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Amazon Pull-Back from Affiliate Offers Prime Opportunity for Advertisers

Apr 23, 2020
Written by Amalia Thomas

Amazon’s widespread cuts to their affiliate program went into effect this Tuesday, April 21, creating waves across the ecommerce and affiliate industry.

The commission rates of ecommerce giant Amazon were slashed from 6% to 3% in beauty, 8% to 3% in home goods, and 5% to 1% in groceries. These drastic commission cuts—by 80% in some categories—come as Amazon shifts focus to only essential goods and as supplies are strained due to the COVID-19 global pandemic. This decision is not isolated to Amazon. Walmart also indefinitely suspended its affiliate programs with major publishers, content commerce, and influencer sites. Our calculations estimate Amazon’s immediate changes will affect at least $300 million in opportunity lost—likely much more as everything progresses.

A Prime Opportunity for Advertisers

In today’s “new world order” as larger players struggle to keep up with increased demand, now is the perfect time for advertisers to adapt to meet consumer need and take back market share. Consumers are looking for alternatives where Amazon and Walmart are no longer meeting their needs—unavailable products, significant increase in delivery times, etc.—and they're ready to switch their dollars. Affiliate marketing not only offers advertisers new and additional consumer reach through the loyal audiences of publisher partners, it's also a fully transparent and outcome based channel that enables deeper insights into customer behavior, so brands can quickly adapt to respond quickly to their changing needs.

Brand Strategies for Changing Times

Get ahead of the products and categories consumers are focused on. At first it was home goods, athleisure, and home entertainment. Soon consumers will be shifting into summer vacation—a vacation season that will look different than it ever has. As seasons change and people’s needs evolve, advertisers need to get in front of it.

Consider the price-conscious nature of today’s consumer. With the current volatility of the economy, consumers are more price sensitive than ever before. They will be drawn to attractive discounts and offers.

Ensure shipping and fulfillment strategies meet the need. Consumers have been disappointed with long wait times. Consider faster shipping options and/or free shipping offers. For brands that can offer it, implement buy online and curbside pick-up.

Pay close attention to markets that are re-opening. In China, consumer shopping has seen a resurgence in what some outlets are calling “revenge buying.” This could be an opportunity, especially for luxury and beauty retailers, to leverage these markets as part of their recovery strategy now.

Action Items for CJ Advertisers

Here are some practical things advertisers can do with their CJ Affiliate programs right away, to help set them up for success:

Understand your program and optimize accordingly. Our newly launched Customer Analysis Dashboard gives insight into the KPI’s per customer status that publishers are driving for their program, and offers a great way to analyze what publishers are doing in each segments.

  • Customer Acquisition: Use introductory offers for new customer acquisition. A whole new share of potential first time consumers have emerged, and advertisers can quickly access these consumers with offers that are specifically geared towards them.
  • Customer Retention: Pay attention to and take care of your loyal customers. Where Amazon and other large players have struggled to meet the demands of long-standing customers, brands should lean in harder to their loyal consumer base and target offers that address their needs.

Ensure shipping and fulfillment strategies meet the need. Consumers have been disappointed with long wait times. Consider faster shipping options and/or free shipping offers. For brands that can offer it, implement buy online and curbside pick-up.

Stay competitive and strategic with commission structures. Publishers are looking to switch their links out ASAP. Make sure your offerings are competitive to attract publishers looking for brands to fill the Amazon “void”. Consider optimizing your program with increased commission at the category or SKU-level while other major retailers are not paying publishers for these categories.

Optimize profile for keyword searches. Add product keywords into your Network Profile so publishers can easily find you using a keyword search as they look for products in the categories where Amazon reduced commissions. For example, advertisers who sell pet products are not solely pet retailers - department stores or online malls also sell these products but should add pet-related or product names to descriptions, so they appear in keyword searches in the advertiser search.

Take care when reviewing publisher applications. We're seeing an unprecedented amount of new publisher sign-ups in the last month as new publishers are embracing the affiliate model. Advertisers may see more applications from publishers that are new to the CJ network with no performance history. Don’t make the mistake of mass declining publishers; take a few extra minutes per application to read the publisher description—these new relationships may end up being top performers in no time. As we’ve proven, publisher recruitment is vital to long term growth.

Conduct a product audit. Many product focused publishers switching over from Amazon and advertisers in the CJ network can leverage solutions such as Product Feeds and the Product Search API to allow publishers to quickly search for relevant product names or UPC codes. Our Developer Portal provides documentation for our API and Feed specifications.

The Time to Act is Now

More than anything, advertisers need to act quickly. Amazon has created a vacuum in the affiliate market, and savvy brands are already making moves to attract publishers that are switching links over. Work with your CJ Affiliate team to ensure that you’re doing the same, so they can begin driving their Amazon revenue your way.

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