Amazon has decided to make some changes to its Associates program, no longer allowing third parties to bid on keywords that would send visitors straight to Amazon websites where they’d earn a referral fee for each purchase.
The change only applies to the Associates programs in North America, and the company is referring Associates based outside the U.S. and Canada to check their respective terms and conditions agreements.
As of May 1, 2009, Associates will not be paid referral fees for paid search traffic. Also, in connection with this change, as of May 1, 2009, Amazon will no longer make data feeds available to Associates for the purpose of sending users to the Amazon websites in the US or Canada via paid search.
Amazon is not very communicative about the reasoning behind the decision, and the FAQ on its website only cites that it is based on ‘their review of how they invest their advertising resources’.
I concur with blogger Gee that paying out these referral fees is probably costing Amazon a lot of money, which is not necessarily a reason to block Associates from using paid search as a way to bring in traffic during normal times, but likely hurts the bottom line in the economic turmoil we’re in now too much to justify continuing to allow it. If that is true, that would mean that in this case paid search underperforms contextual links when it comes to sales referrals.
Another point to think about:
Amazon themselves are probably advertising under same keywords and associate may be running up Amazon’s costs, due to associates bidding up the rates.
Court: Trademarked Keywords Can’t Be Used By 3rd Parties In AdWords http://is.gd/r25s Would this be why Amazon emailed announcement today?
I think this applies mainly to cases where a competitor is buying against trademarked brand terms vs. in this case we’re talking about resellers and distributors of a product. In many cases, companies already establish SEM guidelines for their resellers and disallow bidding against brand terms as part of their overall business agreement. If say Sony say’s to Amazon, no buying any keywords or using the word “Sony” then Amazon would subsequently include those exclusions to their own affiliates.
Most likely this is a way to reduce their own marketing expenses and CPA as affiliates were adding little value when they were simply redirecting to Amazon.
Yep! I use to do a lot of PPC for a company that had many affiliates and in many cases I was bidding against those affiliates selling the same product. It was kind of a pain and definitely drove up prices, but it was also the primary way that many of those affiliates made their sales, so we couldn’t really discourage them from doing it.
The beginning of the end for Amazon. Those affiliates still need to make money and buying traffic, arbitraging traffic, is something they know how to do and just because Amazon changes the system on them, they are not about to stop. What they will do is find other services to work with. The fatter they make others the less Amazon will do. I expect Amazon at some point to realize and revert this decision.
Cheers
Sahar Sarid
Bido.com – Social Auction
This is primarily because of the cookie issue.
When a user lands on amazon via any affiliate link, he doesnt have to buy something that day to give the affilaite a payout. I could do a search for “red widgets” click a sponsored link and buy nothing, and a week later go to the amazon.com homepage and buy a blue widget, and that affiliate would still get paid.
The reason to end this, is there is no “ecpc” – You get paid such high amounts doing this via ebay/amazon as its not a flat CPA type system.
The cookie was for 24 hours. Affiliates did not get paid for anything that was purchased after 24 hours from the initial click. According to a Google Retail study almost two thirds of sales occur after the first 24 hours meaning that affiliates didn’t get credit for the majority of what they sent.
Apologies, I was thinking of ebays cookie, which is 7 days.
less competition for us. Thanks Amazon
Wait, does this mean the infamous NY State Amazon tax will no longer apply, since it was based on Amazon having paid affiliates in the state?
One word, 5 letters,
Fraud.
In trying economic times the legit purchases tend to go down and the bad purchases tend to go up.
Affiliate programs are one of the easiest ways to turn stolen CCs into real world dollars.
The real question is whether Amazon’s affiliates were adding incremental profits to Amazon. If they were, I cannot imagine that Amazon would ban the activity.
Search affiliates add tremendous value to many merchants. However, the more sophisticated the merchant’s PPC team, the more likely it is that affiliates become search competitors.
i can see why amazon is doing this – they want to get control of their own traffic.
It must be a complete nightmare to deal with tens of thousands of affiliates competing with each other to get their link for one product onto the paid search.
