Framework for Choosing a Profitable Niche & Estimating Opportunity of a New Affiliate Site (and An Example You Can Steal)

One of the biggest pain points and mistakes I see beginners building affiliate sites making is in their niche selection process (or lack there of).

This is also arguably the most important part of the site building process as your niche in many ways determines the potential ceiling of earnings you can achieve.

There is lots of conflicting advice that is thrown around about suggesting you should follow your passion, build a general site, go super niche, find low competition ect.

The reality is there is no one right answer, basically anything can work, just comes due to personal preference, level of experience, goals, and ability to execute.

Personally I enjoy a more data driven approach that that boils down to a 7 step framework that can be applied to any search opportunity.

  1. Identify potential niche opportunity
  2. Size the Market Opportunity & Ability to Monetize
  3. Level of sophistication of the current players (competition analysis)
  4. Benchmark earnings estimates of current players in the space.
  5. Transactional Keyword Mapping
  6. Budgeting Your Project Cost
  7. Handicapping Your EV and Odds of Success

Content Sites: More Arbitrage Than Startup

The strategy I believe is most effective can be summarized as reverse engineering (ie. copying what works).

What makes content sites unique to other business models is the predictability of outcome and ability to size the opportunity.

It’s what attracted me to the space in the first place, you don’t need a novel idea to start a business and make money, just the ability to execute and capture transactional SERP rankings.

Generally you can look at any search opportunity and estimate an earnings range of outcomes you are likely to achieve if you enter the space. Sure you may over or undershoot slightly and monetization methods can change/algorithm shifts occur, but this is not the type of business where you will 100x your expectations or fail due to lack of “product/market” fit.

These opportunities can be viewed as an arbitrage where the organic traffic for particular terms can be monetized and results in a direct revenue per visitor amount (typically $.10 – $1.00+ for transactional terms), so if you gain ranking positions and gather a higher organic traffic value than the cost of content to create – you have a profitable (and sellable) business.

1. Identifying an Interesting Niche Opportunity

In this initial stage you are just looking for opportunities that you may want to create a niche media project around and pursue.

This is a vital step as it determines how valuable your traffic is and will decide how easily and effectively you are be able to monetize.

Ex. You can build a site about fish tanks or ant farming to 100k+ visitors, but you may get there and be disappointed to realize that a personal finance site with 2k visitors is more profitable.

Ways to brainstorm ideas include:

  • Requesting prospectuses from online business brokers for what’s on the market currently.
  • Looking at fast growing businesses on the inc 5000 list to see trends in industries experiencing a lot of growth.
  • Be curious, click on FB, Taboola, Outbrain type ads to see the type of products being promoted
  • Looking at industries or products on where there are many high paying affiliate offers available on sources like MaxBounty or OfferVault.
  • Be curious as you are surfing the web and using analysis tools on sites you stumble across in your day to day life.

Can’t Think of a Niche, But Want one with $1M+/yr potential? Try one of these:

  • Sleep
  • iGaming (Gambling/Online Casino)
  • Forex
  • Home Security
  • Moving
  • Insurance
  • Personal Finance
  • Dating
  • Pharma
  • SMB Software
  • Digital Marketing
  • Merchant Services
  • Background Checks
  • Credit Repair/Debt Products
  • Hosting
  • Auto
  • Tools
  • Senior Housing/Care
  • Rehab
  • Jewelry/Engagement Rings
  • Supplements
  • Beauty
  • Lead Gen (Legal, Medical, Dental, Roofing, HVAC, Pest Control, Internet, Phone, ect)

2. Evaluate Commercial/Monetization Opportunity

Look at some of the sites around the space and find out how they are making money and roughly how much. Are the sites owned by large companies? How long have they been around? How many pages?

Is everyone dependent on a single program? Are there multiple programs? Is affiliate an important growth channel for companies in the space? Do they value and understand it?

3. Transactional Keyword/Site Mapping

Use Ahrefs, Screaming Frog, or “site:” to get a complete look at the terms sites are targeting and an idea of all the target keywords that is driving revenue. Pull data for competitor sites and aggregate all keywords to get a better idea of all the keywords in the space that are available and can drive significant revenue.

Determining RPV for a single transactional term using the following metrics:

  • Search Volume
  • Clicks
  • CTR
  • ClickOuts
  • CR
  • Commission $

Typically transactional keywords can be broken down into 5 categories: Best, Comparison, Review, Coupon, and other.

Best

Best keywords have high commercial intent and revolve around users trying to find the “best” product in a particular category. Terms used in keyword phrases include “best”, “top”, “safest”, “most comfortable”, “Cheapest”, ect.

Comparison

Comparison terms compare two (or more) individual product offerings. These phrases typically include the terms “vs”, “comparison”, or “alternatives”

Review

Review terms revolve around individual product or product type reviews. These phrases typically include the terms “review”, “buyer’s guide” or similar keywords.

