Losing $115,000 with an Amazon Affiliate Site – Niche Site Case Study (Project Go White Hat)

– Most people, they just
share their highlight reel. They share their success
stories and really sort of the exception cases that
they’ve experienced. It makes them look really good. Well, I often share
stories where things didn’t quite work out. This is one of ’em. This is a story about how I lost 100K on Amazon affiliate marketing. I’m not gonna lie. It stings a little bit,
but, I think it’s a useful story to tell, and
we’re gonna look at sort of the deeper things like risk
management and how to deal with making really
tough decisions that are potentially you know, huge
amounts of money if you make the wrong decision. And, you don’t even know if
there is a right decision at all, anyway. My name is Doug Cunnington,
I’m the founder of Niche Site Project. I talk about Amazon
affiliate marketing and internet marketing in general. And project management
because I’m a project management professional. Alright, let’s get into
this hundred k loss story. This is the story of project go white hat. If you are familiar with
the story, you kinda know the high points, I’ll kinda
mention what was going on. But, basically a business
partner and I were working on a niche site, an Amazon
affiliate site we were planning on selling. The whole project was around
taking certain backlinks, grey hat backlinks that
Google doesn’t like, these are private blog network or pbn
links and replacing them with links that Google does like. These are white hat guest post links. So, that was sort of the plan. We were gonna replace these
bad links with good links and then sell the site. The site, it was quite profitable. It was making about 10
thousand dollars a month, and we actually got it up
to about 32 thousand dollars a month, over 32 thousand
dollars a month for one month, I guess we did it for one month in December of 2016. Whole other story in another video. So, I’ll place the link to that below. Here’s what happened with the project. Everything was going fine,
I started working with Rob in like September of 2016 or so, and I developed a plan
that we were working through. Of course you know Rob and
I developed it together, but with my project
management background, I spent you know, most of the
effort on the plan and then implementing a lot of it. The main effort was around
you know, getting backlinks, getting new backlinks and
that was my specialty. And that’s why I was on the
site in the first place. So, everything was fine and then March of 2017 rolled around. If you had an Amazon
affiliate site in 2017, around that time you know
that Amazon changed the commission structure in the
Amazon associate program. So, previously, there was a
component that allowed you to make more commissions
based on the volume of products you sold. That was now removed, and
the basis for the commission was now what category the
product was sold from. So it was a major change
and in general, if you were already established as an
affiliate, it made your revenue go down. And if you didn’t start yet,
it didn’t matter, right. It was sort of transparent. It’s still a fantastic
program, the Amazon associate program is probably you
know, in my opinion, the best one out there. It’s generally the only
one that I work within, and in this case, our effective percentage that we were paid out went from
eight and a half percent to about five and a half percent or so. So that means our revenue went
down by 35 percent overnight. It was very dramatic and very sad. And essentially, this
impacted us by about 115 thousand dollars. That’s a conservative
estimate, but about 115 thousand dollars. And let me explain how
I got to that figure. The site stopped making as much money. As I said, it went down
by about 35 percent. Which was dramatic. We sold the site for 235 thousand dollars. So if you do the math and
figure it up, if we didn’t have that 35 percent drop,
we could’ve sold the site for about 350 thousand dollars. So, that’s 115 thousand dollar difference, which is very sad. Especially to say it out loud. Now, here’s the deal. Like, Rob and I were working
on the project for months and all of a sudden, the
rules of the game changed. So, this was, you know,
at first, risk mitigation. We were trying to make
sure we were doing the right things as we were
working on the project. But at some point, this
risk, a potential thing that could happen became an issue. And this is all about issue mitigation and making tough decisions
when you don’t have all the information available,
and in this case, the rules of the game changed. Our, the value of our
site changed overnight. It is part of the risk of having an affiliate business, right. You don’t control the affiliate portion. The company can go out of business. You know, that probably
won’t happen with Amazon, but if you’re working
with a smaller affiliate, maybe a small, individual company. The company can go out of business. The company could be
sold for example, and if that happens, the new owner
maybe doesn’t wanna have an affiliate program. Maybe they wanna bring it
all in-house and get rid of all their affiliates. So, things can change, you
just don’t control that portion of the business. That was the case for Rob and I. So, we talked about it, you know. We, we don’t have a board
