Amazon has drastically changed their Amazon Affiliate Program payouts as of April 21, 2020 and it is not good for many of us! The net worth of people reading this has been cut by millions of dollars. Especially with all that is happening in the world this impacts a lot of people, myself included.
See April 16th Update Below – table has been adjusted
So… what do we do?
First, we need to understand how significant a change this is to us and our own specific sites, then assess what our options are and act. This post will be a deep dive into how much you can still make as an Amazon Affiliate despite the change and look at how many affiliates are impacted by this change. Plus, what other opportunities this creates and how I am responding.
I didn’t sleep much last night as I was working on a spreadsheet that you can input your Fee-Earnings export into and it will calculate exactly how much your site would be making moving forward given the commission change.
What is the Impact? After running several sites through the spreadsheet, it is clear that there is a large range in terms of impact from 10%-60%+ of our Amazon Affiliate earnings gone with this one change.
At the bottom I dive deep into the data on what this means in general to the industry, but for you to find out what these changes mean for your own portfolio you can use this free spreadsheet:
Click Here to Access the Sheet
Originally when I created this spreadsheet yesterday I took a pessimistic view around some of the uncertainty. But, based on feedback I think the current table (fully explained below) is much more likely to be the case as of April 21st. This should be better news for some and little change for others.
There is still some uncertainty around the update but I didn’t clearly communicate some of the assumptions I made.
It is still not a good story but most sites should be forecasting a smaller impact than the original assumptions. I am sorry for any extra stress my pessimistic assumptions have caused!
We won’t know until April 21st with certainty but I have updated the table to more clearly show what categories have changed and which ones we are assuming will not change.
Impact of this Change: Under the pessimistic model we were seeing most sites clustered around a 50% loss while now we are forecasting a wider range from 10% to 70% impact with the average closer to 35%-40%.
This updated approach does have some challenges…
Challenges/Uncertainty Definitely Exists:
1. Health & Personal Care vs Health & Household – Health & Personal Care Shows up in both tables but is not present as a category in commission exports however Health & Household is present in the Amazon exports. So, do we assume health & household is being changed to 1%? In the table we do.
2. “Other” Categories – There are product categories that show up in the export that are not present in ANY table. For example Camera, Photo & Video pays out a 4% commission right now but it is not in the old table or the new table. Does that mean it is changing to 3% or not changing?
3. Some other categories provide uncertainty such as CDs and Vinyl where it is not shown in a table BUT it is paying out at 5% according to the exports which doesn’t line up with “other”.
Updated Commission Table
On the spreadsheet, you can change the commission percentage if you have a different view.
|Amazon Fashion Private Brands||4.00%||4.00%||potentially unchanged|
|Amazon Gift Cards||0.00%||0.00%||unchanged|
|Baby & Nursery||4.50%||3.00%||Confirmed Changed|
|Beauty & Grooming||6.00%||3.00%||Confirmed Changed|
|Books & Textbooks||4.50%||4.50%||potentially unchanged|
|Business & Industrial Supplies||6.00%||3.00%||Confirmed Changed|
|Camera, Photo & Video||4.00%||4.00%||potentially unchanged|
|Cell Phones & Accessories||4.00%||4.00%||potentially unchanged|
|Clothing & Accessories||4.00%||4.00%||potentially unchanged|
|Computers, Tablets & Components||2.50%||2.50%||potentially unchanged|
|Electronic Components & Home Audio||4.00%||4.00%||potentially unchanged|
|Grocery & Gourmet Food||5.00%||1.00%||Confirmed Changed|
|Health & Household||4.50%||1.00%||Potentially Changed*|