Coupon

Coupon terms are generally the highest intent affiliate terms as the search generally occurs as the user has already decided to make a purchase. Because of this many brands don’t work with coupon players or they offer an alternative commission structure. Coupon keyword terms generally contain the terms “promo”, “Coupon”, “Voucher”, “Discount”, or similar terminology. This space has been heavily impacted by browser extensions like Honey and white label affiliate providers.

Other

Other terms that can have strong commercial intent vary by industry. Typically they can be location based ie. “phone providers in San Francisco” or how-to where a product is required to solve the user’s problem ie. “how to start a blog”.

4. Evaluate the Level of Sophistication of Current Players

Using Ahrefs and WebArchive, learn about your potential competition. Are they large public companies? Is there a sophisticated team behind them? Do they operate other sites in the niche also?

Many people are scared away when they see big players in the space, this is not always a bad thing, it generally means there is a lot of opportunity.

On the flip side it’s important to be self aware, if you are looking to treat your affiliate site as a hobby side project and there are only a few transactional terms in the space that are dominated on pages 1/2/3 with corporate owned properties – you may want to focus on other channels (like YouTube or Podcasts) where individual/personality driven content has an edge over corporates.

5. Benchmark Earning of Current Players

Instead of fearing competition because there are multiple large players in the space already. View it as a proof of concept that the niche is viable enough to support multiple large properties.

While you can find a way to make money in essentially any industry, some have a much larger pie overall.

For example, there are dozens of personal finance/credit cards sites doing hundreds of thousands a year + in affiliate, but maybe only 1 or two about ant farming (if that).

Based on Ahrefs rankings of transactional terms and knowledge of industry commissions and conversion rates, it’s not too difficult to get a rough idea of how much a site is earning.

An important data point to consider is not only how much sites are earning, but how many there are and the volume distribution among them.

6. Project Cost Estimate

Look through you list of mapped keywords, how many pages much you create to target and rank for the highest value terms?

What type of lnikbuilding must be done to be competitive in the space. Are you ok with a cookie cutter design or will you work with a designer to build out a custom site.

Content Editing costs? ect.

Essentially you are trying to discover the minimum you can spend to flesh out an idea and have a shot at seeing if it is successful enough to continue investing in.

7. Handicapping Your EV and Odds of Success

If you’ve played poker you are probably familiar with the idea of “Expected Value” or EV. Basically this is how you can determine the statistically-weighted outcome of an event and then can determine how much you are willing to spend to realize the outcome.

Ex. If a coin flip landing on heads results in $1mm, the EV is $500k so it would be worth spending $499k to flip the coin.

Similar to poker, there is randomness and noise created by the algorithm, but over time if you do the right things constantly you can have an edge and make consistent returns.

But unlike poker where the cash you can win is zero sum from other players, the value gained from the zero sum organic traffic available is *mostly* independent from the amount spent by website owners trying to acquire those rankings.

Many “gurus” selling a course or shilling Bluehost for affiliate fees will not tell you this, but sites do not predictably grow and succeed 100% of the time.

Especially in recent years, there have been tremendous algorithm shifts where even some of the most high quality sites have been negatively effected, even if they avoided grey hat tactics.

For affiliate sites you can look at all the other sites in the niche and get a idea of potential opportunity in the best case, middle case, and worse case scenarios. Then you can handicap the likelihood of each outcome and add a multiple based on your skill level to see if the opportunity is worth pursuing.

Some would argue it has limited value due to the uncertainty of outcomes and impact of your ability to execute against an opportunity.

I agree that is definitely not a perfect model, but I think it can to useful to demonstrate just how much upside there is with many of these affiliate sites with minimal downside if you can keep your costs low and execute effectively.

When you factor in the digital marketing skills and management skills you gain that can be leveraged into other business or even used to get a job in the industry I still believe building affiliate sites is a great bet for many.

Real World Example: Home Security

Ok, great you understand the framework, but let’s look at a concrete example to see how it can be applied in a real world scenario.

Identify Niche Opportunity

While scrolling through MaxBounty offers I stumbled across a few high ticket home security offers that caught by eye:

  • $320/lead for Deep Sentinel Security
  • $80/lead for BestCompany.com Home Security

Seems like home security will be a growing trend and concern for Americans as the world becomes more uncertain and violent attacks are publicized prominently across TV channels.

It’s also a high LTV recurring subscription product offering, so each new customer is very valuable to home security companies.

It has a reputation for being a very sales driven industry (lots of aggressive mormon door-to-door sales) with little true differentiation between product brands.

Also based on previous affiliate experience, I’m aware this is a popular space for bigger players so there is likely significant revenue opportunity.

Also since BestCompany is an affiliate themselves, this shows there is a strong market for clicks and leads in the space and there should be no issues monetizing the traffic if you are able to achieve rankings in this area.

Evaluate Commercial/Monetization Opportunity

We already kind of touched on this in the first section, but I did some more research on the space and found multiple CPA opportunities with leading providers that pay in the $200-$400 range per sale and $40-$100 per call. Since these are the public rates, if you achieve sizable volume you can likely negotiate an even more favorable private deal.

