When it comes to online reviews, know that it is no joke, regardless of the endless amount of entertaining and hilarious reviews out there. It means that businesses are taking serious notes of top review sites out there (1).
In today’s digital era and growing market competition, customers are faced with many choices. It is leading them to rely on the ‘social proof’ of what other people are thinking. Online review sites are the perfect example.
These potential customers can find these negative and positive reviews all over the internet. There are thousands of local business review sites and directories online (2). However, some operators are more important than the rest combined. They are even operating with more than 90% margins.
But why review sites are worth so much, and how do they make money?
Where it All Started?
Today’s review sites are a modern spin on Consumer Reports as Consumers Union (3), reporting products and services that people care about the most. Consumers Union is structured as a non-profit organization with a mission to help customers to make informed decisions. However, some also viewed it as a ‘radical threat to corporate interests.’
Previously, the New York Times refused to sell advertising on its publication. It claimed that its product reviews incarnated an attack on legitimate advertising. A House subcommittee even accused them of communist ties in 1940.
At the time of inception, in 1936, Consumer Reports had about 37,000 paying members. By 2008, it had more than eight million subscribers. And according to its May 2020 financials report (4), it has a combined annual income of 191 million USD, 106 million USD from digital, and 89 million USD from print.
There are some clear gusts one can avoid if he is interested in entering the space. The largest Consumer Reports’ most significant line items are 70 million USD in payroll and 27 million in shipping and postage.
It is worth highlighting that today’s review sites spend far less on payroll and printing since they are built for a digital era, dominated by tech giants such as Google and Amazon.
Amazon Associates and Affiliates
The roll-out of cookies in 1994 offered websites a way to track from where the traffic is coming and what happens when it arrives. It has led to a quick surge in affiliate programs.
Within two years since cookies’ creation, Amazon quickly adapted it and capitalized it by launching an affiliate program, Amazon Associates, one of the largest affiliate programs across the globe.
During the period, it paid generous commissions, attracting affiliates that marketed products on Amazon’s behalf. Notably, even today, affiliates drive more than 6% of Amazon’s 2.5 billion monthly visits.
The simple but notable innovation made way for review sites to earn their place in the shopping cart as an alternate to the newsstand.
The Rise of Wirecutter
Google rolled out its ‘Panda’ algorithm update in 2011 to improve the research results quality and disable content farms. Notably, it was a highly effective but controversial SEO strategy in the mid-2000s (5).
During the same period, Brian Lam, a former Gawker media executive, created The Wirecutter. It is a platform that offered high-quality editorial reviews of everyday products.
In an early interview, Lam stated that he wanted to talk about the truth even if he doesn’t have as much traffic. Notably, the sites’ truth-over-traffic ideology fit the new algorithm updates of Google, and it quickly gained traction.
The depth of research made The Wirecutter, now shortened to Wirecutter, stand out against mass media operations. In the same interview, Lam talked about how the site spends between 4 hours to 30 hours of writing per review.
It is also worth highlighting that instead of uploading 100 content a week, like most cookie-cutter sites, Wirecutter churned out only 100 reviews in its first nine months.
In 2015, Wirecutter generated more than 150 million USD per year and collaborated with the New York Times within four years since its inception. Later in 2016, the Times purchased Wirecutter for over 30 million USD, as per the report.
After the acquisition, the first quarterly earnings report by the Times stated that Wirecutter’s other revenues had surged more than 16.2% in the fourth quarter mainly because of the referral revenue associated with the recommendation websites and product reviews (6).
Notably, the New Year Time is not the only media firm seizing in on review site business. Many media platforms are spanning several categories. One can drill down to find that most competing review sites offer content for most industries. It includes everything from software to senior care, pets to pests, and legal professionals to landscapers.
Review sites are part of an over a 13 billion USD global affiliate marketing industry, growing at about 10% per year. In India, the affiliate marketing growth is worth about 96 million USD (7).
In addition to the analysts, several emerging trends in the review sites industry would drive opportunities and growth for players.
Apart from the COVID-19 boom in e-commerce, which witnessed ten years of ecommerce growth in under 90 days, a survey in 2020 found that about 93% of shoppers consult online reviews before making a purchase (8).
Additionally, people are also spending more time online. According to DoubleVerify, a digital media measurement firm, users have doubled their daily time online during the pandemic from 3 hours to 7 hours.
Since potential consumers are spending more time online, it is also drawing more advertising dollars. Over half of the Indian ad spend is set to go digital for the first time. It is an indication of an available growing pot for review sites.
