Like any analytical marketer, I love a good case study. I find there’s an extra layer of insight when you study marketing in practice alongside marketing theory.
The internet is full of case studies – from formal Harvard Business School reports to casual Reddit threads documenting entrepreneurial journeys. The inspiration for this post comes from the latter.
I recently stumbled across a few online posts where users documented their journeys into the world of affiliate marketing. They shared details of their ventures, web analytics, and income reports. As I was reading these posts, something stood out as odd: these marketers were getting great traffic but their income didn’t reflect that. Tens of thousands of monthly visits only converted into a couple hundred dollars of income.
Maybe this resonates with you. I’ve experienced it firsthand on a few of my projects as well. The culprit? The Amazon Affiliate Program.
What Makes a Good Affiliate Program?
The program you promote can make or break your success. This isn’t a post on choosing affiliate programs, so I will keep this simple for now. The quality of an affiliate program relies on three key components:
- The commission
- The conversion rate
- The cookie length
These are not independent variables – they work together, and any weak link can break the entire chain.
Let’s look at the equation.
The commission is how much money you make per sale, the conversion rate is the percentage of clicks that turn into sales, and the cookie length is the period of time during which you can be credit for a sale. Multiply these numbers together and you can measure your profitability per click.
Profitability = Commission X (Cookie Length Coefficient X Conversion Rate)
Note that we are using cookie length as a coefficient for conversion rate. A 30-day cookie would not 30X the conversion rate, but it would certainly increase the conversion rate when compared to a 1-day cookie window. This could be 1.5x, 2x, 3x – who knows. All we can definitely say is that if a customer has more time to complete a purchase, the affiliate is more likely to get credit for the sale.
Remember, any weak link in this formula and profitability suffers. Compare a few hypothetical programs using the following scenarios.
Commission Rates
- 5% (Bad)
- 20% (Average)
- 50% (Good)
Conversion Rates
- 5% (Bad)
- 10% (Average)
- 20% (Good)
Cookies
- 1-Day Cookie Coefficient = 1 (Bad)
- 30-Day Cookie Coefficient = 2 (Average)
- 60-Day Cookie Coefficient = 3 (Good)
See how this plays out for a $100 Product:
- BAD Program Profitability = ($100 * .05) x (.05 *1) = $0.25
- AVERAGE Program Profitability = ($100 * .2) x (.1 *2) = $4
- GOOD Program Profitability = ($100 * .5) x (.2 *3) = $30
Using these numbers, the good program is over one hundred times more profitable than the bad program. Now what happens when you mix some bad variables into the good program?
- GOOD Program w/BAD Commission Rate = ($100 * .05) x (.2*3) = $3
- GOOD Program w/BAD Cookie Window = ($100 * .5) x (.2 *1) = $10
As you can see, a single tweak to the formula and profitability can take a major hit. Remember, this is profitability PER-CLICK, so these changes are amplified when applied to a large scale. Multiply the equations above by 1000 and you’ll see that the bad program would yield $250 while the good program would yield $30,000!
Of course, these are hypothetical numbers and you’re probably wondering what this has to do with the Amazon Affiliate Program.
As you may have guessed by now, Amazon’s program has a BAD commission rate, a BAD cookie window, and a GOOD conversion rate. Most marketers focus solely on that last component (we’re optimists, right?). The results are costly.
So, what’s the alternative? Follow along.
Basic Marketing Principle: Optimizing Your Efforts
You may have heard some great marketers say something along the lines of, “It takes the same amount of work to sell a $10 product as it does a $1,000 product.”
While this isn’t entirely true, there is some validity to the statement, and the overall point is clear. Picture two different buyers: one is looking to buy a TV, the other is looking to buy a new book. Both have intent to buy, but one sale is far more lucrative. Which would you rather sell to?
As affiliate marketers, we choose our audiences. Whereas a door-to-door salesman may have more luck selling cheaper products, affiliate marketers can serve as the in-store salesmen, catering to a warm audience of prospective buyers. Building a site for TV guides takes the same amount of work as building a site for book guides. Why would you choose the latter?
The same logic applies to affiliate programs. Why would you choose to work with an affiliate program that yields less profit for your efforts?
The Amazon Affiliate Fallacy
Many affiliate marketers make the false assumption that it is exponentially easier to sell a product on Amazon than it is elsewhere. This is entirely false.
Look at your own purchases for the past year. Did you purchase every product on Amazon? Personally, I’ve purchased products from a dozen different online stores. This includes software purchases, info products, and physical products.
Sure, the bulk of my purchases were on Amazon, but an affiliate would have made far more money if they collected commissions on my other purchases.
Amazon Affiliate Program Alternatives
There is no simple way to exponentially increase your affiliate earnings. Affiliates need to do the proper research to find profitable niches and profitable programs within those niches.
I highly recommend spending the time to find a wildly profitable niche. There are certain niches that will always be less profitable than others. For example, it is harder to sell to frugal moms than it is to ambitious professionals.
That said, if you already have an existing audience, you can still find affiliate programs that are better than the Amazon Affiliate Program.
Below are just a few examples.
Supplements
- Commission on Amazon: 4.5%
- Commission MoreNiche: 40%
Books and Info Products
- Commission on Amazon: 4.5%
- Commissions on ClickBank: 40-70%+
Beauty Products
- Commission on Amazon: 6%
- Commission on FlexOffers: 10-20%
Shoes
- Commission on Amazon: 4%
- Commission on Zappos (Commission Junction): 7%
For more examples, you can check out these lists of affiliate programs in every niche.
What to Do Next
If you have a site that is getting a lot of traffic but not generating a lot of income, start researching some new affiliate programs. You will have to do a lot of research and testing, but it will all be worth it. Finding the right program can 10X your earnings.
