Affiliate Marketing on Amazon – The good, the bad and the ugly

The affiliate marketing on Amazon seems to be a central reference for many online entrepreneurs in the world. It’s not strange that happen this way because of the hegemony of Amazon on the online sales arena. It’s a company that can offer you an endless stock of products to promote among a broad spectrum of niches allowing you to make a steady income that can become a full-time one.

At the same time, it is fair to say that engaging in the affiliate program of Amazon entails a certain amount of stringent rules about using your affiliate id, advertising materials, and information as well as a global competition which has made increasingly harder to succeed with this partner, although not impossible.

Affiliate marketing, a strategic line of large companies

The core concept of affiliate marketing lies on the idea of recommending products or services from a merchant to people (known or unknown) and getting rewarded for it. As you can see this description doesn’t implies itself any action carried out necessarily online, therefore in its primary modality it could have been a kind of marketing practiced for a lot of humans groups throughout the history. 

The affiliate marketing as an online activity however can be traced back to the 80’s of the last century where the first actions were taken to bring this mode of commercial exchange available to the public. 

William J. Tobin a well known american businessman is attributed as the inventor of the affiliate marketing. He has created several startups throughout his life since 1968. One of those entrepreneurships, PC Flowers Inc started in 1988 by selling flowers as an electronic ecommerce within the Prodigy Network in an era when internet just had around 100,000 computers connected and before the birth of the World Wide Web in 1991.

PC Flowers Inc., first in 1988 then PC Flowers and Gifts in 1994 were the first brands to use an affiliate program online both during their time as part of Prodigy Network and then with the shift to Internet, by using the development of affiliate marketing for the online world invented and developed for Tobin which finally got its US patent in 2000.

An actor with a moderate and brief role but who can be counted as the second in history to use affiliate marketing was CDNOW. It was a dot com company founded by Olim brothers in 1994 to sell compact discs and music-related stuff which in 1998 has a value over $1 billion and two years later such value decreased to $117 million as part of the dot com bubble burst.

Then the Jeff Bezos’s Amazon appeared on the scene in July 1996 for launching its associate program which has since led the affiliate marketing space and has served as host for a lot of big brands which strenghten their own affiliate programs trough this huge channel.

Nonetheless, several projects have consolidated in names as renowned as Commission Junction established in 1998 by University of California students or Clickbank Networs founded in 1998 as well by Tim and Eileen Barber.

Twenty years later not only names as ValueClick, Rakuten or Linkshare have entered in this game as affiliate networks but big individuals brands such as Macy’s, Walmart, Target, Uber, Expedia, Booking, just to name a few of them too.

The good: Amazon, the affiliate marketing giant

To this day there is no affiliate program with such a large and diverse variety of products as Amazon, period. Almost everything you can think of will be in the Amazon stores or in the stores of third-party sellers (Amazon Marketplace). That means that any niche you want to target you are going to find something very focused to offer to your audience either the most abstract and intellectual matters such as theology or philosophy (ebooks for example) till the handiest issues like electronic appliances, toys, cleaning items, etc.

In numbers, Amazon counts more than 300 millions of active customers (prime and non-prime) around the world, which means nearly 4% of the world population and growing.

Amazon sells more than 350 millions of products from which Home and Kitchen; Clothing, Jewelry and Shoes; and Home Improvement and Tools sells above 100 million.

Amazon Prime subscribers are a segment to pay attention to because they would spend around $1300 per year and there are about 90 millions of them just in the U.S. Don’t forget that with a website your reach is literally the whole world unless you are focusing intentionally on a regional or local market.

There are a lot more impressive stats we can write a whole post about; however, this data will suffice our intention to make clear the power of the affiliate program of this company.

The bad: a lot of work to start seeing significant results

Until February 28, 2017, the commissions that Amazon paid were volume-based. It meant that depending on the number of people that you referred to the Amazon site corresponded you a specific commission. It was on the lowest of the scale of 4% regardless of the item sold if your referrals buy something between 1 to 6 products on a specific month, and 8.5% on the top of this tabulator if the purchases attributed to your referrals reached 3131 or more again during a month.

