Affiliate Marketing Programs Axed at Some Sites, Tech Media Unaffected
Amazon NASDAQ:AMZN and Walmart NYSE:WMT have reportedly ended affiliate marketing programs for some of their media partners, however, the program that they are ending is quite specific and will only impact the largest publishers on the web.
Affiliate marketing programs — also known as associate programs — involve monetizing outbound links on a website that directs to a retailer that sells a product. If the person that clicks on the link ends of buying the product the website that directs them there gets a commission. This arrangement works well for both the website and the retailer: the website can place unobtrusive ads on their page; inbound traffic to the retailer likely already has buying intent and an interest in a niche product category. This is particularly useful for monetizing product reviews, and is widely used among websites and YouTubers that cover technology and gadgets.
While the success of banner and pre-roll (ads are shown before a YouTube video) advertising is usually measured by cost per clicks and cost per mile (the rate per 1000 impressions). With affiliate marketing programs, there are two additional metrics: Cost Per Action (where the user inputs their personal information, or signs up for a newsletter, effectively making them a sales lead) or Cost Per Sale (when a user buys something after clicking onto a retailers site).
Per The Information's report the program, used by Buzzfeed, Vox, and Vice, which Amazon and Walmart are looking to cut, involves a "guarantee of a minimum level of payment regardless of the traffic generated by the posts on the websites." This is not the norm for most media partners, a payout is only based upon performance. The Information says that revenue from affiliate marketing makes up approximately 10-20% of the overall revenue for these three properties. For technology websites and YouTubers this amount is usually higher — from the 15-25% range — given the close alignment between the audience category and the products offered. Sales funnels are easier to close, and because of this, the relationship is quite lucrative for both parties.
For most websites, revenue from the affiliate marketing programs channel is centred around the middle of the year as well as the US holiday buying season in November and December. For technology and hardware publications, revenue is primarily focused around new product and platform launches such as a new smartphone or CPU.
According to estimates from research group eMarketer, total spending in the US on affiliate marketing programs is expected to hit $6.82 billion in 2020 (however a prolonged COVID-19 crisis might change that).
Wccftech reached out to a half-dozen tech/gadget YouTubers as well as mid-sized tech media websites and they all said that they had not heard of any changes to their existing affiliate marketing schemes.
Wccftech has reached out to Amazon and Walmart but has not yet received a response.
News Source: The Information