|Home Entertainment||4.00%||4.00%||potentially unchanged|
|Home Improvement||8.00%||3.00%||Confirmed Changed|
|Kindle Books||4.00%||4.00%||potentially unchanged|
|Kitchen & Dining||4.50%||4.50%||potentially unchanged|
|Musical Instruments||6.00%||3.00%||Confirmed Changed|
|Office & School Supplies||4.00%||4.00%||potentially unchanged|
|Outdoor Recreation||5.50%||3.00%||Confirmed Changed|
|Patio, Lawn & Garden||8.00%||3.00%||Confirmed Changed|
|Pet Food & Supplies||8.00%||3.00%||Confirmed Changed|
|Power & Hand Tools||5.50%||3.00%||Confirmed Changed|
|Shoes, Handbags, Wallets, Sunglasses||4.00%||4.00%||potentially unchanged|
|Sports & Fitness||4.50%||3.00%||Confirmed Changed|
|Toys & Games||3.00%||3.00%||potentially unchanged|
|Audible Audiobooks||7.00%||7.00%||potentially unchanged|
|Blu-Ray & DVD||2.50%||2.50%||potentially unchanged|
|CDs & Vinyl||5.00%||5.00%||potentially unchanged|
|Luxury Beauty||10.00%||10.00%||potentially unchanged|
|Major Appliances||4.00%||4.00%||potentially unchanged|
|Mobile Electronics||4.00%||4.00%||potentially unchanged|
|Other||0.00%||0.00%||rare but has shown up as 0|
|Prime Pantry||8.00%||1.00%||Confirmed Changed|
|Tires & Wheels||4.00%||4.00%||potentially unchanged|
|Video Games||1.00%||1.00%||potentially unchanged|
|Software Download||4.00%||4.00%||potentially unchanged|
|Video On Demand: Rent or Buy||2.00%||2.00%||potentially unchanged|
|any other unknown||4.00%||4.00%||catch all if anything else didn’t change|
*Health & Personal Care vs Health & Household – Health & Personal Care Shows up in both tables but is not present as a category in commission export however Health & Household is present in the Amazon exports. So, do we assume health & household is being changed to 1%?
Reference 1 – Current (soon to be old) Table – https://affiliate-program.amazon.com/help/node/topic/GRXPHT8U84RAYDXZ
Reference 2 – Changes Coming Table – https://affiliate-program.amazon.com/help/operating/compare?ref=oa_update_change
How to Use:
- Create a copy of the sheet and save it as your own – confirm and adjust the category comparison table if you disagree with any of the commission %’s.
- Export your data for the last 12 months from Amazon – See how below
- Tip – You will need to download your last year’s data and this year’s data to do this properly
- Input your data “fee-earnings” to the “Fee-Earnings-Paste” tab on your copy of this sheet
- Tip – Make sure all rows have been pasted and the formulas in the orange columns carry all the way to the bottom on the 2 Fee-Earnings tabs
- Done – See comparison on IMPACT sheet
Click Here to Access the Sheet
We received this email… with a nice “hope you are well” before really really f’ing up Amazon Affiliates day!
We hope you are staying well during this time. We are writing to inform you of upcoming changes to the Amazon Associates Program Operating Agreement, which governs your participation in the Amazon Associates Program. All changes are effective as of April 21, 2020.
Visit the What’s Changed page to see a summary of these changes. You can also find the Operating Agreement, Program Policies, and the Fee Statement if you would like to refer to the current, pre-change versions.
Sincerely, The Amazon Associates Program
The first sentence is a real kick to the nuts while down considering everything happening in the world right now!
This is not the first time Amazon has made significant changes. Most recently in 2017 they made a significant (not as big though) change!
Here is my theory as to why Amazon is making these changes and why now.
Amazon has recently been making moves, that in hindsight, show they are being affected by several forces and using it to justify grabbing power they have always wanted to…
- their current efficiency challenges – Amazon is struggling with a spike in orders and trying to maintain shipping deadlines. They are experiencing a loss of efficiency due to COVID-19 mitigation measures at their warehouses and 100k new hires. The shipping costs (especially air freight) have skyrocketed recently. All of this must be driving up Amazons per-unit fulfillment costs.