It’s also interesting to see many of these sales are converted over the phone, so it’s important you find an affiliate partner you can trust to accurately report sales and convert a high percentage of customers.

Transactional Keyword Mapping

Next I began to dive into the the SERPs and look that structure of existing players to get an idea of the most valuable terms in the space.

At this stage it doesn’t have to be completely comprehensive but it can give you a good idea of the number of keywords that drive significant value in the space and the distribution among them to later be an indicator for the number of transactional pages you will want to produce.

Here’s an example of what I found for core transactional home security terms

2 quick notes on this:

  1. I didn’t include every individual product review or comparison term, although I think it would be wise to target every variation as commission is high enough to cover multiple article costs with a single sale.
  2. Generally I’d try to break down click opportunity from the overall search volume number, but I just kept the basic number as a traffic potential estimate to make up for related terms a page targeting the main keyword can also rank for.
wdt_ID Type Term Search Volume CTR ClickOuts Converison Rate Conversions CPA Commission ($) Monthly Earnings Potential EST RPV
1 Best Best Home Security Systems 30.000 40% 12.000 5% 600 $ 200.00 $ 120,000.00 $ 4.00
2 Best Best DIY Home Security System 4.100 40% 1.640 5% 82 $ 200.00 $ 16,400.00 $ 4.00
3 Best Best Self Monitored Home Security System 2.200 40% 880 5% 44 $ 200.00 $ 8,800.00 $ 4.00
4 Best Best Wireless Home Security Systems 2.100 40% 840 5% 42 $ 200.00 $ 8,400.00 $ 4.00
5 Best Best Smart Home Security System 800 40% 320 5% 16 $ 200.00 $ 3,200.00 $ 4.00
6 Best Best Security System for Apartments/Renters 200 40% 80 5% 4 $ 200.00 $ 800.00 $ 4.00
7 Best Best Security System for Businesses 200 40% 80 5% 4 $ 200.00 $ 800.00 $ 4.00
8 Best Best Security Systems With No Monthly Fees 100 40% 40 5% 2 $ 200.00 $ 400.00 $ 4.00
9 Best Best Home Security Camera 8.500 40% 3.400 5% 170 $ 200.00 $ 34,000.00 $ 4.00
10 Best Best Outdoor Home Security Cameras 400 40% 160 5% 8 $ 200.00 $ 1,600.00 $ 4.00

Eventually once you build up enough authority in the space you could also expand to tangentially related areas like Medical Alert Systems, VPN, identity theft protection, Bluetooth trackers, video doorbells, smart home devices, ect – so the opportunity is actually much, much larger.

Evaluate the Level of Sophistication of Current Players

Once you have an idea of distribution of keywords that drive revenue for the space – I like to do a deep dive into who is currently winning in the space. Quickly found 20 that seemed to be some of the biggest, but there are dozens more out there.

Will eventually do a deep dive on the space in a similar depth and format to the sleep/mattress affiliate landscape breakdown.

wdt_ID Site Ownership # of pages Traffic EST Earnings/mo
1 ConsumerAffairs.com general affiliate company 75600 5.752.034 n/a
2 Usnews.com corporate 2.89mm 31.754.416 n/a
3 Pcmag.com corporate 553000 14.095.076 n/a
4 Cnet.com corporate 4770000 50.546.742 n/a
5 Businessinsider.com corporate 3870000 45.148.196 n/a
6 Reviews.org ClearLink 2010 1.137.753 $ 796,427.10
7 Safewise.com ClearLink 2020 527.483 $ 369,238.10
8 Safety.com Red Ventures 781 482.711 $ 337,897.70
9 CreditDonkey.com n/a 5960 361.238 $ 252,866.60
10 BestCompany.com general affiliate company 13200 249.564 $ 174,694.80

Notes on the players currently in the space:

  • Corporate affiliate media players Red Ventures, Clearlink, Centerfield all active in the space. Says that this is a vertical with millions if not tens of millions in yearly affiliate commission opportunity.
  • Very sophisticated and experienced independent affiliate operators, but also some smaller anonymous affiliate sites doing well.
  • Large media (USnews especially) making a serious dent in the space.

Benchmark earnings estimates of current players in the space.

Haven’t worked in this vertical before, but (based on the quick research above) would estimate the distribution looks something like this…

Number of SitesOrganic Affiliate Revenue/yr
3$1.5mm+
8$250k – $1.5mm
15$50k – $250k
20$5k – $50k

Even if these number are off, it’s a good representation of how I think about a vertical and the distribution of earning potential.

Budgeting Your Project Cost

Ok so now you have an idea of the affiliate opportunity of a niche, how much will it cost for you to compete in a meaningful way?

Based on the number of transactional terms you mapped out earlier, you should be able to have a rough idea of the size of site and number of transaction terms that are worth targeting.

Depending on your skill set and how much you are able to work on the project will impact how much you will allocate for each bucket.