Notably, influencer marketing is the fastest-growing marketing acquisition channel for online shopping. And there are projections that it would reach about 15 billion USD by 2022, up from 8 billion USD in 2019 (9).
Between 2016 to 2018, YouTube videos with ‘review’ in their title scooped more than 50k years of view time, equivalent to rewatching ‘The Queen’s Gambit’ over 66 million times. Product reviews go hand in hand with YouTube, and it helps further when one can also embed affiliate links in videos.
According to Princeton University’s research, about 4% of videos about Science and Technology have affiliate links, which is most of any subject area.
Even on TikTok, with over 1 billion active users and higher engagement than Instagram and Twitter, videos tagged #amazonfinds have over 6 billion vides while #founditonamazon and #tiktokmademebuyit have about 1.5 billion views.
Review sites are no longer only sites. People are reviewing products wherever potential customers are spending time. One of the rapidly growing segments in social media is instructor influencers. They are well-positioned to review and recommend things to buy.
The Business Model
The best review sites are the ones that can build trust among people while also helping them decide what to purchase. Moreover, the inability of Amazon, or, some would say, ‘its unwillingness’ to deal with fake reviews, gives review sites a trust advantage.
But how do they make money? Well, review sites earn commissions from the products purchased from their recommendation. When a customer clicks on a link on their site that redirects them to a product’s ecommerce platform, cookies register where they come from, and the sale gets credited back to the review affiliate. The seller tallies up the commissions and sends them a cut of the business.
Now, let’s talk about the different ways one can make money via review sites.
Content is occupied by search and media players. They write reviews and lists according to search interest and get authority when other sites link to their content.
Media firms can become robust content players with about 15% of digital media revenue from affiliate marketing (10).
Several media companies already churn up trustable editorial content. And it gives them an advantage since their existent domain authority makes it easier to win competitive keywords.
Even though media firms get most of the attention, small review sites can also be highly lucrative. The secret is virtual assistants and freelance writers who consistently offer new articles.
Moreover, focused content Is also an advantage against a review site that offers a broad range of products.
Performance review sites also buy traffic, keywords with high intent. The advantage is that one can get started immediately and scale at a much quicker pace. However, one would also be burning cash rapidly.
The fastest-growing competitor in this segment is NI, Natural Intelligence, a company based in Israel. Nir Greenberg founded it in 2009. Notably, they pocket 300 million USD revenue with 400 employees (11), and they are completely bootstrapped.
The products listed on NI are not on Amazon, where commissions are trending feathers. Instead, they target traffic for services such as Match.com, where a 3-month subscription gives 34 USD in commission.
There are other services, such as EliteSingles, that pay for leads. Even though the seven USD commission, when someone completes a profile, it may not look much, the traffic conversion rate is usually much higher. The strategy is to arbitrage traffic and optimizing EPC, Earnings per Click.
Viral model review sites expand where users can build and share content. They are potent since 90% of consumers are influenced by UGC, user-generated content when making buying decisions.
Instead of creating all content themselves, players in this segment analyze and fact-check to ensure accuracy. The concept is portable with celebrities for other domains such as business and sports, like preferred chess sets of champions, software tools used by top CMOs, and famous athlete’s gym equipment.
The internet also expanded the idea of ‘celebrity’ to include influencers. Now, even normal individuals can gather followers and build strong businesses and personal brands in the process.
Review sites can generate revenue from either direct affiliate programs or affiliate networks. An established review site also diversifies as it grows.
For a new review site, Amazon is a good starting place. It has the largest product affiliate network and allows newcomers to minimize time with affiliate relationships until they generate traffic.
Top earning product categories for Amazon affiliates include technology, outdoor, computers, home, fitness, and auto (12). There are hundreds of such niches with multiple players. However, there are still opportunities for entrepreneurs who do their homework while building review sites that pocket in tens of millions of dollars annually.
Product niches drive revenue, which determines the ceiling for review site businesses. Here is a useful guideline that would help you while evaluating prospective affiliated niches (13):
- Identify potential niche opportunities
- Size the market and monetizing abilities
- Assess existing players’ sophistication
- Benchmark earning estimates of existing players in the niche
- Handicap EV and success odds
The Success Secret
The secret for the success of review sites is not in the product but the distribution. There are multiple ways one can win through distribution.
The three growth models for review sites, content, performance, and viral require a specific combination of strategies and skills.