- the situation in the world – COVID-19 is reshaping the global power structure and Amazon is a part of that structure
- their dominant market share – Currently, they have 38% of all US e-commerce.
All of these help make and justify this as a time to grab more power. Amazon was powerful before, but appear to be using this as an opportunity to become even more dominant.
History has a long record of power grabs occurring during times of crisis, most countries income tax came in as a “temporary” war effort. Amazons power has gotten to the point of being comparable to many countries.
A few data points show us that this is NOT a coincidence in terms of timing but Amazon being opportunistic…
First, the communication being shorter/off-tone more than usual with the tables not communicating things very clearly.
Very different from the old table. This new table is much harder to map/understand where some categories fall:
Second, in addition to the update above, on April 6, 2020 Amazon removed the possibility of doing Revenue Share with 3rd party vendors like SkimLinks.
Amazon is using its position of dominance to systematically grab revenue specifically from affiliates.
My general philosophy in the world is we are all a bunch of idiots responding to incentives. Amazon had what it took and the foresight to lose money for 20 years to build an incredibly valuable business with a seemingly insurmountable e-commerce moat. Now they are using that position of power to systematically grab power back from those they gave it to (apparently temporarily) to help grow its business (affiliates).
It is very unfortunate for all of us impacted but I don’t blame them.
It is now up to us to respond.
I have been thinking a lot lately about the quote “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” (Charles Darwin)
So what opportunities does this change present when it comes to Amazon affiliate marketing? Is it time to find a different online business model? Time to switch off all affiliate links?
Opportunity 1 – Testing display advertising on Affiliate Pages
Historically the RPM of Amazon compared to display has meant it never made sense to have ads on affiliate pages that could cannibalize revenue. It is worth retesting that theory. No advertising option provides more control for testing then EZoic. Other options to consider would be AdSense or Mediavine.
Testing your options with EZoic or using MediaVine if you have the traffic can be great ways to increase your site’s earnings. What we have seen at MotionInvest.com is that a site is often VERY focused on Amazon Affiliate links and even on posts that are not buyer-focused, but get a ton of traffic from either informational intent searches or social media they only monetize with affiliate links.
We have seen the majority of smaller Amazon Affiliate sites have monetized EXCLUSIVELY with Amazon and that made sense. Now it will take more work but partial recovery should be possible overlaying and testing display advertising to minimize cannibalization of affiliate earnings while adding display. See image below for the estimated impact and hypothetical partial recovery.
- EZoic has shown to be a very effective solution that has made more money than AdSense and should be explored ESPECIALLY for smaller sites. It really shines through in its ability to test ad layouts.
Opportunity 2 – Switch to a different affiliate program
Some typical Amazon niches, like the pet niche, have affiliate programs for sites like chewy.com, which have been reported to perform better than even Amazon.
This may be time sensitive in your niche … if there are several sites all making the move away from Amazon they will be shifting their content marketing strategy to now focus on the products/problems the new affiliate offering solves.
Getting your article ranking for the new affiliate(s) products into Google first may provide a ranking advantage. So although the current situation sucks, it might be time to double down on content marketing focusing on your new affiliate products.
- If you need some help identifying potential affiliates in your niche and getting content created to rank for keywords that are a good fit for their offerings, contact the team at ContentRefined
- If you need help finding new affiliate programs and switching over affiliate links, get in touch with Brady at BrandBuilders.io to get help making that happen.
Opportunity 3 (my favorite) – Affiliate website to E-Commerce site conversion
If there is an Amazon Affiliate website that is narrowly focused on a specific product and that product can be sourced, then converting it to either an Amazon FBA business or E-Commerce niche site could result in an increase in earnings. Now that these sites will sell at a discount from before the lift you achieve from conversion would be even more significant. Similarly, if you are currently an E-commerce site owner then your cheapest option would be to add feeder traffic in the form of buying a WordPress blog monetized with Amazon associates.