Below is an example of what I estimate it would cost me to create a high quality site in the home security space to the point where I would know if it’s worth continuing to invest in.

BucketEST Cost
Domain (You may want to test a few) $                              2,000.00
Links/Campaigns $                              5,000.00
Content (150 money + 100 supporting) $                            17,500.00
Editors $                              1,500.00
Designers $                              1,000.00
Products + Photos + Videos $                              5,000.00
Total $                            32,000.00

Handicapping Your EV and Odds of Success

Based on this rough EV calculation, there is tremendous upside in the home security space and it would be worth spending ~30k (per the budgeting step) to realize the outcome.

Likelihood Total Site Earnings after 36 MonthsAsset Value after 36 MonthsTotal EV
1%$2,000,000 $3,000,000 $5,000,000
9%$500,000 $1,000,000 $1,500,000
10%$100,000 $250,000 $350,000
15%$50,000 $70,000 $120,000
20%$25,000 $30,000 $55,000
25%$10,000 $25,000 $35,000
20%<$10000$10,000 $15,000
Weighted EV$260,750
Ability to Execute Multiplier (0 – 2)1
Your EV$260,750

Note: While I’m all about analysis and assessing market opportunities – eventually you will have to recognize that you will never have complete information and you need to take action.

Thoughts on this framework and model? Do you think it’s a useful way of sizing niche opportunity or an unnecessary formality that overcomplicates things? Would love to hear feedback from either direction.

The Definitive Guide to the Online Business Brokerage Market in 2020 (And Where to Buy Affiliate Sites)

As the popularity (and hype) around content based affiliate businesses has grown in the past few years, so has the brokerage ecosystem offering sites for sale and allowing site owners at all levels to exit.

Factors to Consider When Choosing a Broker

Success Fee/Commission Structure

Most of the brokers operate on a model where a success fee is paid as a percentage of the site sale when it is successfully sold and transferred. Percentages can range from 7.5% – 20% depending on your business type, size, and particular broker. It’s important to remember that everything is negotiable, so don’t be afraid to ask for a more favorable rate or be willing to talk to multiple brokers before committing to an exclusive agreement.

Buyer Pool

Many brokerages will have established connections with large email lists of interested buyers who have the funds and are actively looking to acquire sites of various sizes.

Valuation & Multiples

Most brokers have a value model where they will suggest the price to list your business as. Remember, as with the success fees, everything is negotiable and it doesn’t hurt to ask for a higher valuation or shop your business around to multiple brokers to get an idea of different valuations.

Level of Exposure & Confidentiality During the Sales Process

Different brokers handle this differently with various levels of public information on the sites for sale. The most common requires an NDA before the full prospectus being sent. This is an important point to consider if you are trying to keep the sale of the business quiet from current employees and customers or if your business is driven by a few keywords or other arbitrage (most content sites) that could be replicated and see declining revenue with increased competition.

Escrow & Transitional Tasks

Many brokers will have relationships with attorneys which can handle escrow and others use services like Escrow.com. It’s important to understand and trust the escrow method the broker uses to prevent any difficulties is problems arise during the transition period.

Some brokers also have a team of VA’s that can help with switching affiliate links and other tasks for transferring a site post sale. However, it’s important to note that no one will be incentivized as much as you to get the deal finalized, so you may want to dedicate your own VA’s and resources to expedite this process.

Deal Sizes

Most of these brokerages have a sweet spot where they have both a large buyer pool and deals in a certain price range. Generally most of the brokerages on this list operate in the <$5 million dollar range, with a few exceptions.

Factors to Consider When Evaluating a Buyer

Offer/Ability to Close

Many buyers will misrepresent their financial situation or say they have the funds ready for purchase, but in reality they only begin passing the hat to raise funds after locking down an LOI.

Some groups will try to tie you up with an LOI only to try to tire kick or decrease their ask near the end as interest from other parties has cooled.

It is very rare to see legitimate private equity firms at these deal sizes, although this term is thrown around a lot and gets sellers excited. Be skeptical.

Level of Sophistication

This is an important factor to consider the amount of post sale guidance that will be requested by the buyer. Generally it’s much smoother sell to a competent, experienced operator in the space.

Plans With the Site Post Sale

Depending how much time you spent on your business and the level of attachment you have with it, you may be invested in the continued success of the project that you can reference and proudly talk about in the future.

Also if you have a team in place, you may want to look for a buyer that will retain them and continue to provide opportunities to work and grow.

Notes for Buyers

When working with a few brokers on this list and entertaining buyer calls, I noticed the majority of buyer fell at either end of the extremes.

  1. Very experienced SEO’s and online marketers who deeply understand the space looking for strategic opportunities where they can add value through SEO, CRO, or better affiliate relationships.
  2. Older professionals with significant savings and experience, but didn’t really understand the nuances (and sometimes risks!) of content sites and their reliance on Google.

I do truly believe that content sites and other online businesses can be a great place to generate significant returns that are unheard of in the traditional investment world.

