Affiliate Update: Amazon's Commission Reductions
This is part of a series of updates that provide data-driven insights and experience-based anecdotes that will hopefully help marketers and brands weather the COVID-19 storm. If you have feedback or questions, please send us a note at firstname.lastname@example.org.
Amazon Reduces Commission Rates
You may have seen this in the news, but Wednesday evening Amazon announced it was dropping its affiliate commission for all publishers. This CNBC article sums it up pretty well. Amazon has a tiered commission structure, so they offer higher commissions for mattress sales than they do TV or apparel. Each category is affected a little differently, but the Sports/Outdoors category commission dropped from a rate of 5.5% to 3%.
These cuts have shocked the affiliate world. It's clear that this was bound to happen eventually, but it was most likely accelerated by COVID-19. Such reductions could have drastic effects for publishers and will certainly expose publishers who have enjoyed Amazon's high conversion rates with a “set it and forget it” model. That said, this will benefit brands' DTC sites and direct affiliate programs, as direct relationships between brands and publishers are now more important with Amazon's change. Hopefully, this will encourage publishers to pause and see this more clearly.
Direct Affiliate Programs
Backbone has been managing affiliate marketing programs for around 20 clients since early 2019, and we have seen a meaningful uptick in the affiliate channel since the start of the COVID-19 crisis. With brick-and-mortar stores closed and traffic to publisher sites growing, there is more traffic and demand through the affiliate channel. Since Amazon has slowed or delayed shipments of non-essential products, brands' DTC sites have actually been performing quite well in April (March was a different story). The affiliate channel has been a bright spot in the media mix for many clients.
With the news of Amazon's reductions, some publishers have already reached out to Backbone's affiliate team requesting to join brands' affiliate programs and switch links away from Amazon. We have been busier than ever negotiating rates, creating links, and discussing future opportunities. Further, Backbone is reaching out to all publisher and affiliate contacts letting them know that our affiliate business is very much alive and strong, and we are ready to help brands maneuver through these dynamic times. We will work to convert as many Amazon affiliate links as possible over to brand affiliate links over the next few weeks. We believe that there will continue to be an uptick in product coverage and direct links as a result of these changes. Amazon's change further proves the importance of having a direct affiliate program.