Losing $115,000 with an Amazon Affiliate Site - Niche Site Case Study on youtube

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. .