- To find Amazon Affiliate sites for sale, signup for free to monitor listings at MotionInvest.com
Opportunity 4 – Fight It
It is unlikely a giant that has shown a lot of disregard for Amazon Affiliates would change its mind, but they certainly wouldn’t if they don’t receive blowback.
- Email Jeff (at) amazon (dot) com and any other high ranking Amazon employees you can find
- Contact people in the media to make this a story of how Amazon has used its position of power to crush small businesses using this crisis for cover
- Jesse at Geni.us links has a great guide on the historical trend of affiliate earnings here.
- Matt from AMALinksPro shares his thoughts here.
- Richard Patey and I chatted about the changes and he shared his thoughts:
Not only have a lot of sellers’ advertising revenues dropped by 50% due to Covid-19, but now the most popular affiliate revenue has been badly hit. And this is on top of the liquidity crisis. Investors will likely be able to get aggressive bids at lower multiples accepted going forward, valuing future revenue rather than historic. 2020 truly looks to become a buyers market – and savvy active investors who know how to optimize monetization and negotiate on good deals will do very well. I believe other affiliate programs may follow suit.”
I will add other peoples opinions as they are sure to come in.
There will be some first-timers on this post trying to understand what the Amazon Affiliate program is, what are its requirements and how much can someone make with an Amazon niche site.
In addition, below I crunch data related to the Amazon Associates program changes showing how much of an impact it will be.
An Amazon Affiliate links to Amazon with a special link that tracks the visitor and then receives a commission for each sale the person they referred to Amazon makes. Typically it is a niche site built on WordPress that relies on blog posts to attract organic traffic from search engines like Google or social media platforms like Facebook.
- Signup to become an Amazon Affiliate here
To start an amazon affiliate site you need to follow the basic process of identifying a niche (where there is a need for content and low competition, but a product that you can promote), then pick a domain, build the website, create content and market it by building links. Once your site meets the Amazon Affiliate Requirements you can apply and receive your affiliate link to direct traffic to affiliate products you recommend on Amazon.
- To get help starting an Amazon Affiliate site, checkout BrandBuilders.io
There are many case studies online that share some of the impressive earnings. In this section I will summarize some while showing the historical earnings per visitor and how much an Amazon Affiliate site can make based on the previous commission table.
- How to Earn $100/day – Have an amazon affiliate site with 1,500 daily visitors and another monetization source that matches how much money you make as an affiliate.
- How to Earn $1,000/day – Have an amazon affiliate site with 15,000 daily visitors and another monetization source that matches how much money you make as an affiliate.
Case Study 1 – NichePursuits – OwnTheYard
- Traffic = 69,657
- Earnings = $3,195.31
- EPV = $0.046 (how much you make per 1 visitor)
Case Study 2 – BrandBuilders Success Story
- Traffic = 1860
- Earnings = $333.2
- EPV = $0.18
Case Study 3 – NicheSiteProject
- Traffic = 9,300
- Earnings = $393.80
- EPV = $0.042
Our Data at MotionInvest.com
Over a quick study of 20 Amazon Affiliate listings, the average passive income per visitor for sites we sold was $0.067 per visitor.
If you are an Amazon Affiliate site you can expect to earn $0.04-$0.2 per visitor (before).
Using some of the data I had handy across multiple accounts, here is what we are seeing the impact will be (updated April 16):
- – 32.24% impact on revenue
- – 45.47% impact on revenue
Ignore the decline in March (that is just a data timing issue)
- – 39.59% impact on revenue
|% Change for a Sampling of Other Sites|
Across the accounts, we see a large range from 10-60+% in earnings loss!
Let us know in the comments below what you saw when you ran it through the free spreadsheet.
Click Here to Access the Sheet
The EPMV, RPM (earnings per 1,000 visitors) of Amazon Affiliate sites should line up to be about $15-50 now while most display focused sites perform at ~$6-$30 (see case study) but can range from $2 to over $100.