or anything we had to discuss it with, we just
talked to each other about it. And, Rob and I are friends, we’ve known each other for years. So we individually brainstormed
the options that we had. We narrowed it down to two main options. So the first option was to
try to recover the earnings through getting more traffic
and expanding the site. Option two was to sell the site as it was. Just move forward with
our original plan and take the hit in the revenue. So, there were pros and cons for each one. And you know, some of the pros
for recovering the income, well of course, the pro would
be we could sell it for more. And the cons were we don’t
know how long it takes. We don’t know if it’s you know, feasible. We didn’t know if we were interested. Just from a you know,
interest perspective of like what we wanted to work
on and what would help us grow as businessmen. Stuff like that. And then of course selling the site as is. We take the hit on the
money, that’s the major con. But, on the pro side, we
accomplished you know, what we wanted to. We finished the project. And we moved forward with
you know, what we believed was you know, the best option. That was to sell the site and
just not make as much money. So, for us, the you know,
selling the site for 235 versus 350, it wasn’t that big of a deal. I mean, we wanted to sell the
site for over six figures, which we were going to do. Now, the other thing to
keep in mind is we worked on the site for several months. So, when you work on a
project for awhile, it’s very interesting at first, it’s novel. And as you work on it, it
becomes less interesting and boring, and depending
on what it is, you may just wanna move on. For Rob and I, we wanted to move on. We weren’t particularly
interested in you know, hammering the site trying
to get the revenue. To you know, move up in
you know, a few months. And then the other part is
we just had other interests. So we just didn’t care. So we were ready to sell the site. Okay, so now I wanna sort
of back up and give you some information on risk
mitigation and dealing with issues and in this case, it’s
just a niche site, right. But the value is quite
high and the consequences of a decision or an issue
arising, it was quite high. So in this case, over six figures. Couple things to keep in mind. Number one. Don’t panic. People that are panicked
are usually not making great decisions, and
you should just be calm. You should probably try
to remove emotion as much as you can, and especially
with this business perspective. It should be easy. I mean, you’re making a business decision. You’re not trying to
do something else where emotion and other things
should come into play. Now you can’t completely suppress it. It’s probably not advisable
to completely suppress your emotions, but when
you’re looking at a business decision, treat
it as a business decision. We probably can relate
to like, buying a new car or something and the
sales person has the tools and the information to
potentially manipulate you. And get you to make an emotional decision. So their commissions will be higher. So you want to remove those
sort of things from it. So, limit your emotional
sort of input for now. A very sort of systematic
way to look at it is to list out and brainstorm your options. Even list out the crazy
ones, because, you know, brainstorming is about getting
ideas out of your head. Don’t try to evaluate ’em
before you write ’em down. Just brainstorm as much as you can. The reason why is you may
get a nugget of wisdom in one of those, you know,
crazy ideas that you have. Those crazy ideas could
pan out to be not so crazy. Especially if you can
get like a little nugget of a good idea out of a crazy one. And then pair it up with
something more practical. So, don’t edit yourself
until you get the ideas out of your head. And finally, the third
thing is you know, once you try to limit your emotion and
you’re brainstorming ideas. You list the pros and cons. Discuss it with your
partner or whoever else you’re working with. Maybe you can bring it
to a mastermind group to get their input, that’s
a good idea as well. Once you’ve done those first
two steps, which should take some time, sleep on it first. You know, make sure you
have some time separation. But then, if you’re still
totally confused and you’re not sure what
decision to make, you can go with your gut. I mean, there’s probably a
reason, a specific option feels better than another one. So, maybe there is some emotion but I hope there’s some you know, logic. Some of the brainstorming. Things that are contributing
to that gut feeling. But you can go with your gut. And a lot of times, your gut can be right. Alright, the question of
the day is what would you do if you were in the same
position as Rob and I? Would you have kept pushing the site and kept the site until it
was making more money? Or would you just sell it like us? Or something else? Let me know in the comments below. Really interested to hear
what other people would do if you were faced with
the same sort of issue. And you know, devastating six figure loss. Thanks. I’m Doug Cunnington
from Niche Site Project. Take a look at some of the other videos. And if you like what you see,
please consider subscribing. Thanks.


Add a Comment

Your email address will not be published. Required fields are marked *