On March 1, 2017, Amazon’s new policies for the Amazon Associates program officially kicked in. Although the announcement did not come unexpected, things are still shaken up for the affiliate marketing community. A month has passed, and we’ve seen the effects of these changes in the payouts that most niche websites and affiliate marketers receive.
The email that Amazon sent to their affiliates mentioned that this change was in response to feedback from associates that wanted the pay structure to be made clearer. They mentioned that the changes they’ve implemented make the fee structure much simpler to understand, and clearer to see for affiliates in the program.
So what is the new pay structure for Amazon Associates, and how can you adapt to this new situation?
The Old Pay Rates
The Amazon Associates program has allowed internet marketers of all kinds (whether you’re working with YouTube, a niche website, or any other media), to make commissions on the referrals that they send.
The process goes something like this:
- The affiliate enrolls in the Amazon Associates program.
- Once accepted, the affiliate produces content on a certain niche topic.
- The affiliate places links to Amazon within that content, usually recommending a certain product.
- Readers of this niche site follow these links.
- When a reader purchases something on Amazon after following the link, the affiliate gets a commission from that purchase.
The process of receiving revenue from the Amazon Associates program hasn’t changed; what has changed is the commission that the affiliate will receive.
In the past, Amazon’s affiliate program worked in stages. The affiliates who sold more products would receive a higher percentage of commission for each sale. That means that niche sites bringing in over 3,131 sales to Amazon per month could get 8.5% of the price of the item purchased.
This pay structure, also known as the Variable Standard Fee, allowed the bigger affiliates to earn higher commissions, essentially rewarding them for their hard efforts in bringing consumers to Amazon. However, it was often difficult for new niche website owners to rise to the top, if it was possible at all.
To get a feel for where we’re coming from, let’s take a look at the old chart from Amazon of their previous pay structure:
So now that we know where we started with Amazon, what is the new pay structure?
Amazon Associates’ New Pay Structure
The high-achieving affiliate marketers who have been driving thousands of sales to Amazon every month are no longer being rewarded for their hard work. Although Amazon’s affiliate program still functions in the same way, the commissions are now calculated by category, not by the number of products sold.
Here’s the chart that Amazon has provided:
Each category now gives you a different percentage for commission. That means that your fee depends on what you sell, not how much you sell.
Who is Affected?
In very general terms, Amazon’s new Associates Operating Agreement affects all Amazon Associates. How much it affects each person (or niche site) depends entirely on their area of focus. An affiliate marketer who once referred thousands of sales per month to Amazon now gets the same commission as a brand new Amazon Associate in the same category.
So let’s break this down into an example. Let’s say that you’re an affiliate marketer who brings over 3,131 individual sales to Amazon every month. This means you would be in the top tier of the old Amazon Associates Operating Agreement, earning 8.5% of commissions on every sale.
Now, let’s imagine that your area of focus in video games and consoles. You’ve obviously worked hard to create a successful website, and to get to the commission tier that you’re at now.
How does Amazon’s new fee structure affect you in this example? All you have to do is look at the chart above to see. Now, instead of 8.5%, you’re earning a measly 1% of commission. Before, you would have earned $85 on every $1000 of products sold on Amazon. Now, you now earn $10 for every $1000 sold.
Obviously, any business that depended on Amazon’s affiliate program for income will be affected by this change. If you’ve been unlucky enough to land in one of the categories that is now a low commission, you could be seeing a significant drop in revenue from your affiliate website.
Of course, it all depends on what niche you’ve chosen for your blog. Since Amazon’s changes to its affiliate program came out of the blue, no one could have taken precautions beforehand in creating their niche sites.
However, what about someone who is looking to start an affiliate site now, or who has just started one recently?
Who Can Benefit from this Change, and How?
Let’s create another imaginary scenario. Let’s say you’ve just started out as an Amazon Associate. Your total referred sales last month were under six, meaning that you would have been in the lowest tier of the old Amazon Affiliate program. You would have earned 4% of commission on each sale.
Now, let’s say the focus of your niche website is pets and pet products.
Amazon’s new affiliate agreement states that pet products sold on their site earn affiliates 8% of commissions. That means you, as a niche blogger in the field of pets, have achieved a higher commission than ever would have been possible as a newbie. In fact, you would have to sell more than 631 pet products in a given month to earn the same commission.
The bottom line is this: new Amazon Associates can gain instant benefits if they’ve chosen a high-commission niche.
How Do New Associates Take Advantage of This Situation?
If you’re in a category that Amazon has deemed worthy of a better rate, you’re golden. Just keep working to bring in revenue from your blog by placing affiliate links throughout!
But what if your chosen niche doesn’t fit directly into one of these high-paying categories? If your blog is still relatively new, it may be possible to adjust your sails a bit and still land in a good category.
For example, what if you were planning on blogging about home design, specifically kitchens? Well, looking at the chart above you may notice that ‘Kitchen’ earns only a 4.5% commission, while ‘Furniture’, ‘Home’, and ‘Pantry’ earn 8%. All of these topics are easily relatable to your original idea, and can earn you a much better commission.
