E1 Part 1: Adam Smith on the Amazon Wake-Up Call

Hey, welcome to the first Website Investing Podcast, coming at you every Friday.Episode 1 is with Adam Smith from Niche Website Builders, the Niche Website Flippers facebook group and now the expiring domain newsletter Domain Geeks. Adam is deemed one of the 5 website investors you should follow in 2020. We recorded this conversation on 16th April, just a couple of days after Amazon slashed their commission rates. This is part 1 of the episode for free subscribers. Paying subscribers also get part 2 in their RSS feed. The second half of the conversations typically elicit the top insights.I will be submitting this podcast to iTunes etc when we get to ~5 episodes, as believe that dropping with a bunch of episodes increases the chances of the algo recommending it.Sponsored by EzoicThis podcast is sponsored by the Ezoic platform which my main software review site runs on (literally in terms of using their nameservers) to monetize through ads, maximise site speed and gain insights from their big data analytics tool.Part 1 NotesDue to the coronavirus lockdowns, Adam’s portfolio actually did much better in March, from higher traffic and/or higher conversions. But as primarily monetised by Amazon Associates, it was hit hard by the reduction in affiliate commissions announced on April 14th, and would end up down around ~40% if no new action was taken.However, Adam is viewing this as an opportunity to put in place the steps he knew he should have been doing, such as diversifying across affiliate programs and squeezing out the maximum amount of dollars per user.  Rather than try to replace Amazon, Adam is leaving all Amazon links up there and looking at ways to make up the 40% drop. He is finding other affiliate programs / partners and displaying a choice of options for visitors, encouraging them to check the price on all of them to get the cookie. Website investors who figure out how to close the revenue gap have a massive buying opportunity where they can replicate and generate immediate upside. One way is to have a private affiliate deal with a partner in the niche. This gives you the ability to out bid people and overpay the re-priced listing asking prices. Adam’s portfolio is weighted to sports sites and he may consider focussing on niches within sports to build up those private partnerships.  One way of closing the gapAdam downloaded the 2020 to date sales data from Amazon Associates and grouped by sales by manufacturer to see whose products they were selling the most of. He then reached out to them saying the amount they had sold on Amazon, and would they be interested in purchasing some banner ads as their products resonate with their audience. One manufacturer agreed as the products were high ticket ($300-$500) and they had enough margin, and Adam effectively doubled the RPM from ads he was getting (on top of his ad network). On a different site with lower priced products ($29), he reached out to the manufacturer who said they didn’t have enough margin to warrant banner ads. Fair play. But if they want to remain listed as the #1 recommend product on Adam’s site they need to pay, effectively renting / sponsoring the page!  The next-level play is to see if you can help manufacturers get set up on an affiliate network, so you can get a much bigger cut and be their first affiliate (discussed further in part 2).In Part 2We talk about:* Live examples of higher paying affiliate programmes* The benefit of blended business models and how dropshipping could play a part* How we need to reconceptualize product review sites as ecommerce* How we can use demographics to construct portfolios.Part 2 is for paying subscribers, you can access by hitting the button below. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit investing.substack.com