But it’s important to emphasize the complete platform dependance many of these businesses have on ever-changing algorithms and the terms & conditions of the largest tech giants which can (and frequently do) decimate or significant reduce the value of a business overnight.

If you do not completely understand all the levers that influence the asset you are purchasing (especially if using an SBA loan of other financing structure) you are putting your financial future in significant risk.

Caveat Emptor.

Online Business Brokers in the Market Today

Flippa

Traditionally a marketplace for websites Flippa has been around the longest and is typically the most well know place to look when buying an online business. Sites can be purchased for as low as a few hundred dollars, however there is very little vetting in place to verify financials and traffic so there are many, many scams and fraudulent behavior that occurs by sellers.

EmpireFlippers

One step up from Flippa with lots of content sites in the $50k-$2mm range, Empire Flippers verifies the financials so there are fewer outright scams. However, there are definitely still some lower quality sites listed there, so it’s important to conduct proper due diligence and fully understand what you are getting into if making a purchase.

EmpireFlippers has a large buyer list for smaller content sites and they assist with the site transfer and changing of affiliate links. (Although we recommend handling this yourself to make sure there are no errors and it’s completed in a timely manner.)

One unique point about EmpireFlippers is that they require a cash deposit to view the URL and details of their listings to deter copycats. However they allow frequent buyers to view all listings for free and we’ve seen some of their listing information circulated on forums.

They also routinely act as the escrow agent for the transaction. Some people see this as a red flag, but you can always request to use an attorney or other escrow service to ease concerns.

FEInterntional

FEI plays in a similar market to EmpireFlippers, with a slightly more buttoned up image and staff.

QuietlightBrokerage

Another digital first brokerage that handles slightly larger deals. Great content marketing initiatives with their podcast and blog with prospectuses available after a general NDA is signed.

DigitalExits

A moderate sized brokerage that offers a range of businesses from content, SaaS, ecommerce, agencies, and job boards for sales usually up ~$10 million dollar asking prices.

DigitalAcqusitions

A smaller brokerage that sends periodic emails when deals become available. They offer content, ecommerce, SaaS, and even digital agencies for sale occasionally.

Website Closers

A large catalog of deals available, some reaching the higher end of a few million in EBITDA.

Acquisitions Direct

An impressive catalog of online business listings featuring multiple monetization models.

Acquisition Station

A smaller brokerage that focuses on small online businesses, while it doesn’t have the largest selection or broker the most volume on this list, good opportunities periodically arise so it’s worth getting on their list/checking them out.

AlphaInvestors/Investors.Club

This is a new model that emerging, apparently offering to broker deals for no success fee from the sale price, instead the buyer pool pays a recurring monthly fee to have access to the deals.

Flipping Websites Facebook Group

Recently acquired by the AlphaInvestors group, this Facebook allows users to sell content sites directly to one another without fees or brokers.

Latona’s

Started as a premium domain brokerage, Latona’s now offers a variety of online business for sale. Good mix of a variety of business types.

The FBA Broker

A specialty broker that deals with FBA businesses only. While the focus of this site is mainly affiliate driven content business, FBA companies can be an excellent addition to a portfolio of content sites if you are able to leverage the traffic of the content portfolio to boost sales and rankings of the FBA products.

Website Properties

Large variety of online businesses available.

BizBuySell

This is a large directory style site where numerous brokers syndicate deals and offers to reach a larger audience. Although there are mainly offline deals listed, we have noticed a growing trend of online businesses for sale. Some even being listed directly by the sell which can provide for some underpriced opportunities for savey buyers.

FoundersIB

This is more of an investment bank than many of the marketplace style options on this list, but they have been involved with multiple content deals (mostly finance) in the mid 7 figure + range to holding companies and public media players.

HL.com (Houlihan Lokey)

More of a legitimate investment bank that works on transactions in the hundreds of millions or billion dollar range. If you have a business in this range you likely have a board and existing banking relations so you probably don’t need this article to give you advice.

Domain Trust Arbitrage: How Affiliates Can Buy Trust, Increased Conversion Rates, & Higher Valuations Through Domain Name Selection

Affiliate Marketing Domain Name Increases Conversion

Performance marketing is a game of finding and exploiting underpriced attention and extracting more value from a traffic source (especially when running paid campaigns) than your competitors .

One opportunity I don’t see mentioned enough in affiliate circles is the impact of a domain name and TLD on a users perception, trust, conversion rate, and eventually the sales multiple of your business.

We are not talking about the historic link equity value of expired or auction domains that can increase rankings, but the intrinsic trust that the specific combination of letters, numbers, and extension invoke in users.

Potential Benefits of Choosing the Right Domain Name for Affiliate Marketing

Increased Conversion Rates

This one is pretty straightforward, you are going to be more likely to trust the advice and recommendation of site with an authoritative sounding name. How much? Depends on the niche, name, specific competitors, and target audience.

