FBA Investors are Branching Out to Content Sites. Here’s Why You Should Too
A few FBA portfolio owners, namely brand aggregators, high net worth individuals (HNWIs), and portfolio builders, have discovered a new strategy for portfolio growth and security.
With competition ferocity increasing in the FBA space, they have started to look outside Amazon to gain an advantage and multiply the growth of their FBA assets. How? By expanding their portfolios to include content sites.
A key motivation behind acquiring a content site is to secure their FBA portfolio, but not just by diversifying its assets. They’re looking for content sites in the same niches as their FBA brands, so they can use the sites to boost those brands.
This is part of a “bolt-on” strategy investors are starting to employ, whereby they acquire content sites to act as mini media companies for their FBA brands. They acquire the media company and bolt it onto their FBA brand, giving them an advantage over competitors with an extra marketing channel and more valuable audience data and insights.
We’re going to dig into why and how investors can use content sites in their portfolios and what we anticipate the future of this trend will look like.
Why FBA Investors are Acquiring Content Sites
After the pandemic accelerated the shift from offline to online commerce, Amazon saw record-breaking sales, and a lot of FBA owners benefited from that surge.
As a result, a flood of money was invested into FBA brands and those investors started to benefit from the growth of e-commerce, benefits which they continue to enjoy to the present day.
By the middle of 2020, we were working with dozens more private equity-backed roll-up companies looking to follow the examples of successful brand aggregators and capitalize on the trend.
With the increase in the FBA acquirer population came an increase in competition amongst investors for top-performing assets. The average sale value of FBA businesses has increased 36.83% in the first six months of 2021 alone, and we often see big buyers competing for assets, to the point where the sellers of these businesses are interviewing the buyers to make sure they’re a good fit for the business.
However, when a lot of FBA sellers are winning, the competition heats up.
Owners of FBA portfolios have had to get creative when it comes to securing their FBA investments.
With the increase in competition for competing products, rankings on Amazon, ad pricing, keyword targeting, and more, FBA brands are finding it harder to scale. This puts the ROI of investors’ portfolios at risk.
Investors with an FBA portfolio have had to get creative to mitigate risk.
How Investors are Using Content Sites in their FBA Portfolios
One of the most valuable assets an FBA business, or any online business, for that matter, can have is an audience.
With a loyal audience of repeat customers, a brand doesn’t just have an asset that provides income security, it also has the leverage to scale.
While it’s possible to build an audience on Amazon, there’s a big disconnect with that audience that limits FBA brands from getting everything they can from their followers and customers. This is because Amazon controls customer data, so FBA businesses never really get to contact customers directly and build that brand-to-customer relationship.
This is why FBA brand owners are looking outside Amazon to build their audiences.
It used to be that in order to create a presence independent of Amazon, an FBA brand had to build an external marketing/traffic channel from scratch. This requires investing a ton of time and money to build, and building brand presence through external sites with high SEO rankings achieved through organic content marketing takes even longer.
Now we’re seeing FBA brand aggregators skip the building phase and instantly acquire established audiences.
FBA brand aggregators have the capacity to do this because they have the capital and resources to bring in the right teams to run the content sites and maintain the “hands-offness” of their portfolio.
Not only that, but these expert website operators can scale the content sites alongside the FBA brand to grow the mini media company. That increases sales for the FBA business and the content site itself—don’t forget, a monetized content site is already earning money.
With this mini media company bolted onto the FBA brand, there are many data-collecting, double-earning, traffic-boosting, and brand-expanding opportunities to scale.
Tapping into Amazon Associates
When you acquire a content site that is monetized through Amazon Associates, you add a unique branch to your business model that almost no other FBA sellers have, giving you many competitive advantages.
Using Amazon Affiliate Reports for Product Launches
Most FBA sellers use software such as Jungle Scout and Helium 10 for their product research.
While these tools are great for finding potentially winning products, when you have a content site that is monetized through Amazon Associates at your disposal, you get access to extra product research insights almost no other FBA seller has.
You get to tap into the ocean of data that is the Amazon Affiliate Reports.
Sleuthing through the sales reports from your content site’s Amazon affiliate earnings gives you insight into what types of products your audience likes to buy.
These reports are specific to your audience, not the full buyer population of Amazon, so they provide more targeted insights that you can use to help you expand your product line while also reducing the “spaghetti against the wall” risk of launching products that are selected using generalized data.
Launching products on your content site and Amazon rather than solely on Amazon is the best strategy because you’re also launching directly to an audience that already knows your brand. And with the customer data from your content site, you can get customer feedback more effectively than you can with just Amazon reviews.
You should also take a look through the site’s content because there’s a trick you can employ to easily and quickly increase your sales.
