looking to help make our lives easier.
I won't be able to share everything with you because most of it will be shared with me behind a Non-Disclosure Agreement, but what I can tell you is that the message has come down from the top over the last year or so that “We need to pay more attention to our long-tail affiliates, and we need to start clearing up a lot of the confusion around the affiliate program”. This is another reason they are reaching out to people like me to help bridge that gap.
One example of this is that Amazon UK are currently working on a “What we like and what we don't like” post, to clear up some of the ambiguities in their operating agreement.
Does all of the above sound like the actions of a company ready to give up on its affiliates?
Secondly, Amazon is the biggest online retailer. They don't actually NEED an affiliate program, but instead they have decided to leverage it to help them take over different aspects of the market.
It's pretty obvious to me that Amazon can't afford to give 8.5% payouts in some niches that already have tight margins, but in other categories where they want to increase their share in the market, they are being more than generous.
Essentially they are saying “We want your help cornering more parts of the market, and we'll pay you accordingly”.
As for Art's comment about it no longer being worthwhile to build niche sites…all I can say is this:
Nobody affiliated with Amazon in the past because of their “OMG Amazing” affiliate payouts. 8.5% and 4% is a big difference, but the reasons most people chose Amazon was because it's easy to make sales with them, it's easy to send traffic to them, and there are thousands of products to promote.
In that sense, nothing has changed. Maybe you now need to get 10,000 visits extra per month, or you need to build an extra Amazon site.
No worries, you probably have less competition now too.
Besides, some of these categories have been 4% for a long time and people still make a killing in those niches. What's changed there?
Don't forget that even if you are in a low percentage category, you will still get sales from products in the high percentage categories, regardless of your sales volume.
For beginners looking to start a new site, there is a lot of opportunity.
Two Stories For You To Consider.
A lot of you are familiar with the story of my shaving site and how it started earning me a lot of money when I made some changes to it.
Did you know that when I first launched it, I was appalled that Amazon would only pay me around 6.5% commission for a razor?
Because of that, I promoted a lot of 3rd party razors instead. I recommended some razors that had an affiliate program through Shareasale and offered 70% commissions instead. How could I not choose them over those cheapskates at Amazon?
No matter how well I promoted those razors though, I only ever sold about 3 of them. I made $66 in commissions and my site was earning pennies despite having decent traffic.
I noticed that Amazon commissions were doing ok, and even though I was trying to drive people elsewhere, the few Amazon links I did have were outperforming my shareasale products.
So..I accepted reality (something very important to do in affiliate marketing) and doubled down on Amazon. I removed all references to the shareasale products and started pushing everyone to Amazon.
Know how much money I made per month shortly after that? Hundreds, then thousands. As soon as I accepted that the low commissions were offset by high conversions, high buyer trust, and a huge variety of available products to buy, I started making more money.
Nothing has changed for me on that front.
Yes, we need to do more to get to the same level as before, but if everybody is jumping ship to shopify or building other types of site, that just leaves more space for the rest of us. Bon voyage I say.
My second story is a much harsher lesson.
One of my very first affiliate sites made money promoting a DVD on Clickbank. I got $27 per sale and was earning $500-600 per month in a relatively short time. This was my ONLY income source at the time and I was looking forward to scaling it up and quitting my job.
Know what happened? The DVD vendor decided to take the product off clickbank because they had some TV deal and didn't want it clashing with their new offerings.
My income dried up overnight and I earned about $50 the next month. I told myself at that point it would always be safer to diversify my income and affiliate with marketplaces like Amazon where people were buying all sorts of products and one vendor leaving would just mean another vendor replaced them.
I've never had a huge concern about income vanishing overnight since then, and I owe it to Amazon.
So really, unless Amazon was about to close down its affiliate program (and I've already explained above why that's not happening anytime soon), I say to you all that this could be much worse, and Amazon sites are still as viable as ever.
Ask yourself another question:
If you were to first learn about Amazon sites 6 months from now, in the middle of 2017, and you were never aware that commissions used to be higher, would you still start an Amazon affiliate site?
I bet you would.
However, Consider Other Options Too
It would be foolish of me not to suggest you look at other options though. Whether that means checking out the Walmart and eBay affiliate programs, reaching out to different 3rd party vendors (good luck!) or selling your own products, it really depends on your niche.
The one lesson here is to not rely on one single income source and to diversify, and that was true before these changes were even dreamed of.
My personal thoughts are that the commissions got a bit lower, it was a good run, but the show must go on. Amazon has the lead role for me, and I'm excited about what they have coming down the road.
As always, don't dismiss the largest online retailer just because you don't like their commissions.