Increased Memorability & Brandability

If your domain is besttop10casinopromo2018.biz it will be much more difficult to build a memorable brand than if your domain is Tuck.com, TheWirecutter.com, Reviews.com, ect.

Direct Type-In Traffic

Some names come with the benefit of direct type in traffic either by users curious what’s on the site or interested in a product/service related to the name or by a typo of being closely related to another brand.

This has decreased substantially and is not a huge channel today, but worth mentioning.

Effectiveness Multiplier for Offline Channels or Verbal Mentions

If you ever grow to the size where you can begin to experiment with outdoor, radio, TV, or other advertising methods a powerful domain will ability the brand message and will be easy to remember and find on desktop or mobile phone.

Ego/ Flex of Being Proud of Your Site

Some people may not understand this, but when I’m building a site on a great domain I get much more pride when it performs well. It makes what I’m doing feel more “legitimate” and makes me more willing to share the assets I own with others. It can also help with the motivation to build it into a truly great site.

Increase Outreach Effectiveness

When performing outreach for link building prospectives site will be more willing to link to you if you site looks professional and is built on a strong domain.

On the flip side, potential advertisers are more willing to work with high quality sites built on strong domains which can improve your chances of securing exclusive agreements or custom commission structures.

Great Recruiting Tool

If you ever looking to build a team, a great domain makes your project appear more successful, important, and valueable to work for.

Increased SERP & PPC CTRs

When consumers see trustworthy, relevant, and familiar domains in the SERPs or PPC ad spots they are more likely to click.

Note: Google has been experimenting with hiding the domain and TLD in the SERPs, so this might not be a factor in a few years.

Halo Effect that Can Result in Higher Valuations

When looking to sell you business, a strong domain may directly be added to the value of the sale, or the perception it provides can add a healthy increase in monthly multiple and more than cover the initial cost of purchase.

Ok great, you see the benefits a great domain can have for affiliates, but what are the specific levers where this value can be captured?

Levers of Opportunity for Affiliates to Consider When Choosing a Domain Name

Exploit the IP of Existing Organizations (Without Getting Sued)

If you can include non trademarked words or phases that can leverage trust from an existing brand to your domain this can be a great opportunity.

Great examples of this include:

  • ConsumerAffairs.com
  • ConsumersAdvocate.org
  • DMV.org
  • StateRegistration.org
  • StateRecords.org
  • vehiclehistory.com

Leverage TLD Brand Equity

You can’t go wrong with .com, but I believe that .org can be even more interesting for affiliates.

The .Org extension has built up trust and authority over the last decades as the TLD for non profits, unbiased research groups, and other trustworthy sources. Millions if not billions of dollars have gone into traditional advertising channels to help solidify this belief.

Many web users even believe that .Org domains can only be used by non profits and public interest organizations, so they let their guard down a little with browsing a .org and are more likely to trust recommendations at face value.

Bit by bit as general web users encounter untrustworthy .orgs, they become more skeptical and this trust in the TLD will erodes over time, but currently I believe it is still strong and worth much, much more to affiliates than the $10/year renewal cost.

While I do think that the sale of the tld to private equity will result in higher prices, I believe that the true intangible value of the trust in .org can be worth thousands or even millions (ex. ConsumersAdvocate.org) to affiliates if utilized correctly with the right domain.

In addition, premium .org domains typically sell for a small fraction of their .com counterpart, so some pretty amazing names can be found for reasonable prices in this extension (Clearlink has some great .ORGs to look to for inspiration).

Great examples of this include:

  • Reviews.org
  • Alarms.org
  • Security.org
  • SafeHome.org
  • BackgroundChecks.org

Flex With Strong 1 Word Dictionary Names

Many casual users consciously or subconsciously respect and trust strong one word domains. The largest and most loved brands typically have an online presence that includes a premium domain and if you have a name that appears similar, users will think of you as comparable.

To marketers and savey internet users who understand the scarcity and value of one word .COM and .ORG domains, using them for an affiliate site conveys a level of quality, seriousness, and professionalism of the site.

Example: Tuck.com vs TheSleepJudge.com – both successful but don’t appear to be in the same league when only looking at the domain

What is a Reasonable Price to Pay for a Domain Name for an Affiliate Project?

This is a tough question to answer as the domain aftermarket is extremely illiquid and there no textbook way to value them. I can see a use case for spending up to $100k for a great domain for a strictly affiliate project if the potential earning opportunity is the niche can be covered by the value multiple increase the name provides when sold, and if the majority of the value can be retained if the name is resold.

Generally I think the sweet spot is <$25k as many extremely strong names (especially .ORGs) can be found at auction, domainer forums, marketplaces in that range and if site makes even a few thousand a month, the investment in the name will likely payoff in the sales price of the site.

Note: If you invest in a truly great name, it is an asset can still has value and can be sold even if your affiliate project fails.

Opportunity to improve a businesses through redirection to a more Powerful Domain

This is an interesting opportunity that I predict more website owners will begin to capitalize on in the coming years, especially those with large budgets. By redirecting a high performing site on a subpar domain to a much higher quality one, you can add all the benefits of a premium domain to an already successful traffic engine.

