If you are in the publishing or affiliate space, you likely heard the news of Amazon once again slashing their affiliate commission structure, this time lowering their commission rates to between 1 and 4 % across all major categories, a significant decrease in revenue for many publishers in the midst of the coronavirus pandemic.
Gradually Then Suddenly
To This (2017)
To This (2020)
At Least Buy Us Dinner First…
Marketers and publishers understand that difficult business decisions are sometimes necessary to ensure the sustainability of a company.
With this change Amazon has reduced their publisher spend by hundreds of millions of dollars, likely without a direct loss of revenue (in the short term) which will improve their bottom line and allow them to focus on their essential categories during the current unprecedented coronavirus pandemic and other businesses.
But to the tens of thousands of publishers, bloggers, and social media content creators that have grown accustomed to their Amazon commission checks, the swiftness and lack of notice of the changes sent a message loud and clear, one which many were suspecting and feeling for years:
While this message may seem harsh, affiliates are used to it, as virtually every other large retailer has already made the same changes to diminish their affiliate commission rates years ago.
The reason it hurts more with Amazon is they are the largest affiliate program in the world and for many years have offered the best rates on virtually any physical product, while also having the strongest brand and conversion rates of any online retailer.
Amazon Was Built On Affiliates
Affiliates were a key to making Amazon who they are today.
While Amazon was widely recognized by the traditional media and ad world for leveraging underpriced Google Ads, and were for a long period of time, the platform’s largest advertiser.
The fact their affiliates blanketed all transactional keyword SERP’s with recommendations to purchase from Amazon from “unbiased” organic results had an even greater effect in conditioning consumers to purchase, trust, and eventually go direct to Amazon when buying a product ;not to mention the SEO benefit of the billions of affiliate links to their website.
The Future of Amazon Associates Program
There will likely continue to be exclusive rate agreements with premium (and on-side recommendation) publishers, but we think the open public program terms will continue to diminish over the coming years. The decrease my not be to the commission percentage, but more so to how additional purchased items that aren’t linked to directly are treated.
Permanent Change or COVID Special Circumstance?
I think it’s permanent for the public facing problem, I do think that “premium” publishers like Meredith and New York Times as well as content providers they promote likely have a special arraignment where they receive higher rates.
More Players Competing for a Smaller Pie
There is less easy money in the system and more competent companies and individuals competing for transactional affiliate terms today than 3, 5, or 10 years ago.
The wide arbitrage that existed between the cost of capturing rankings for long tail transactional physical product keywords and Amazon’s affiliate program continues to close.
Still An Important Monetization Method, But Not the Only One
Overall the Amazon affiliate program is still competitive and is still likely the best option for many physical products and generic “top 10” lists when you factor in their conversion rates.
However the switching costs to other programs now is lower as the Amazon program is now more aligned with the market. The means account bans are less of a concern and other programs should be tested thoroughly before defaulting to Amazon.
Short Term Publisher Impacts
Across the board earnings of pure Amazon affiliate sites was around $140 per 1000 views, we are now seeing numbers down to ~$60/1000 views depending on the niche and the commission category they fall into.
While this is a drastic reduction for many, it can be offset when you consider “premium” ad networks can add an additional $15-$20/1000 views depending on the niche and advertising cycles and an email list or info products can become more a priority.
Additional impacts include:
Less Risky to acquire Amazon affiliate sites – lower affiliate switching costs.
More Negotiating and split testing retailers required.
More people entering and shifting to obvious non-Amazon affiliate verticals: sleep, CBD, VPN, online gaming, ect.
“Premium” publishers likely have a higher Amazon affiliate fee structure and can continue investing in affiliate content.
More affiliate shifting to course or guru model
Greater shift to other channels like podcasts and Youtube
Who Will Step Up to The Plate?
Affiliates are tired of Amazon and actively seeking other companies to promote who will treat them better and provide more attractive terms. This would be a great time for large retailers to create more aggressive programs, however we haven’t seen them capitalize on this.
This would be a great time for brands to reach out directly to sites ranking for transactional terms in their category to create custom deals and find win-win opportunities. Affiliate are receptive and brands benefit from not competing with funded startups in paid auction based acquisition channels like Facebook, Instagram, Adwords, ect.
At a minimum if you run a content site, definitely reach out to brands you are promoting to create custom relationships or even consider creating your own ecommerce brand if the margins are attractive.
Long Term Opportunities
Build owned ecommerce brands from content sites to promote
Leverage SEO skills gained to build a local services company, lead gen business, agency, SaSS, ect.
Increased willingness to target non transactional high volume terms for display ad revenue.
Build email list and info products.
Test other affiliate programs
Build direct relationships with brands – both hate being overly reliant on Amazon.