Add in the restrictions from certain merchants, all of the fraudsters out there, the get richquick books telling everyone to go sell on Amazon etc.
They must have a TON of data, and can now build out their own search campaigns and make a lot more money in the long run.
fb843593 asked:
“Wait, does this mean the infamous NY State Amazon tax will no longer apply, since it was based on Amazon having paid affiliates in the state?”
NO – Amazon will still have paid affiliates, just no PPC affiliates.
Linda Buquet
Great that you guys picked up this story
Another thing worth mentioning is that Google already makes sure only one advertiser can send traffic to any single domain, ie amazon.com for a query.
This means that Amazon can effectively kick out all competition for keywords driving traffic to Amazon. I’m lucky I got out of the arbitrage game a couple years ago and started creating web sites with actual content :-/
What’s to stop you from making a go-between redirection website? I’m guessing Adwords TOS prohibits this?
Actually, Amazon included interstitial pages in their FAQ on the matter: https://affilia...romo/paidsearch
Assocatiates may not use interstitial pages to redirect traffic from search engines to Amazon. They may however use PPC to promote their own sites and content that may include links to Amazon, but the click has to originate there…not from the engine itself.
Right. Plus, the added step adds a huge amount of drop-off in the conversion funnel, making it economically far less attractive to engage in this arbitrage game.
Been expecting this for a while. Considering half of the advertisements I’ve seen on the paid search by affiliates are ones Amazon are directly competiting with which increases their costs.
Not to deviate too far from the subject. What other ways (SEO and alike) are there to properly and most effectively drive traffic then. If you’re a company that does not yet have the “buy” power that Amazon has where do you go and who do you go to?
What’s more amazing is that this wasn’t done years ago. Affiliates who bid on keywords Amazon can bid itself, and then send that traffic directly to Amazon, are provding no value in the process, other than financing the PPC. Amazon doesn’t need them for that, nor the paid search execution. Since the affiliates are providing no value, why should Amazon pay them?
I realize that affiliates will bemoan the end of the gravy train. Nobody else should be surprised.
Agree with this decision…too many affiliates conning the system. If it provided a lot of legitimate traffic/purchases, they wouldn’t have done this, guaranteed.
I guess google sent complaints to amazon saying those paid search keywords don’t have enough content. it’s just another form of ad arbitrage for adwords.
I guess the wolves will keep feeding on google ads.
This is mostly about acquisition cost management and channel conflict (and maybe throw in fraud as a minor reason). As Amazon’s internal SEM initiatives get larger and more sophisticated, they’re competing more and more with their affiliates using paid search, which ends up running up CPCs and thus acquisition costs. If they disallow paid search affiliate traffic, they get two immediate benefits:
1. Reduced channel conflict.
2. Lower customer acquisition costs, since they can now get the same customer directly via SEM by eliminating the middleman (the affiliates).
Frankly, I’m surprised it has taken them so long to come to this decision. But it probably has to do with being afraid of upsetting their vast affiliate base.
Now one can make the argument that these affiliates can now switch to other e-tailers and divert their traffic elsewhere, as Sahar points out above, but Amazon is clearly making the calculation that the pros will outweigh the cons.
I think the most important factor for this is FRAUD. It’s possible they are no longer benefiting from the efforts of paid search because of fraud. But who knows? They might have other motives, nonetheless.
Amazon doesn’t pay for referrals for purchases that are found to be fraudulent.
Umm it’s simple. Amazon does not want to compete with its own affiliates.
I talked about this in one of my blog posts: http:WebMagg.com
Now THAT was a waste of my time.
Apologies in advance for the following rant:
You “talked about it”? Really? You mentioned it in a very short blurb, with absolutely no analysis and no opinion on anything. If you’re going to blog, try to actually say something and stop spanning us on TechCrunch. Jeeez.
This might be Amazon’s first step in eliminating its affiliate program altogether. Affiliate programs don’t make much sense when everyone has already heard of your website.
I don’t have any stats to back this up, but I would think people would check out what something costs on Amazon before buying something online, especially books. They and ebay are the places you look for price comparisons. If people do that, why pay for traffic that you will get anyway?