Or, if your niche was aimed at the category ‘Televisions’, (a terrible 2% commission) could you adjust slightly to include ‘Amazon Fire TV Devices’? That will earn you a 7% commission instead.
See where I’m going with this?
All you have to do is adjust your sails slightly to adapt to the changes.
The Best Payout: Creating a New Niche Site
If you’re looking to truly take advantage of the changes that Amazon has implemented here, it might be time to look into creating a brand new niche site.
Why so? Well, creating a new niche site is obviously a difficult task, and even with the new commission rates it will not be an overnight money-earner. However, with a bit of hard work, you can make a new niche site truly pay off in the long run.
Obviously, this is highly recommended for niche site creators who have a bit of experience in getting a website going. They’ll be able to make up for any losses that they’ve had with other sites through Amazon’s changes, and still end up with a hefty payout.
However, this idea is not solely for niche site experts. In fact, if you’ve been on the fence about creating a niche website, now might be the perfect time to act! You have the opportunity to make better commissions from the get-go, not having to wait for your referral sales to increase gradually. Beyond that, you might even make more commissions now than were possible with the old Amazon Associates Operating Agreement!
The key is this: choose a niche that still gives you a good rate on commissions.
Which Categories Are Still Worthwhile?
When looking at the chart above, we can see that there are still good payout options for those who want to continue using Amazon Affiliates. Which niches are still viable for you personally are absolutely up to you. Depending on how many sales you refer to Amazon per month, many of these categories are excellent options for you.
To see exactly which categories are still viable for your affiliate marketing blog, let’s take each tier of the old Amazon Associates Operating Agreement and see how the new commission structure matches up.
The Lowest Tier: 1-6 Referred Sales Per Month
For beginning or small-time affiliate bloggers, remember that if you only sell 6 items or less in a given month, you would only have been earning a 4% commission. That means that any category above a 4% commission would be worthwhile for these kinds of affiliate marketers.
So for anyone who refers less than 6 sales per month through Amazon Associates would be achieving the same or even a slightly better commission in the categories below:
- Amazon Kindle and Fire Tablet Devices (4%)
- Physical Books (4.5%)
- Health and Personal Care (4.5%)
- Sports (4.5%)
- Kitchen (4.5%)
- Automotive (4.5%)
- Baby Products (4.5%)
- Digital and Physical Music (5%)
- Grocery (5%)
- Handmade (5%)
- Digital Videos (5%)
- Outdoors (5.5%)
- Tools (5.5%)
Also, don’t forget that any of the categories that are not listed in the table above are automatically 4%, meaning you’ll be getting the same commission as before if you refer less than 6 sales per month.
Taking one of these categories may be a viable option for small-time bloggers who see minimal sales. However, remember this: once you’ve chosen a category here, you will never be able to expand your payouts. So once you increase into the next tier (referring 7 or more sales per month) these categories won’t earn you any better commission.
Low Tier: 7 to 30 Referred Sales Per Month
For those who refer 7-30 sales per month with Amazon Associates, anything in the 6% category will get you the same payout. This includes:
- Musical Instruments
- Business and Industrial Supplies
Middle Tiers: 31 to 320 Referred Sales Per Month
In the old Associates Operating Agreement, the tiers in between these numbers would you anywhere from 6.5% to 7%. So if you’re an affiliate marketer that refers something within these numbers of sales each month, you’ll find that the 7% categories will give you either the same or a bit better payout. These are:
- Amazon Echo and Fire TV Devices
- Apparel and Shoes
- Jewelry, Watches, Handbags & Accessories
Middle-High Tiers: 321 to 1570 Referred Sales Per Month
Within these numbers in the old pay structure, you would be receiving between 7.5% and 8% commission. So any 8% category would be viable for you to continue with, including the following:
- Home Improvement
- Lawn and Garden
- Pet Products
The Highest Tiers: 1571 to 3130 Referred Sales Per Month
With the old fee structure in Amazon, these numbers of referred sales could get you between 8.25% and 8.5%. As you might have noticed, this was the top tier in the old pay structure system, and was the highest commission possible to achieve with Amazon Associates.
However, that is no longer the case.
Now, with the new category system, you can actually get a 10% commission on sales! And that is right from the get-go, without having to build up the readership and referred sales over time.
So what’s the catch? This 10% commission is only available in three categories:
- Digital Video Games
- Luxury Beauty
- Amazon Coins
So, to get the best commission possible, your affiliate marketing blog would have to somehow refer back to one of these categories. (If you’d like more information about Amazon Coins, check this page. It’s basically digital money to use within the Amazon Appstore.)
The point is this: whatever tier you in were before, it’s still possible to achieve the same commission percentage, or even a better one! Everything depends on the category that you have chosen to write about.
But what if your chosen niche is now at a significantly lower commission percentage than what you were earning before? How can big affiliate marketers who are seeing losses recover from this change?
How Big Affiliate Marketers Can Recover
It’s obvious that many established affiliate marketing blogs are really going to suffer after the changes that Amazon has made. In fact, many of you have probably already seen the effects of the new Associates Operating Agreement on your revenue for March.
