According to one affiliate marketing specialist, Google’s AI overviews reduce traffic to content and buyer guides by as much as 50%.
Paul Cunliffe, who works with publishers on their affiliate channels, described the arrival of AI Overviews as a “real challenge in the affiliate space at the moment”.
Publishers can earn affiliate revenue by linking to products and services and receive a commission when readers make a purchase by clicking a link.
Cunliffe was speaking at Press Gazette’s Future of Media Trends event in London on Thursday for a panel on licensing, affiliates and retail revenue streams.
Cunliffe, former managing director at Shortlist and director of affiliates at Time Inc UK, said Google’s AI Overviews, which last year began summarizing content from across the web at the top of search results, has “significantly reduced traffic to buyer’s guides and review content”.
He said that in some cases this has an effect of “as much as 50%”.
[Read more: AI Overviews cutting publisher clickthrough rates by 50%, new report finds]
“So this is a set of content that has been highly optimized for searches for years and suddenly gets hit with a huge drop in traffic, a corresponding drop in affiliate revenue of 20-40% in some cases, which is really a huge hit…
“With that, you also get a drop in commission rates because you’re not referring as much traffic to those retailers and not as many purchases are being made.”
Publishers told ‘to optimize everything you have’
Cunliffe said this is why he believes the “fight” against Google’s AI products is important, citing a legal challenge filed in July by groups including the Independent Publishers Alliance with the U.K. Competition and Markets Authority.
The CMA has just designated Google as a technology platform with “strategic market status” in relation to its search products, including AI overviews and a separate AI Mode generative search function, which will allow the regulator to implement new rules and regulations.
[Read more: How to grow publishing revenue in a world of declining traffic]
“In terms of your content, I would like to optimize the most of what you have, so make it work a lot harder.”
Cunliffe said the industry average click-through rate is about 4%, but the New York Times tests and reviews of the Wirecutter brand put it closer to 40%, so “there’s still a lot of catching up to do.”
He said this can be done by “going deeper rather than broader on content – so go deeper into categories, rather than covering more and becoming more niche.
Cunliffe advised publishers to also look at “the hierarchy of the information on your pages. We’re often still stuck in the way magazines handle reviews.”
Personalization could be the “next rung of the ladder” in the affiliate space, Cunliffe said.
He said that two people “would be recommended the same headphones, but we have different needs, and personalization is something that doesn’t happen here.
“Nobody has really discovered yet how we can reflect that…”
Why New York Times Wirecutter is a leading player in affiliate revenue
Cunliffe also explained why Wirecutter is doing so well, citing its “unique focus in terms of what it does”, including the fact that it is “incredibly ad-lite”.
He said the click-through rate is at 40% “because the trust signals are extremely high and the content is extremely thorough.
“The average length of a Wirecutter article is about 4,500 words, so when they test something, they really test it, and you see a lot of confidence signals from the top of the article to the bottom.
“There’s no reason why, if you’re in the US and want to buy headphones, you shouldn’t go to Wirecutter. They’re the best place to get that information. There’s not really a UK alternative to Wirecutter.”
He said UK websites such as Techradar and Trusted Reviews contain “a lot of advertising”, meaning they are spread across “many different ways to generate revenue”.
“Wirecutter is about one way to generate revenue and that’s why it works.”
Michelle Myers, Global Chief Revenue Officer at global content licensing agency Wrights Media, agreed that Wirecutter is “killing it from an affiliate perspective.”
She said: “I think the reason, one of the reasons why, is that they have a very strong methodology. And the buyers who buy the licenses want a strong methodology. It’s very important to them because there are so many players in the category.”
US publishers ‘further’ in affiliate revenue than Britain
Myers noted that US publishers are generally “further along” in their investments in affiliate revenue and e-commerce than in Britain.
She said these revenue streams are “a big source of income” for US publishers, “which I don’t see happening in Britain”.
Myers said: “I can see it because we have customers on both sides: the US is further along, I would say, in e-commerce and affiliate – the publishers have invested in internal teams and have grown those internal teams significantly. It’s a great source of revenue for these publishers.
“American culture really changed from a retail perspective when Covid started looking for those editorial endorsements of products and selection for reviews.
“So it has really changed the retail landscape in the US, and those publishers are making significant revenue from that.”
She added that many publishers in the US have created their own commercial content brands, CNN underlines And Forbes vetted”of what I call the mother ship”.
In Britain, names such as Indy Best, whose reviews led to a million purchases last year, and The Guardian’s The Filter, which launched a year ago, were mentioned at the event.
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