What changed with Amazon’s affiliate program
In mid-April, Amazon made significant cuts to commission rates for members of its affiliate marketing program. Commission revenue through affiliate links is a major source of revenue for many online media entities from independent bloggers to major publications like CNET. If you’re not familiar with this type of marketing strategy, an affiliate program is a performance-based marketing initiative where an external partner (affiliate) is paid a commission for helping an online store generate sales. When you watch a video for “the ten best Bluetooth speakers under $50” there’s a good chance that the links in the description help the channel earn a commission for each sale generated. Here’s an example of affiliate links in a Youtube description:
Why the change matters for your brand
If you’re reading this, you’re most likely not a Youtube influencer who’s just had your revenue model slashed by 50-80%, so why should you care? For brands, the biggest impact will be seen in the second and third-order consequences of this action. For the past decade, affiliates have been responsible for generating a significant percentage of sales across a wide range of e-commerce platforms and have become a major component of many PR strategies. Brands have reaped the rewards from this as publications and influencers have considered product reviews to be valuable content. They can help generate direct revenue for the publication while also providing their readers with interesting content that encourages more time spent on-page. This time-on-page also helps boost ad revenue for the publication.
Seeing their revenue drop by as much as 80% in some categories will force these affiliates to re-evaluate their content plans and start looking for alternative revenue generation opportunities. While product reviews generate visits and will never completely dry up, with the revenue-generating potential of a “The ten best Bluetooth speakers under $50” now cut by up to 50-80%, we’re likely to see a significant drop in these types of posts as bloggers and media entities look for better ways to generate revenue.
As the supply of reviews shrinks, established brands and commodity amazon sellers alike will soon need to find alternative ways to generate brand awareness and drive traffic to product pages. An added layer of complexity is that, with consumers in North America confined to their homes, many traditional brand activation campaigns are on hold and the bricks and mortar locations that served as an additional source of revenue are closed, putting increased pressure on non-essential consumer product brands.
What we can learn
It will be interesting to see the chain reaction that this commission rate cut and more interesting to see how product marketers respond. Either way, we hope that it serves as an important reminder of the fragility of building livelihoods upon the platforms of others. When we learn to rely on Amazon’s referral program to generate sales on Amazon’s storefront that are then shipped through Amazon’s warehouse with Amazon’s logistics fleet, we might find ourselves becoming overly reliant on a system that we cannot control. How can we make sure we’re not leaving our brands in a vulnerable position? In addition to diversifying our contact points with consumers, it’s important to remember the value created by a relationship that extends beyond a single transaction.
What can’t be easily taken away from you is the benefit of brand recognition and the attention and respect you earn from your audience by consistently providing value to them and following through on your promises. Yes, a Google or Instagram algorithm might change overnight, making your message harder to find but if you’ve left your customers or audience with a reason to connect with you and enough places to do so, they will.