‘This is exposing our weak points’: Amazon changes teach publishers – again – platform dependence is risky

'This is exposing our weak points': Amazon changes teach publishers - again - platform dependence is risky
Written by publishing team

Back in 2017, after painful changes to Facebook’s algorithm, which followed the similarly painful axis of video, publishers large and small announced that they were getting serious about revenue diversification and freed from dependence on the platform.

However, one of the brightest points of diversification – taking advantage of affiliate programs with shopping guides and other product recommendation content – for many publishers has been just another form of dependence on the platform. But this time, the platform was Amazon (and to a lesser extent, Walmart) rather than Facebook.

All bills are due, and for many, the bill for relying on this platform unofficially arrived on April 14, when Amazon notified publishers that it would lower the commission rates it offers through Amazon Associates, the affiliate marketing program that serves as the unofficial basis for its growing commerce and media operations.

The changes are drastic and painful: Commissions on essential commerce goods including headphones, beauty products and business supplies were halved, from 6% to 3%; Commissions on household products, a fast-growing category with a lot of people in shelters, were cut by nearly two-thirds, from 8% to 3%; Commissions on health and personal care products, another major area of ​​growth, fell from 4.5% to 1%.

After pulling a spreadsheet of the top performing trade publications on their site, one CEO quickly discovered that four of their site’s 10 highest-earning product categories would be affected by the changes.

“This will definitely be a huge success [to our bottom line]This source believes.

While many publishers have recently embraced commerce as a way to diversify their businesses, Associates’ changes could reveal how many publishers still rely on Amazon. Few expect these shifts in committees to be temporary measures. Once prices drop, they rarely go back to where they were.

“Across the board, this exposes a lot of our weaknesses,” said a source at a second publisher that earns more than 50% of its trade revenue from Amazon. “It’s really starting to show how badly leveraged everyone has.”

The cuts in the Amazon are part of a broader disruption running through the commerce space. As people are trapped at home and shop more online, commerce publishers are seeing their traffic go up exponentially.

But supply chain issues and economic uncertainty have caused many merchants and retailers to drastically change their affiliate programs. And with business link building still largely a manual process and many publishers still mastering the nuances of business development, many publishers will struggle to get the most out of their audience’s demand.

“I don’t think publishers are often prepared from an infrastructure perspective to be able to implement the opportunity,” said the second source, who has worked on several business operations for different publishers.

In this way, even though affiliate commerce is still a small and growing market, it really does look a lot like the rest of the media: it can be managed for the strongest, it can be executed for the smallest, it is vertically focused, and brutal to most people in the middle.

Over the past month and a half, with e-commerce activity spreading across the globe, Amazon has taken several moves designed to curb demand for non-essential products. In mid-March, she began asking the major publishers of her affiliate program to stop sending them traffic; A number of different publishers have responded by cutting off paid distribution of publications containing Amazon links and keeping Amazon-focused publications away from their commercial newsletters.

A few days later, Amazon informed Skimlinks and Viglink, two popular monetization platforms, that publishers would no longer be able to monetize their links on those platforms with Amazon.

Then, last Tuesday, Amazon notified participants in its affiliate program, Amazon Associates, that it would reduce the commissions it pays for a number of product categories, starting April 21.

Not every publisher dealing with Amazon was affected by the cuts. Three sources said that the commission rates among the big publishers that Amazon began calling last month about traffic, for example, have remained the same.

Amazon wasn’t the only retailer to make changes to the company’s affiliate program, either. Walmart began asking publishers to stop sending them traffic several weeks ago, citing similar issues with order management, according to a source familiar with the matter.

Sources at several publishers said dozens of other retailers and merchants, from Best Buy to Ulta, have either paused their programs indefinitely or lowered their commission rates. Sources at different publishers said that nearly 10% of their affiliate partners have made changes in the past 45 days.

These changes, along with significant declines in digital advertising spending, have prompted publishers to look for quick ways to diversify their businesses. Carl House, chief operating officer of StackCommerce, a vendor of commercial and storefront content used by publishers including CNN and Ziff Davis, said StackCommerce has signed more new publisher customers in the past 45 days than it did in the previous six months.

Joris Chretien, head of US Publishers Management for the affiliate network Awin, said publishers’ requests to join the Awin network rose 36% over the same period.

However, people are still locked into the house and still looking to buy. Lauren Newman, head of US publisher relations at Skimlinks, said publishers’ revenue is up 50% over the past month. Skimlinks has been busy not only finding retailer alternatives to Amazon, but also highlighting merchants and retailers who are somehow holding back during the pandemic.

But taking advantage of these opportunities requires time and resources, two things that most publishers lack. Publishers who have tried to shift their commercial coverage to new product categories can wait weeks or months to start ranking them competitively on search.

“You can’t take a 90-degree turn and see it work right away,” said a publisher executive in a business process.

Forming direct relationships with new retailers also takes time. While a publisher in an affiliate network can accept the terms of a merchant deal with a single click of a button, negotiating a customized, direct deal can take months.

Meanwhile, many commerce publishers worry that Amazon’s changes, combined with ongoing supply chain issues, could lead to further cuts across the affiliate ecosystem: The retailer may consider cutting Amazon’s commission rate by 50%. In one category he decides to cut their own rates by 30%, multiple sources said.

“If I was a performance marketer and was running an affiliate budget, this is what I would do,” one publisher executive admitted.

However, even if those dominoes don’t fall, expect Amazon’s cuts for Associates to stay the same.

“This will 100% be the new normal,” said Greg Mason, former CEO of Purch. “This program has helped them build their dominance, but they don’t need to pay anymore. It won’t have any revenue ramifications for their business and the savings will go straight to the bottom line.”

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