Digital Marketers Are Cockroaches
If you have been working on the internet for any length of time this is not your first rodeo. Algorithm changes, commission cuts, organic reach changes, penalties, changing consumer trends, and competition are always a very real treat to your livelihood. But every time dynamics shift, crafty individuals will find new opportunities and angles and pounce on them.
Optimistic About the Future
As the real world becomes secondary to the digital world and products/services continue to be commoditized, the ability to tell your story and capture consumer attention will become an increasingly appreciated skill.
I suspect the coming economic hardship will push trendy DTC brands to pursue more profitable and sustainable growth methods – a la affiliate.
Online and affiliate marketers with in-the-trenches experience will thrive.
Recently I heard a podcast episode “My First Million” where the guest talked about this early days slinging berries and dating offers as an affilate. The host of the show chimed in and said ex affiliates are some of the people they look to hire and are most undervalued in todays market as they actually understand how traffic and the internet work.
I completely agree, seeing behind the curtain of large corporate performance marketing companies with large well-known sites, there is really no secret sauce, and in many cases the emperor has no clothes.
Many solo and passionate part time affiliates have a better understanding of the landscape and the tactics to drive incremental revenue improvement than execs with MBA’s and Silicon Valley startup “growth marketers”.
The same skills to drive traffic and revenue for affiliate offers can be applied to almost any digital based business.
Once you realize this, the internet becomes your playground.
While the commissions cut will sting in the short term for many, it will push many to build stronger more sustainable businesses that will be much more valuable for the long term.
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.
Identify potential niche opportunity
Size the Market Opportunity & Ability to Monetize
Level of sophistication of the current players (competition analysis)
Benchmark earnings estimates of current players in the space.
Transactional Keyword Mapping
Budgeting Your Project Cost
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.
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:
iGaming (Gambling/Online Casino)
Credit Repair/Debt Products
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:
Typically transactional keywords can be broken down into 5 categories: Best, Comparison, Review, Coupon, and other.
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 terms compare two (or more) individual product offerings. These phrases typically include the terms “vs”, “comparison”, or “alternatives”
Review terms revolve around individual product or product type reviews. These phrases typically include the terms “review”, “buyer’s guide” or similar keywords.
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 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-$100 per call. Since these are the public rates, if you achieve sizable volume you can likely negotiate an even more favorable private deal.
It’s also interesting to see many of these sales are converted over the phone, so it’s important you find an affiliate partner you can trust to accurately report sales and convert a high percentage of customers.
Transactional Keyword Mapping
Next I began to dive into the the SERPs and look that structure of existing players to get an idea of the most valuable terms in the space.
At this stage it doesn’t have to be completely comprehensive but it can give you a good idea of the number of keywords that drive significant value in the space and the distribution among them to later be an indicator for the number of transactional pages you will want to produce.
Here’s an example of what I found for core transactional home security terms
2 quick notes on this:
I didn’t include every individual product review or comparison term, although I think it would be wise to target every variation as commission is high enough to cover multiple article costs with a single sale.
Generally I’d try to break down click opportunity from the overall search volume number, but I just kept the basic number as a traffic potential estimate to make up for related terms a page targeting the main keyword can also rank for.
CPA Commission ($)
Monthly Earnings Potential
Best Home Security Systems
Best DIY Home Security System
Best Self Monitored Home Security System
Best Wireless Home Security Systems
Best Smart Home Security System
Best Security System for Apartments/Renters
Best Security System for Businesses
Best Security Systems With No Monthly Fees
Best Home Security Camera
Best Outdoor Home Security Cameras
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.
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 Sites
Organic Affiliate Revenue/yr
$250k – $1.5mm
$50k – $250k
$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.
Domain (You may want to test a few)
Content (150 money + 100 supporting)
Products + Photos + Videos
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.
Total Site Earnings after 36 Months
Asset Value after 36 Months
Ability to Execute Multiplier (0 – 2)
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.
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.
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.
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.
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.
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.
Online Business Brokers in the Market Today
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.
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.
FEI plays in a similar market to EmpireFlippers, with a slightly more buttoned up image and staff.
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.
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.
A smaller brokerage that sends periodic emails when deals become available. They offer content, ecommerce, SaaS, and even digital agencies for sale occasionally.
A large catalog of deals available, some reaching the higher end of a few million in EBITDA.
An impressive catalog of online business listings featuring multiple monetization models.
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.
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.
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.
Large variety of online businesses available.
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.
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.
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.
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:
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:
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.
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.
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 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.
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
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.
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.
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
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
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
~15k users. Didn’t seem to prioritize the channel.
~10k users. Didn’t seem to prioritize the channel.
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.
1.2 million installs – early Honey clone. Seems like an acquisition opportunity for another fintech/payments player
About 200k users
Now defunct, part of the Gift Card Granny gift card affiliate team.
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.