Negotiating affiliate commission is one of the most underutilized tactics to increase your websites’ affiliate revenues.
Traffic is the first thing people look at when trying to increase affiliate earnings. This equates to more content, build links, etc. And then there’s conversion rate optimization (CRO).
Some affiliates decide to delve into the world of CRO, but get quickly frustrated after staring at code and statistics.
But the most underlooked way to massively increase your affiliate income is to renegotiate commission terms. You don’t have to deal with algorithms or equations; just people.
Here is what this article will cover:
- Formula to calculate affiliate commissions
- Growth levers
- 3 step framework for negotiations
- Case studies
- Common questions
I am collaborating with Austin Tuwiner, who owns a portfolio of niche websites to chime in as well. Let’s get right into it.
👉 Tool: Caculator To Estimate Affiliate Commissions
An extremely basic formula that determines how much an affiliate property makes is:
All of these variables have a multiplicative effect on each other, and should be maximized.
Here is a calculator you can utilize, or check out the logic behind the Amazon earnings calculator:
Let’s go through a few examples:
Example Calculations
If you send 1,000 visitors per month to a brand’s page, the offer converts at 5%, and pays 10% commission on a $100 product, then you’ll earn:
But if you negotiate the commission to 12%, the new earnings is:
So even if a company pays you 10% commission, and you manage to negotiate it up to 12%, it’s a 20% multiplier on your earnings, not 2%.
Which components are growth levers?
It’s important to understand which components within the formula are controllable and not uncontrollable.
1. Traffic to offer page (controllable)
Sending more traffic to the affiliate offer is a function of how much traffic is coming to your website’s page and the clickthrough rate (CTR).
You can increase traffic to an offer by flat out growing the traffic to the website/page via more content and/or backlinks.
However, this requires significant investment and time to see the results. It’s not an easy win.
2. Conversion rate (Uncontrollable)
This is the e-commerce brand (or Amazon) conversion rate. This is not in your control. It’s a combination of the industry average conversion rate plus how well optimized the brand is. You need to keep track of this though.
It may be that with two offers being equal, one of them converts better than another. Then it’s a matter of switching them in your articles.
3. Commission rate (Controllable)
You can control this. This is what you can negotiate based on what benefits you can provide to the brand.
4. Product price (Uncontrollable)
This is the listed product price and something you cannot control.
👉 3 Step Framework For Negotiating Affiliate Commissions
I follow this 3-step framework. It’s a back and forth process via email.
Step 1: Identify Your Pages
The first step is to identify which pages on your site are ideal candidates to showcase the product/service, or pages that are already showcasing the product/service. Create a shortlist of the article URLs and also obtain any traffic numbers from Google Analytics.
You may need to obtain screenshots showing the traffic over time.
Step 2: Initial Email To Test The Waters
After I’ve identified pages and the offer, I reach out to the brand with the following email. This email is for new brands only:
If you already have a pre-existing relationship, you can test the waters with this email:
Step 3: Value-Add Opportunities
If the above email works the first time, you’re set. However, most likely they will counter and ask what can you do for them in return, or how much are you looking for in payouts.
Here are some ideas I’ve implemented that you can pitch to them to get the deal done:
- Higher product placement in comparison tables
- Dedicated product popup
- Social media blasts
- Email list blasts
- Hands-on product reviews
- Guest post article
Offer them one or more of these. The end goal for the brand is more traffic. Any of these will get them more traffic but some are immediate wins and some more long-term.
👉 3 Successful Case Studies for Higher Payouts
Let’s review the case studies.
1. Long-Term Loyalty Leads to Higher Commissions
In this example, Austin reached out to a company that was already listed high on his site’s comparison tables and affiliate pages. He already had an existing relationship with them and directly asked for a commission bump.
Here was their response:
It worked because he was one of their largest affiliates (for over a year), and had never asked for a raise before. He was able to get away with not offering anything value-add in return due to the long-term relationship built with the company.
2. When to Call it Quits (Or A Deal)
Companies have a set acquisition cost for what’s profitable for them to acquire a customer at and set their affiliate commission relating to that.
A basic formula to identify a customers LTV is the following:
Most companies will have a pretty solid idea of this number and refuse to make any deals above this rate. There are a few exceptions like when brands are pushing for mass brand awareness or market domination, but it’s not super common.
In another example, Austin was setting up a deal with a company not yet listed on his website. He proposed a 25% commission rate to be listed in the #1 position. Unfortunately, their profit margin (Customer LTV) did not allow for that as can be seen in the email response below.
But Austin was persistent and then countered back 17.5% and landed the deal.
3. Use Data To Request Higher Payouts
Data is king. If you have a pre-existing relationship with a brand, use the affiliate sales data from THEIR platform partnered with your traffic data to showcase value.
On my dating site, I usually do a commission bump request every 6 months with existing affiliates. Read more details in this case study.
In short, I pulled data on two of my networks. The results were as follows:
- Primary affiliate: generating $5,000/mo average at $57 CPA
- Secondary affiliate: generating $2,000/mo average at $80 CPA
After a bit of back and forth, the networks obliged and increased rates as follows:
- Primary affiliate: $57 CPA to $60 CPA. Increase of $150/mo average.
- Secondary affiliate: $80 CPA to $85 CPA. Increase of $200/mo average
👉 Common Questions With Negotiating Affiliate Commissions
Here are some common questions I’ve been asked throughout the niche website case studies I’ve done.
Why does this commissions negotiations even work?
A few major reasons:
Brands have a TON of competition: They spend a ton of money on paid advertisements whereas niche website publishers are sending them warmed-up visitors at a fraction of the cost. They want to keep you on their side.
Your site’s traffic is increasing over time: Your commission rate is usually locked when you start the relationship. So over time, you are sending them more traffic but not getting a reward for doing so. Re-negotiations are key.
Does this work with Amazon Associates?
Yes! But you have to be more creative. Read more about the various strategies with Amazon brands in this article. To summarize, you have to use Amazon’s new Attribution platform or use a dedicated affiliate tag to track sales and then send invoices at the end of each month for the additional commissions.
How do I get leverage when re-negotiating higher commissions?
You have all of the leverage as the publisher. You own the traffic that drives sales for the brand. However, data is key here. You need to track your traffic (use Google Analytics), and correlate that with affiliate sales via tracking IDs so you can let the brand know which pages generate sales. Getting your data organized will give you the leverage needed.
How do I get leverage without proof of traffic?
This is harder. If you have a landing page on your site with not traffic (e.g., it’s a new page), and you are trying to ask for higher than advertised affiliate commission rates, it’s a difficult ask. The best approach is to first get the article ranked and bringing in traffic. Remember, traffic is your leverage.
The brand keeps rejecting my offers. What do I do?
It happens all the time. I’ve been rejected by many brands for commission increases. It boils down to these factors: (1)There is no more margin to payout further commissions, or (2) you are not sending them enough traffic.
If you get rejected, clearly ask the affiliate manager, what is needed to get an increased commission rate. They will clearly let you know. Most affiliate managers are paid out in part via sales commissions. It’s in the manager’s best interest to ensure you send more leads.
👉 Wrap Up: Go Negotiate!
Overall, negotiating affiliate commissions is one of the quickest and easiest ways to increase your affiliate asset income.
People don’t like confrontation, so sometimes neglect this powerful method of increasing your affiliate earnings.
But the affiliates who are not afraid to barter will have the biggest website flips.
