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How publishers are thinking about affiliate commerce in 2021

How publishers are thinking about affiliate commerce in 2021
Written by publishing team

In theory, affiliate trading is easy money.

All a publisher has to do is drop a link to a product in a piece of relevant content and wait for an interested consumer to come across and bite. Any sales result in a small commission to the publisher without having to lift a finger to package and mail out any product they just helped sell.

At the start of 2020, 43% of the 135 publishers who took part in a Digiday survey about their goals for the next year said affiliate commerce was not a source of revenue for their companies. By the beginning of 2021, the number of publishers not making money from affiliate links had fallen to about 34% of the 181 participants during the survey’s second annual iteration.

This low-effort business has been a saving grace for many publishers during the lowest stages of the coronavirus crisis, but in 2021 some are starting to build on how to make it more profitable and strategize on how to make it more profitable as the e-commerce boom continues to grow. .

With all that said, the Digiday 2021 survey also showed that interest in affiliate commerce as a business has fallen slightly from the previous year, dropping from being a moderate focus for 39% of respondents in the 2020 survey to 36% of respondents in the 2021 survey.

It turns out that it takes a pivotal mindset.

“It’s not easy for publishers to optimize for,” said Neela Ali, Vice President of Commerce at BuzzFeed, who came from a background in fashion retail before moving into the digital media space. “You have to think like a retailer and not every media company can wake up and start doing that.”

Some local media outlets and newspaper-focused publishers see an opportunity to earn trade revenue from affiliates, but it is still a secondary source of revenue.

“When we strive for everything we can get, it makes sense. As a percentage compared to ads or subscriptions, it dwarfs those. But it’s worth doing because it funds our journalism,” said Colin McMahon, chief content officer at Tribune Publishing. .

Here is a summary of the top affiliate commerce trends that publishers are tracking in 2021.

What is behind the links?

Commissions made from affiliate links are an easy “set and forget” job for publishers. They can incorporate links into product reports or product reviews that they were planning to publish anyway to make a little extra revenue in a way that serves the reader, but there are limits to how much a publisher can actually earn.

Commission rates from retailer affiliate rates range anywhere from 1 to 20% for publishers, depending on the product category and type of deal a media company can strike, according to Samantha Ski, CEO of SHE Media. She said adding affiliate links to editorial commerce content and product reviews is at the low end of that range.

To increase pricing, Sky said its team has begun selling retailers on branded content packages that focus on specific products and include affiliate links. This hits the top and bottom of the conversion funnel ad goals for marketers and allows SHE Media to earn both guaranteed revenue from writing posts as well as incremental revenue from any commissions earned from sales. The commission rates themselves also tend to be higher than standard affiliate rates, she said.

Trusted Media Brands has also experimented with a hybrid business and advertising model that turns display ads into shoppable posts on their sites. These affiliate rates usually fall between the 5-10% range, according to a report from Digiday last year.

Because of this model, the relationship between commerce and sales teams has changed and conversations with potential advertisers have begun to include more first-party consumer data than before.

AllGear, a division of Lola Digital Media that publishes several outdoor product review sites, has significant ownership of certain categories of search terms. For example, 40% of people in the world who search for the “best rain jacket” will subsequently click on a review by AllGear, according to group strategy chief Stephen Reginold.

This information was started to be used by the publisher’s sales team to lubricate the wheels for further sponsored reviews and mixed deals.

Some of the big publishers, like Meredith, have a range of dozens of brands to integrate affiliate links into content and generate significant revenue. During the company’s second quarter last year, which ended December 31, the company generated $27.7 million in profit from its e-commerce operations, a 26% annual increase over the same quarter a year earlier, according to its latest earnings report. .

While ad deals and hybrid commerce is an area that is also growing for the company, the primary effort this year is to continue to produce affiliate-based content, according to Andy Wilson, Meredith’s vice president of consumer revenue, e-commerce and paid consumer products. He added that contrary to what other publishers have reported, this type of content usually brings the higher end of commission rates.

Another area that publishers are exploring is posting on site, or asking for reviews that live on retailer’s product pages. Over the past year or two, most publishers Digiday interviewed for this story said they were part of Amazon’s program to do so.

AllGear doesn’t get paid to write reviews, but it does get a commission from sales at a rate similar to traditional affiliates. The big difference there is, Reginold said, is that readers of the reviews on the site already have a high incentive to buy, so the conversion rate is higher and therefore more revenue goes back to the publisher.