“Stealing” Competitor Sales
Looking through the site’s content, you might be lucky enough to find links to your competitor’s products. Now that you own that content, you can log into the website and replace the links with links to your products.
This helps with the process of making your brand a recognized name for the audience you’ve acquired. Building that trust factor and having a better place to test/launch products than just the open Amazon marketplace gives you an extra indirect way to take competitor sales.
Don’t forget, since you own the Amazon Associates account, you still take home the commissions on the sales made via the Amazon links in your content.
Double Dipping on Affiliate Traffic
When you drive traffic through a site monetized through Amazon Associates, you profit from the sale of the product, but you also earn the commissions that any affiliate marketer would have made on the sale, too.
In other words, you make bonus earnings on every sale made via the Amazon Associates content on your site.
What’s more, Amazon is now rewarding FBA sellers for driving traffic from external sources to Amazon product listings by charging less on sales generated from external sources. So not only will you make more revenue on each sale, you’ll also see more profit on those sales because you’re being charged less.
There’s another profit margin-thickening benefit to driving external traffic to your FBA products.
Generating Off-Amazon Organic Traffic
Usually, content sites are fueled by Google’s organic search traffic. Throughout the industry, search engines like Google are recognized as the driver of the highest converting traffic, as the search engine user (i.e., the traffic) is actively searching for the product/information. This is in contrast to platforms like Facebook, where users are scrolling through their newsfeeds passively rather than looking for products or info.
More importantly, organic traffic is free traffic.
Because organic search traffic is cost-free and higher-converting when compared to paid advertising traffic, organic traffic allows for a much lower customer acquisition cost (CaC).
You pay nothing for the traffic; it requires none of the day-to-day maintenance of advertising traffic and you get more sales because the traffic converts more customers.
Having a lower CaC allows you to redistribute your budget to be more aggressive with your paid mar keting. Brands without this ability simply cannot compete, because their reliance on paid media means their CaC is far higher.
At this point, you might be thinking that these are the same benefits that you get from Amazon organic traffic, but there are some additional benefits unique to off-Amazon websites that your competitors won’t be getting access to.
The Power of External Traffic Part 1: Amazon
Amazon is competitive. It’s difficult to get a brand established organically, and it’s almost guaranteed that you will have to do some paid marketing.
It’s crucial to generate Amazon organic traffic, but while your competitors stay in that lane, you could be branching out and getting more traffic from other areas, which will boost your listing ranking the same way Amazon traffic does.
Yes, external traffic boosts your product listing rankings in the Amazon marketplace!
On a granular level, you get all of these benefits with external traffic, but looking at the 30,000 foot view of your business, you’ll also notice some changes strengthening your business model.
The Power of External Traffic Part Two: Your Business
The majority of FBA businesses do everything on Amazon.
If you’re the owner of an Amazon business, you’ll likely be aware of the volatility of playing in the Amazon marketplace.
Amazon has the power to update their terms at any time, as they did earlier this year with their new storage limitations, which could heavily impact your business. They can ban your advertising account in an instant. If you rely on Amazon PPC for 40% of your traffic, and your account gets banned, then you’ve just lost 40% of your income overnight.
We always advise business owners to diversify their business model to minimize the number of single critical points of failure and secure the business’ earnings.
When you have a content site driving external traffic that isn’t prone to the whims of Amazon, then you secure your FBA business’ earnings.
Diversifying away from Amazon allows the brand to be less reliant on Amazon for traffic and income. For example, if you have a stockout that sinks your product’s ranking on Amazon, you still have external traffic coming in, which will not only maintain sales, but also help boost the ranking back up faster.
As part of a diversification strategy, a content site not only gets you access to organic search traffic from Google, but you also get to build the most powerful kind of audience.
Building the Ultimate Audience: Email
With your Amazon audience, there’s a disconnect between your brand and your audience. You don’t get access to customer data, so you only really communicate with a customer when something goes wrong and they require customer service.
With a content site, you can build an email list audience, which is an audience you can contact directly.
You control the customer data so you can send emails directly to your customers and email list subscribers—this is a powerful marketing tool to have in your arsenal.
Email marketing is the most important form of traffic on the internet because you own the contact base. As a communication channel, it is divorced from algorithms and policies that have the potential to wreck a business.
Organic traffic can be converted into an email list that can be nurtured into a brand following. There are multiple ways to drive more customers from this list.
You can build out your audience however you like, depending on what data you’re able to collect from your audience. For example, if you have a business that sells dog products, you can segment your list by the different types of dogs the audience has; for example, divide by dog size or by breed.
Why is this important?
Providing content that is relevant to specific segments of your audience is the most highly targeted type of marketing. The more relevant your marketing content is to your audience, the more likely it is to convert, the lower CaCs you’ll see, and the more enjoyable an experience it will be for your subscribers. Relevant, highly targeted content helps prevent losing members of your audience who don’t want to receive emails that don’t relate to them.