Content review sites have the advantage of their authority, with Google seeing them as more worthy of organic traffic and readers trusting their reviews enough to make a buying decision.
One of the indications of search authority is a website’s DR, domain rating. It predicts how a site would perform in SETP. According to a study (14), the mean DR of 1,000 successful Amazon affiliates was 39, which is an average since over 50 is considered good.
According to the same study, increasing DR used to entail mostly link-building strategies. However, today, most winning sites offer more content, with an average of 423 index pages.
One can also acquire authority by buying aged domains. In the study, 28% of the sites are built on expiring or expired repurposed domains.
Building more pages needs more content. And writing reviews need skills such as keyword research, website, editorial, design, and project management.
Notably, the line between editorial and SEO content starts fading as review sites gather more pages. Top review sites operate by building editorial content and SEO by either freelancers or hiring writers. Either way, the goal is to produce in-depth reviews to help people decide on their purchases.
The primary principle of the performance review sites is to help people make decisions. Some of these sites have useful configurators and calculators that guide consumers to make a decision.
We all know that the secret to viral growth is finding the right audience to follow, like, and share the content. However, getting an audience needs timing and persistence. Here is how one can do it.
- Catching the wave
- Consistent and improved content
- Creative fit
Cuts in Commission
People connected with affiliation are aware that Amazon had significantly slashed commissions for several products in April 2020. It had dropped commissions from categories such as home goods to 3% from 8% overnight.
However, the good thing is even though it is less convenient to handle multiple affiliate relationships, most review sites are shifting to deal directly with brands.
It is worth highlighting that direct affiliations are more productive and offer special incentives such as discount codes that give people more compelling reasons to purchase from you.
There are new Google features such as snippets, videos, ads, and top stories. They keep popping up before organic SEO results. People have difficulty getting their desired results since organic reviews are hidden behind several Google SERP features.
The competition is fierce in the segment. Many firms have also started creating their ecommerce verticals to stand out (15). Media publications with their strong editorials and domain authority get a search ranking advantage. Moreover, they are more motivated to bring in affiliate revenue to make up for what they have lost in ad revenue to Google and Facebook.
Another competitive threat is browser plug-ins such as Honey (16). It is a plug-in with more than 17 million active users that helps people find discount codes.
Here, the risk for review sites is that such plug-ins replace last-click attribution for affiliate offers. It means that one can drive traffic but lose the commissions.
Even though there are risks, there are also several opportunities worth exploring for review sites.
One of the best ways to compete against incumbent review sites is with new products with the potential to drive new search interest. There are two emerging industries suitable for review sites – crypto and cannabis.
There is a sharp learning curve for first-time crypto investors. It indicates an opportunity for review sites to offer a guiding hand.
Crypto affiliate programs are based on CPA models, cost per action or pay per sale, pay per lead, or pay per transaction such as money transfer, trade, or deposit (17).
Commission on trading fees is usually about 20 to 50% depending on the program. Review sites can benefit as the money flows into bitcoin and transactions value rise (18).
India is set to become the biggest cannabis industry globally with over 25 billion USD business (19). Even though its legalization is still off somehow, the rising number of hemp startups and growing support is encouraging. And it won’t be long before the Indian government unlocks its full potential. It is also a perfect candidate for niche review sites.
It is a relatively unfamiliar industry to many people in the country. And there are also several product categories that one can dive into it.
Certain products are not easy to differentiate on the web, such as beauty products, mattresses, and health and wellness goods. One can’t easily try them before making a purchase, and that’s where review sites play a main role.
Some industries pay more for CAC, customer acquisition cost, and review sites worth even more.
One of the most genius models is recruiting users to review software and charging software firms for analytics, marketing tools, and competitive insight. Notably, small market firms pay about 10k USD per year, mid-market companies spend between 30k to 100k USD. While enterprise software companies such as IBM and Salesforce spend seven figures.
There is also a huge opportunity with B2B services. One can find several review site opportunities on the internet by observing questions people ask about products and services.
One of the powerhouses of affiliate marketing is financial services. One can start reviewing loans, credit cards, and other financial products (20). There is ample space for new business option reviews.
Smaller review sites can compete against giants such as BestReviews and Wirecutter through the niche. Even though media firms have domain authority, their review coverage is broad. It leaves them vulnerable to niches with similar editorials.
The trick is to base on what people want to do or become. Then, review sites can help them make progress with useful content, quizzes, and checklists. Remember, people want to make progress. After purchasing a great product, they want to make an outcome for it.