That changed on March 1, 2017, when the plan changed and new commissions were adjusted based not in volume like in the past but in categories. Now just to give an example if your referrals are buying video games or video game consoles you are getting a 1% commission over the price of the item bought, and till 10% if the purchases were of Amazon coins, digital video games or luxury beauty. In this new scenario doesn’t matter how many sells could be credited to your efforts, the critical thing is which category are your referrals shopping from.

Let’s see what these percentages and commissions could represent in time and money.

It would be great to have such a beautiful mathematical equation because at least in principle, we can calculate a defined amount of clicks we need to generate for every successful operation. However, there is no rule of thumb or a rulebook that says how many people you need to refer to Amazon to get a sale credited to you.

The reason is that every person, niche, product, category, market, etc., are different and sometimes many things could be aligned to make things happening quickly, and other times things seem to get results hard. Nonetheless, let’s says that we take a general calculation for many marketers who are conversions around 0.5 to 2% as a general rule.

That general rule (don’t take it as a law carved in stone but just a starting point) means that if you get 100 clicks over your affiliate links one of them will buy something. This gives rise to two questions: 1) How much money will I make out of this single successful sale credited to me? And 2) How many visitors (traffic) should I need to get those 100 clicks?

Well, the answer to the first question depends on the sold item and its category. For example, if someone buys Borderlands Double Game Add-On Pack in the VideoGames Category at $6.72 will get 1% of it as commission that is ¢6.72, but if buys Gigabyte MMO Gaming Mouse (GM-Thunder M7) in the same category, at $2999 will earn $29 out of just one sale at the lowest commission. Do the same exercise but now with the category that offers 10% commission the top within Amazon in Digital Video Games, Luxury Beauty, and Amazon Coins Categories.

The answer to the second question again depends on various factors like the reputation and consolidation of your website, the ranking of your posts or pages, how broad or narrow is your niche, who kind of people are part of your audience, the promotion you do of your site in your social media network, etc. Let’s say that after 6 months of hard work in your business, you are getting 100 unique visitors per day, an entirely achievable goal. That could means to you an average of a daily sale in the range of ¢6.72 to $29 if we use the previous example.

Is it too much or too little for you? Everyone will have to decide depending on his/her previous situation, however, what is clear for the purpose of this topic is that there is a lot of other affiliate programs which can offer higher commissions for almost the same time and effort. You can easily find tons of offers out there which pay you commissions as high as 40, 50 or even 75%. You have to look for them.

What about a program that can teach you everything about online marketing, starting by creating your website at no time, and building it step by step to become an authoritative and profitable business and whose affiliate program will pay you around 40% for every subscribed member? Click here for more information

The ugly: they put the rules

Amazon is the owner of its affiliate program, and they do whatever they consider as more convenient for it, anytime. As well as they changed the way in what commissions are paid, so they can also change anytime any other term, guidelines, operation rules, the agreement itself, the use of the product advertising API, etc., you name it.

Amazon requires that you put on your website a disclosure about that you are part of its affiliate program and that you can get revenues for advertising. So the people that come to your portal don’t get surprised if a recommendation you do makes some profit which could be considered a non-ethical a biased way to induce someone to purchase something if they are not aware of these conditions.

Likewise, Amazon requires that you avoid by any means put affiliate links in some places which could be a little bit obscure or definitely out of the radar for them, for instance, emails.

Keeping the ethics the business is a good thing, but it turns out an especially annoying issue when seems to become police surveillance in some cases which can lead and in fact has led many people to get its websites banned from Amazon, sometimes justified but many other times don’t.

Adapt to the system or follow plan B

Briefly, Amazon is an excellent option for monetizing your business, your website, but it is not the only one.

You can take advantage of the brand, services, and above all, the universe of products ranging the whole spectrum of human activity and of course, targeted niches. But at the same time, you have to take into account that playing the Amazon game implies commitments, some of them you can go around, but other you have to stick as they are.

Within a specific niche, you have many options to lead your audience to. There is no restrictions or prohibitions of any kind. That means that you are free to put the affiliate link of the advertiser that most suits to your content either Amazon or other brand or both. However, what you cannot do is changing the commission rate or the policies about not publishing its affiliate links anywhere or not showing an affiliate disclosure.

If you are not willing to comply with all these conditions, a whole world of affiliate programs waits out of Amazon for you. Just remember, any of them could impose its own requirements.

What’s the option then? Creating your own products.

Learn how to create an online business from scratch to promote the products of others or your own. Click here for more information.