Your email list isn’t the only place you can segment your marketing either.
Optimizing Paid Ads
Once you’ve segmented your email audience, you can use those segments to structure your paid advertising campaigns.
Most platforms allow you to create lookalike audiences from email lists for ad targeting, which is considered one of the most effective types of audiences you can target on paid ad channels.
The ad platform will use your email list data to find people who closely match the demographics of your segmented email audience so you can send your ads to people more suited to your brand. This reduces the CaCs in your ad campaigns, as you will likely see higher conversion rates from your ads.
Speaking of other platforms, there’s a way you can use your email list to build audiences beyond your website.
Building Social Media Audiences
As we mentioned before, it’s important to diversify your business structure; this also applies to your marketing efforts, bearing in mind the impact an Amazon advertising account ban or even a Google update can have on your business.
To mitigate the impact of these types of external factors, it’s important to market on multiple channels.
Social media is a strong channel to target. When you share your content on YouTube, for example, there’s an opportunity to boost that content’s ranking by sending your email list to view that content.
This will help build your YouTube audience and start a viral cycle in which your email list boosts the visibility of your external content.
All the expansion opportunities we’ve discussed so far are part of the bigger plan to build a media company for your FBA brand.
Creating a Revenue-Generating Media Company for Your Brand
Having your own branded site with written content, videos, and maybe even podcasts allows the site to act like a media company for your brand.
You can implement real content marketing in your growth strategy, which is often limited when you’re only on Amazon because you can only use your listing page, Amazon Live, and PPC ads as content.
While diversifying your marketing channels allows you to generate more brand presence, with your own content site, there are ways to further use that brand presence to diversify your revenue streams.
Including Display Ads on Your Site
With content sites, it’s easy to introduce display ads. You simply make ad space on your site and sign up for an advertising network.
The best thing is, you don’t have to maintain the ads. You can just let them run in the background and collect the earnings. Interestingly, ads on a website don’t put people off; in fact, they increase audience trust in your site because ads are considered a trust signal by internet users.
We’ve talked about Amazon affiliate earning power, but there’s also an opportunity to earn from non-Amazon affiliates if you want to expand that side of your business.
Expanding Affiliate Earnings
Not all sites will be monetized through Amazon Associates, so you might not get to steal your competitor’s sales that way, but most will be monetized through some kind of affiliate earnings.
If the site you find does earn through Amazon Associates, then you can expand to other affiliate programs and promote shoulder-niche products you have no intention of selling to create additional affiliate revenue from your site.
The beauty of this strategy is that if your site has the right content, you can use that already created content to integrate this new revenue stream, making this a quick and easy revenue boost.
The reverse is also true: if your site isn’t yet monetized through Amazon Associates, you can add links to your products in the site’s content, double dip on those earnings, and expand your affiliate income that way.
If, further down the line, you want to get a bit more hands-on to secure your e-commerce earnings, then you can branch out in that area too.
Building an E-commerce Revenue Stream
Most content sites are built on WordPress, so there is an opportunity to integrate WooCommerce into the site.
You have an audience ready to receive your product launches, so you can diversify your business’ earnings by selling private label products direct-to-consumer (DTC). This is an especially good opportunity now, given Amazon’s recent inventory limits update. It’s now more important than ever to have other order storage/fulfilment options.
There’s also a way to sell products more passively using assets you already have.
Building a Digital Product Revenue Stream
Your site will have a ton of content. One way to further monetize that content is to repurpose it into digital products.
If you sell beauty products and the site you acquire is about those products, one example of a digital product you could have your team create is a beauty course that educates your audience how to use your products.
Once you’ve created the course, you can add it to your site and your email automation sequences for promotion and sit back while earning the extra revenue.
The opportunities that come with owning your own media company are endless. It enables you to take your FBA business from a brand to an empire. This is why investors are acting now, to get ahead of the competition, and we think this acquisition trend is going to continue.
What We Anticipate the Future to Look Like
We’re already starting to see brand aggregators make these types of acquisitions to employ the bolt-on strategy. We anticipate that this trend will accelerate with more and more aggregators buying up content sites to build media empires.
As a result, the value of content sites will rise considerably and see more buyer competition, just like it did for Amazon FBA businesses. We’re already seeing the value of content sites increase considerably, as you can see in the table below:
The best time to get a step ahead of the FBA competition and the content site buyer competition is now. By getting in early, you can acquire a content site for less than they will cost in the future and get a head start on building a media company for your FBA brand.
To start implementing the bolt-on strategy early while it’s at its most effective stage, register for an account and start searching our marketplace for your portfolio-securing media company.