Sure there is always a risk when redirecting, however if the new name is fresh and doesn’t have much previous history this risk is greatly minimized.

Not Sure Which Domain to Choose for An Affiliate Site?

At the end of the day, for 99% of cases, especially with purely SEO driven affiliate sites, the name you choose wouldn’t make or break you. If you are just starting out it’s fine to just hand register a name you like and get rolling.

Heck, “AffiliateInsights.com” is probably a 6-7, based on the published scale and I am more than happy with it.

Once you have a few wins under your belt and have built a bank roll and confidence in your abilities you can begin to consider investing in some higher quality names.

Honey: One of the Most Successful Affiliates in History & A Growing Threat to the Rest of the Industry

Note: These are all opinions and I have no inside knowledge of Honey’s operations or future plans. If any of my points are incorrect please leave a comment or shoot me a message as I’m very interested in having a complete and accurate understanding.

$4,000,000,000

First of all, hats off the founders of Honey and their incredible outcome and sale to Paypal.

They kept their heads down and built an insanely profitable and efficient extension while the herd of affiliates battled over SERP positions and obsessed about algorithm shifts.

They played their own game and it payed off massively.

That being said I wanted to share a few thoughts and opinions related to the transaction, Honey’s business model, and it’s potential effect on the greater affiliate industry.

Before diving further into this article, it’s important to understand the meaning of 2 industry concepts.

Cookie Stuffing

Cookie Stuffing is an affiliate marketing technique in which, as a result of visiting a website, a user receives a third-party cookie from a website unrelated to that visited by the user, usually without the user being aware of it. If the user later visits the target website and completes a qualifying transaction (such as making a purchase), the cookie stuffer is paid a commission by the target. Because the stuffer has not actually encouraged the user to visit the target, this technique is considered illegitimate by many affiliate schemes.

Wikipedia

Typically this technique can be spotted by an abnormal conversion rate. Either extremely low in the case of the cookie being inserted for broad, unrelated traffic. Or almost 100% if the cookie is inserted by spoofing the brands site or injecting a cookie at checkout.

Although savey affiliates can adjust their traffic mix to make it appear more natural so this isn’t always the case.

Last Click Attribution

Last click attribution modeling is a tracking method that credits the site from which a buyer last clicked before making a purchase.

Coupon Sites & Last Click Attribution

This is the reason coupon sites were able to proliferate and flourish a decade ago.

They would create promo code and coupon pages for every retailer (valid or not, doesn’t matter) hidden behind a button. When the user clicked to see the coupon code, the affiliate cookie was inserted and the coupon site got compensated when the checkout was completed, many times the addition of the coupon affiliate’s tracking code would override the code of a publisher who referred the user to the retailers site in the first place.

Originally brands and retailers loved the volume and conversion rates that coupon sites were able to drive, but many realized over time that many people the coupon sites “referred” had actually already made up their minds to make the purchase before landing on the coupon site when looking for extra savings.

Today, many affiliate program offer lower commission rates for coupon sites or block them entirely, however there are many who still happily accept them as they make their affiliate teams appear invaluable and a large driver of revenue.

A Coupon Site on Steroids: Honey Will Slowly Eat All Affiliate Verticals

Similar to a zombie outbreak, once more and more people install Honey after seeing a TV commercial or hearing a podcast sponsorship they become “infected”. From that point on, any purchase made by the user where the retailer uses last click attribution will likely be replaced by Honey for affiliate commissions.

(Note: Yes, I’m aware that there are linking plugins that claim to “protect” your tracking id. Definitely worth looking into, but I have no experience with these.)

This will only be accelerated as PayPal has virtually bottomless pockets to spend on paid acquisition and cost conscious consumers will spread the word about Honey saving them money.

Unlike Zombies, Honey Actually Helps the User

From a customer’s perspective, if they have little to no concern for their data and browsing privacy, Honey will generally be seen as beneficial. It will find them coupons they didn’t know about and alert them when a product they are watching drops in value.

Everyone loves free money.

Judging by the popularity among millennials and consistently high ratings in the chrome store, the vast majority of users are very happy with Honey saving them money.

It seems the only people with anything bad to say about honey are privacy advocates and competitors.

Sure there are some complaints about Honey not having working coupon codes, but it’s hard to stay angry at a free extension that runs in the background and saves you money.

Even if users aren’t happy with Honey, what percentage of the general public even knows how to uninstall an extension?

Honey’s Effect on Coupon Term Search Volume

Watch for decline in coupon trends as extensions gain in popularity

While it’s important to know that these trends can’t be entirely attributed to Honey, instead they could be due to consumer shopping patterns, changes in retailers use of promo code boxes, retailer declines, ect. It will be interesting to watch for a decline in search volume to “coupon” and “promo code” terms in the coming years.

These are traditionally some of the most valuable and sought after in affiliate SEO, so the shrinking pie will definitely be noticed.