So, what are some tricks and tools that these big affiliate bloggers can use to recover from the changes that Amazon has imposed? Let’s take a look.
Mixing and Matching Categories
We talked above about how new bloggers can shift directions slightly to adjust to these changes, making sure that their blogs include an affiliate marketing category that still gets a good rate on Amazon.
Can this work for established affiliate marketing blogs as well?
Let’s take an example. Suppose you were a top-tier affiliate blogger in the old system, and your category revolved around beauty products. This means that, as of March 1st, your fee rate went from 8.5% to 6%. Obviously, that’s not ideal.
So, how can you improve that fee rate? The best choice for you would be to switch to luxury beauty, a category that earns 10% commissions.
However, now there are other factors to consider. Would you lose readership if you switched gears entirely? How much of your audience is actually interested in luxury beauty products as opposed to regular (less expensive) beauty products?
It might become clear to you that your readership will suffer by changing directions completely. However, it’s still possible to take advantage of the higher commission that ‘Luxury Beauty’ offers. How?
It’s time to mix and match. Instead of switching your entire blog over to luxury beauty products, mix in an occasional affiliate link. Perhaps write comparison articles that pit luxury beauty products against normal beauty products. Try to compare different makeup, face creams, hair styling tools, etc. Or, talk about the best products in different price categories. What is the best budget hair straightener, and what is the best luxury hair straightener?
By including both your previous categories and a smattering of the higher-commission category, you’ll be able to reach a happy medium.
This is actually possible for many of the categories with a lower fee rate. Quite a few of them are easy to connect to higher commission categories. Thus, you’ll still be getting almost equal to what you could have before, and some may even get more!
That being said, it’s obvious that some established affiliate marketers will not be able to bounce back so quickly. So, for these Amazon Associates stuck in a low-commission category, what other options are there?
Take Advantage of Special Program Fees
Amazon runs what are called Bounty Events which can earn extra fees for any Amazon Associate. Marketers looking to make back cash they’ve lost from a lower commission may find that these Special Program Fees could be worth their while.
Amazon’s website describes the process in detail. Basically, when an eligible customer follows your affiliate link and completes the ‘Bounty Action’, you get a special bonus. These bounty actions include signing up for a free trial of Amazon Prime, buying an audiobook on Audible, creating an Amazon Baby Registry, etc. The special bonus is not a percentage of anything, but instead a set dollar amount.
Here is the chart from Amazon describing the current Bounty Events and Special Program Fees (but remember, they reserve the right to change this whenever they feel like it):
Should You Change to a Different Affiliate Program?
It may become obvious to some Amazon Associates that the methods mentioned above are just not possible for them and their business. Some have found themselves stuck in a low-commission category, earning even half of what they would have before. For some of these, there is no way to increase their fee rate while using Amazon Associates.
So the question arises: does it make sense to switch to another affiliate network?
This is up to each individual website owner to decide. I highly recommend crunching the numbers before you do this, and making sure that changing to another affiliate program will still get you the payments that you expect.
If you do decide to switch to another affiliate program, you might start by looking into one of these two networks:
This network boasts over 4,000 different merchants, ranging across many different categories. Thousands of these merchants are exclusive to this website. Their commissions are reasonable, and differ from brand to brand. If you were a top-tier affiliate marketer with Amazon Associates, then you can easily achieve the same commission that you were making before by switching to ShareASale.
– CJ Affiliate
Formerly known as Commission Junction, this affiliate network boasts the title of #1 affiliate network of choice. It is certainly one of the oldest affiliate networks around, and one of the largest available. Affiliates who work with them say that the payouts are timely, and there is an incredible range of retailers that work with them.
Also, it’s possible to find affiliate marketing networks that are tailored to your niche. For example, if you write about travel, you can join Booking.com’s affiliate marketing program and refer your readers to the hotels listed on their website.
Of course, switching to another program doesn’t have to be done in one day. You can also move gradually over, testing different methods and ensuring that your new affiliate program is working out as you hoped. Although this may mean accepting a lower revenue from your website for a few months, changing gradually will ensure that you don’t lose out in the long run.
How to Stay Afloat During Change
It’s never easy when things change. We often get comfortable once we’ve set up a system that we enjoy using and that works well. However, sometimes change is not dependent upon us. Unfortunately, many affiliate marketers are learning this lesson the hard way with the recent changes to Amazon’s affiliate marketing program.
So how do we make sure we don’t get burned again? The answer is simple: don’t put all your eggs in one basket. In other words, if you’re looking to make money from your website, don’t just rely on one source of income! There are many different ways to make money with a niche website, including advertisements, selling digital or physical products, and more!
The key is making sure that you have a backup plan. By using multiple monetization methods, you’ll have a fallback in case something fails.
Right now, it’s time for Amazon Associates to take a serious look at their niche website and see what they can do to ensure continued revenue. However, as we’ve seen, all is not lost. In fact, for some this may be a time of great opportunity! By taking advantage of the methods provided above, you can stabilize or even increase your income from you niche website.