“There is a great deal of editorial integrity and objective reader conversations about this,” Reginold said. As a journalist, I don’t just want to write ‘cool, buy this’ articles on Amazon, we publish objective reviews, but they motivate publishers to be positive. [with the retailers] Try to lubricate the sled for these sales.”

Right now, AllGear’s GearHungry creates three to five posts per week for Amazon that are essentially the same as their editorial posts, but are edited and formatted differently, according to Regenold. This business represents a “big revenue bucket” for the brand and his team is currently in talks with other retailers to start this business elsewhere.

Publisher Markets Come Online

Increasingly, publishers want to become a one-stop online retail store with their own editorial-driven marketplaces.

Having seen its merchandising revenue increase 67% year-over-year from 2019 to 2020, BuzzFeed is working to relaunch the BuzzFeed Shopping tab by the end of the second quarter as a destination for Gen Z and Millennial shoppers.

Ali said the site will feature an improved search function that will allow readers to search based on product and brand, as well as allow customers to purchase from a variety of retailers without leaving BuzzFeed with a new checkout function.

“We want BuzzFeed to be the point where your shopping journey begins,” Ali said, but rather than copying the “tried and true” network of products like most online stores do, BuzzFeed Shopping will remain content-based and focus on reviews and reports that publisher readers know.

Ali added that this new model will open BuzzFeed to new sponsorship opportunities as well, a similar approach Group Nine has taken with its online marketplace Swipe.Shop that gives sponsors the opportunity to appear within the platform.

The surface is barely scratched

Local media publishers are still largely running their commercial content business, while others have taken a step back entirely.

Local newsletter publisher 6AM City, which has outlets in seven cities in the southeastern part of the United States, is spending 2021 trying to figure out what a hypothetical market for its business might look like.

6AM City’s mission is to create a positive local economic impact, according to its chief operating officer Ryan Heffy. By the end of the second quarter, he said his team is working to launch its variety of affiliate businesses that serve as a central marketplace on its site for local businesses in the communities it covers. The team is using its earnings from 2020 to create the technology to drive the platform.

Currently, the publisher’s business consists of paid posts on community event boards. That alone brought in $200,000 last year without any upgrade, Heavey said.

Other local news publishers have bought their way into the affiliate business by acquiring product review sites.

In February 2018, Tribune Publishing bought a 60% stake in product review site BestReviews for $66 million that was supposed to give the company an entry point into an affiliate business. Less than two years later in December, Tribune (and BR Holding, which holds the remaining 40% stake in the company) sold the site to Nextstar Media for $160 million, earning $96 million from that deal, according to the Chicago Tribune.

Tribune Publishing still has subsidiary commercial revenue coming in after sales, but has not been tasked with the operational supervision and overhead of operating BestReviews.

McMahon, who is also the editor-in-chief of the Chicago Tribune, said the media company has a content licensing agreement and a revenue-sharing arrangement with Nextstar. He said the publisher is still able to publish BestReview content on its nine news sites and earn a commission from sales attributed to its readers.

McMahon declined to share the exact terms of the revenue share, but said the deal is a long-term agreement.

“The vast majority of our e-commerce efforts are done through BestReviews and will remain that way,” McMahon said. And while the deal is only six weeks old, he said he expects continued revenue sharing with BestReviews to keep Tribune’s business going even over the past year.

However, McMahon does not limit Tribune’s ability to generate commercial revenue from its relationship with BestReviews. He said he is actively exploring different affiliate partnerships for locations that will feel like it Reader Membership.

USA Today is looking to further expand its product review site, which was purchased by network parent company Gannett in 2011 for an undisclosed amount.

Since integrating affiliate links at the end of 2017, the site has increased its revenue by more than 50% year-over-year over the past four years, according to the site’s general manager Chris Lloyd. He said that all this growth is attributed exclusively to the affiliate business, and the affiliate business now makes up 75-80% of the total review.

Recently, Lloyd’s team began incorporating reviewed content on other local news sites into the USA Today Network. And over the past 12 months, the ‘Reviewed’ audience has doubled in size as a result of content sharing. Editors of more than 300 local news sites can select which posts to include on their sites via the company’s corporate content management system.

“It gives them a chance to get content they wouldn’t produce themselves,” Lloyd said.

Any commissions earned on sales made on local newspaper websites are mutually beneficial from a revenue standpoint, though he declined to share revenue share details.

‘We have barely scratched the surface on the domestic side. There are still plenty of opportunities for us to increase the distribution of our content across this giant network,” said Llyod.

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