Lots of comparison sites will get rid of amazon if they cancel their associates program, and IMHO, no merchants will do that just to save a few bucks.
I’ve got to disagree with you there. A comparison site without Amazon wouldn’t be worth a bucket of spit.
Also, the margins can be so small on certain products, “a few bucks” can make all the difference between black and red. Besides, Amazon can always continue to privately keep it available to certain sites they find beneficial to them.
What people do is make their own purchases through their own associates account to get an extra discount. I know, I know, that violates TOS. Oh my, there is drinking going on in this establishment???
“paid search underperforms contextual links when it comes to sales referrals”
from amazon’s or affiliate’s perspective?
I don’t get why people promote a site with a 24 hour cookie.
Someone can make $10000 per month with this 24hrs.
My friends has made $100,000+ / Month with 24hrs COKKIE.
I don’t believe Amazon is going to do their own PPC. I think they will largely do it theirself and for the spand of control select a few affiliates to do the rest. Secondly I believe a big reason for this decision is not so much based on their advertising spending. I believe with a set commission structure paying affiliates is in the majority of cases cheaper than pick up the fight with so much competition. But I belileve that larger merchants on the amazon platform complained on the competition they were getting from Amazon affiliates. So therefore the prices of the larger merchants of Amazon are going up and up……
Basically, Amazon has phased out its affiliate program in US and Canada because in the mail to associated on April 6th they stated that the following:
1. Amazon will no longer pay referral fees to Associates who send users to the site through keyword bidding.
2. They will not be pay referral fees for search traffic.
3. They will no longer make data feeds available to Associates for the purpose of sending users to the site.
So how else can an associate make money in their so called advertising Program? Price comparison sites use data feeds. We know now that as of May 1, 2009 every lead to Amazon.com is “gratis”,
IMHO, Amazon affiliate program is dead in US and Canada.
They should have closed up direct linking to smaller group a long time ago. Allowing anyone and everyone to direct link is irresponsible and will only lead to advertisers locking down paid search policies.
amazon make more money after cut out the PPC competitor.
The only reasons Amazon is making this move is:
-They have an internal search team and they are worried about cannibalization between the two channels
-Over ten states have come out with affiliate taxes nicknamed the Amazon Tax focusing on Amazon as a target. Shifting to CPC in those states makes the most sense. Why pay search affiliates on a click that will be taxed when you have an internal team?
Several point to consider
1) Is it worse for Amazon to compete against say 5 out of 11 first page Adwords advertisers for the same keyword all driving sales to Amazon or now have up to 10 out of 11 advertisers on the first page of search results sending traffic to different sites other than Amazon
2) How many millions of pages indexed by the search engines contain affiliate links to Amazon? would those affiliates all changing those links to promote somebody be a good or bad thing for Amazon
3) If Amazon eliminates Paid search affiliates doesn’t this effectively eliminate all Adsense advertisements as well…just the single largest contextual advertising network in the world?
Pretty bold I think and I can only assume they have crunched all those numbers.
You know after reading the terms of the change on Amazon’s site, this post is actually a bit misleading.
Amazon is not banning affiliates from using paid search completely, they are preventing affiliates from linking directly from their PPC ads to the amazon site.
IF the affiliate has their own site they are sending people to from their PPC ads then all is good.
Quote right from their site:
“Q: How do I know if this change will affect me?
A: If you are using paid search advertising services like Google AdWords, Yahoo Search Marketing or Microsoft adCenter to send users directly to the http://www.amazon.ca, http://www.amazon.com or http://www.endless.com website, this change will affect you. If your own website has links to Amazon’s US or Canadian sites and you are using these or other similar services to send users to your own website, you should not be affected by this change as long as you comply with all terms of the Operating Agreement. “
My website is based on a framework that allows anyone to sell via its network. Seller gets paid directly from buyer and my system gets a commission for facilitating or brokering the sale.
I am wondering if anyone has an idea on how to manage commission and principal payment automatically without creating an accounting mess. Is there a checkout software or company that you can recommend? Any advice is greatly appreciated. Thanks! Wale