Despite this hit, earning with Amazon will still be more profitable for focused sites then display advertising.
However, the win will not be as clear moving forward and since the choice is not clear, many affiliate sites should start looking at how to overlay display ads to maximize page RPM now.
Just how many people did Amazon piss off?
Amazon does not seem to report this number anywhere I could find, but doing a little internet sleuthing revealed there are 694k Amazon Affiliate sites linking to Amazon. By adding URL’s that are linking to amzn.to and linking to amazon.com with “tag” in the link results in 573k + 121k = 694k Amazon Affiliate websites currently on the web.
Some of these numbers get hard to follow (lots of assumptions) but I tried and estimate the value destroyed for affiliates and transferred to Amazon.
Based on the imperfect data of the number of Amazon Affiliate sites, using a sampling of those sites estimated traffic from Ahrefs and the earnings per visitor we have…
- # of Sites = 694k sites (see calculation above)
- Average Traffic per Site = 11,000 (NOTE – some outliers through this off & I removed some of the craziest outliers from the ahrefs data)
- Earnings Per Visitor (before – from case studies and MotionInvest data) = $0.067
- Earnings Per Visitor (after – from spreadsheet example impact of ~50% for simplicity) = $0.034
- Value of an affiliate site = 2-3x earnings
- TOTAL NET WORTH LOST BY AFFILIATES = $778,668,000!
Here is an interesting way to look at it: Was value destroyed or just transferred? Did that transfer increase the value more than it destroyed it?
- Affiliate sites mutliple = 3x (see how to sell a website for more details)
- Amazon value multiple = 99.31x (P/E ratio as of April 14)
- Value Destroyed = $778,668,000?
- Value Created = $25,955,600,000?
- Value Created for Jeff Bezos at 11% owner = $2,855,116,000
This means Jeff Bezos personally could have purchased all Amazon Affiliate sites given his net worth increase just from this change.
If you look at the Amazon Stock price, it has gone up over the last 5 days by 4x the value they created by cutting Amazon’s Affiliate program in half. Their market cap expanded $99,180,000,000 over the last 5 days.
Do these numbers make you feel small?
Depending on your outlook (affiliate commission can’t go lower than 3%, right?) now could be a great time to get a strategic Amazon Affiliate website. The best place to buy Amazon Affiliate Sites making under $2k/month is at MotionInvest.com
What will need to happen now for any new sites getting bought/sold is that the historical earnings will need to be adjusted based on the updated commission table. Those updated earnings will be what is used to calculate the fair price moving forward.
Once logged into your account, go to reports.
NOTE – I find it odd that they have MASSIVE Important Notice signs at the top of our accounts right now and then a subtle email telling us ~50% of our earnings have been wiped out. But don’t forget your FTC guidelines.
Above the graph that shows your affiliate income, you will see a download reports button.
Next, you will choose the timeline you want to export. We will start by exporting last year’s earnings by choosing preset and then choosing last year. Once done, click apply.
You will then click generate report. If you want, you can also choose a specific tracking ID if you only want to export a specific Amazon tag.
We also want this year’s report so we will do the same thing, except under preset, we will choose this year.
Again, we will either choose a specific tracking ID as well of just leave it to all. Then we will click generate reports.
Now you will need to wait until the report(s) are done and it shows that you can download them.
So yesterday was a bloody day for a lot of my friends, my audience, and my own portfolio.
Millions of dollars of value has been lost by you and many others. I am sorry and feel the pain!
In whatever way you are choosing to handle this change I wish you the best of luck!
For me, I am looking at my affiliate sites and re-evaluating the best way to maximize value in the following ways:
- I will accelerate the migration of a couple of sites from affiliate sites to e-commerce sites
- For 2 others I will be pursuing finding other affiliate programs and QUICKLY scaling content to target keywords related to those affiliates.
- For all sites, I will be testing out an increased mix of display advertising to maximize the earnings per visitor.
If you have any thoughts please share below.