The thought process is that from the moment Honey is installed, the cost conscious user who would usually search for a coupon or promo code at checkout will instead use the Honey extension.

The Largest Cookie Stuffing Operation in History?

Funny how the world works, Shawn Hogan was prosecuted by Ebay/Paypal at the time for alleged cookie stuffing and a little more than a decade later Paypal buys an extension that operates with a very similar method of monetization.

The fact that the user must click or engage with the Honey popup keeps it from being pure cookie stuffing.

From what I can see, Honey isn’t actually cookie stuffing as the user must select their icon or engage with a popup and choose to have a coupon applied before the affiliate id is inserted.

That being said, like the majority of conversions from SEO driven coupon sites, I believe that for the vast majority of conversions that takes place within a browser were Honey installed and gets credit, they were not truly responsible for driving the sale.

There is an argument to be made that when a customer finds an active coupon code through Honey they are more likely to complete their transaction so Honey should receive credit for that contribution in increasing confidence and conversion rates.

Honey does have a product offering for finding deals, tracking prices, and recommending lower priced competitors at checkout. In those cases it is undoubtable that Honey is contributing to making those sales and deserves those commissions. I’d argue that sales made from redirecting a user from a competitors checkout is even more valuable to the brand/retailer.

An Unprecedented Level of Access to Intent & Targeting

By now marketers understand that inbound traffic from Google is some of the most sought after, highest converting, and most valuable traffic sources online.

This is largely because you can align an offering with customers who are actively searching for information or a solution to their problem.

But what is more targeted than an intent based Google search query?

Your current browsing history.

Honey can see all browser data and actions that are taking place within someone’s browser.

Imagine the ability to offer someone a discount for your product/service as they are checking out on a competitors website.

Honey could do this.

They not only can do this, but users are expecting them to, that’s the main reason they downloaded the app. To get the best deals.

The ability to create a bidding platform where companies can bid on showing ads/discounts to customers literally at the checkout of their competitor’s site could be one of the most valuable ad products in history.

Honey Risks

While it may seems that I’m describing Honey as an infallible model that will certainly destroy legacy affiliates, it doesn’t come without significant risks. Namely around privacy concerns, data privacy laws, data breaches, and a complete reliance on Google and the Chrome Browser.

  • Chrome Platform Risk
  • California/GDPR Data Privacy Acts
  • Consumer Privacy Scandal/Expose
  • Retailers taking a closer look at Honey’s true conversion impact
  • Data Breach – Public Outcry

Extension vs Email vs Social vs SEO Affiliate Traffic

Extension users are better and more valuable than all other channels/platforms

In their current form, extensions are better for affiliate marketing than owned and operated websites, email list, and social channels in virtually every way.

Benchmarking The Legacy Coupon Players Extension Execution

SlickDeals

Only 60k users currently, seems like a reactionary move to the Honey acquisition. Great platform and long time couponing audience to promote it to.

Rakuten – Ebates

3 millions users. Definitely taking the extension opportunity seriously

Groupon

~15k users. Didn’t seem to prioritize the channel.

Offers.com

~10k users. Didn’t seem to prioritize the channel.

Dealhack

~2k users. Didn’t seem to prioritize the channel.

CouponCabin

65k users.

RetailMeNot Genie

~400k users. Incumbent mentality of suing to enforce a tech patent after losing marketshare to startup

Competitor Coupon Extensions

Wikibuy

Aquired by Capital One, now has almost 3 users. Investing heavily in paid acquisition channels.

CamelCamelCamel (The Camelizer)

Almost 700k installs, early successful Amazon price tracking site.

Piggy

1.2 million installs – early Honey clone. Seems like an acquisition opportunity for another fintech/payments player

Cently

About 200k users

Otto

Now defunct, part of the Gift Card Granny gift card affiliate team.

PriceBlink

133k users

Browser Extensions – Untapped channel

The acquisition of Honey highlighted the importance of maintaining a presence in your customer’s browser extension or risk that someone else will.

The browser extension has access to override and have influence over all other channels that exist in a desktop environment.

This is especially true if your business relies on a model of last click attribution.

It would be wise to consider building an extension to launch to your existing userbase at minimum. You can include coupon features as well as propriety functions related to your core business. Examples include sports scores, betting lines, political news, job application tracking, job postings, local service deals, crypto/stock prices, ect.

Adware and clickstream data providers will be clawing at you door once you build up a significant userbase if you choose to monetize through that route. And almost any audience would be happy to receive deals and discounts.

Similar to SEO driven coupon sites, affiliate review sites, Viralnova clones, there is room for thousands of profitable “me too” chrome extensions that can exist in the market.

Legacy Coupon Players: Adapt or Die (Slowly)

Between the subfolder JV couponing trend and the growing prevalence of coupon/deal finding browser extensions, pure play SEO driven coupons sites must take a hard look at their long term goals and adapt to these changing realities in the market or accept a slow decline of their business over the coming years.