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Amazon’s Affiliate Program Ends PPC Arbitrage

Maybe I’m not the best qualified to make assumptions about why Amazon Associates–the online retailers affiliate program–just pulled the plug on allowing affiliates to send referrals via paid search, but that doesn’t stop me from making an educated guess.

PPC Arbitrage.

I suspect that Amazon finally realized that it could do its own keyword bidding and cut out the middle-man–those bidding pennies on long-tail keywords and making dollars in affiliate commissions. Here’s the email that Amazon just sent out to its affiliates:

Dear Amazon Associate:

We’re writing to let you know about a change to the Amazon Associates Program. After careful review of how we are investing our advertising resources, we have made the decision to no longer pay referral fees to Associates who send users to www.amazon.com, www.amazon.ca, or www.endless.com through keyword bidding and other paid search on Google, Yahoo, MSN, and other search engines, and their extended search networks. If you’re not sure if this change affects you, please visit this page for FAQs.

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.

This change applies only to the Associates programs in North America. If you are conducting paid search activities in connection with one of Amazon’s Associates Programs outside of the US and Canada, please refer to the applicable country’s Associates Program Operating Agreement for relevant terms and conditions.

We appreciate your continued support and participation in this advertising Program. If you have questions or concerns, please write to us by using the Contact Us form available on Associates Central.

Sincerely,

The Amazon Associates Program

Is this the end of search marketing for Amazon affiliates? Yes, and no. While you can no longer send traffic directly to Amazon via paid search, I’m assuming you can still send searchers to a landing page and THEN send them to Amazon.com. Also, there doesn’t appear to be any restrictions on using search engine optimization (SEO) to send referarals, but good luck trying to get your own affiliate link to rank in Google.

OK, time to hand this over to the Pilgrims that live for affiliate marketing. What’s your take on this move by Amazon?

  • http://www.debtfreescholar.com/ Nate @ Debt-free Scholar

    Time to start looking for another affiliate program…

    - Nate

    Nate @ Debt-free Scholar’s last blog post..23 Warning Signs of Scholarship Scams

  • Steve

    Important Note:

    They also stopped providing their data feed (for PPC). Thousands of sites use the Amazon datafeed to populate webpages.

    But how would Amazon know if the referral traffic (from the affiliate site) originated from SEO or PPC before that?

    -Steve

  • http://www.marketingpilgrim.com Andy Beal

    @Steve – I wondered the same thing. I suspect they don’t care about traffic coming into your own site, it’s the stuff that you’re sending directly to an affiliate link.

  • http://www.thedeets.com Ed Kohler

    I’ve had some good luck with PPC arbitrage over the years. Long-tail terms with no competition convert at high rates and are very cheap.

    I haven’t seen competition directly from Amazon on most of the stuff I bid on.

    The change seems strange to me. I take the financial risk, and only get paid when I drive sales for Amazon. Should that be rewarded rather than shut down?

    Ed Kohler’s last blog post..Run Minneapolis: Shingle Creek

  • http://www.getelastic.com/ Linda Bustos

    That is silly, wouldn’t Amazon rather have 10 links in PPC advertising that ultimately go to Amazon than just its own? Affiliates are a great way to get around Google’s double serving policies, and commissions are only 4-6% for most affiliates unless they’re sending killer amounts of buyers, in which case, why cut them off? Plus, the affiliates absorb all the costs for non-converting clicks. I wouldn’t go this route, Amazon, if that’s why you changed your policy.

    Linda Bustos’s last blog post..Price Guarantees: No Substitute for A Unique Value Proposition

  • http://www.productwiki.com Omar Ismail

    Still trying to figure out why they would do this since the simple numbers don’t add up (i.e. some money is better than no money). It’s possible that there are long-term brand issues that have come up? As in, SEM ads that go to Amazon are considered by the general public to BE Amazon Ads. Therefore, by allowing Affiliate SEM Amazon loses some control over its brand which it may value over the extra revenue brought in by these affiliates.

    Omar Ismail’s last blog post..Nintendo DSi

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  • Allan

    Qestions not answered by Amazon:
    Does thois affect direct PPC linking to Amazon.com only? Or (indirect) ppc to affiliates’ sites as well?
    How does this apply to astore.amazon.com?

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  • http://www.jaankanellis.com Jaan Kanellis

    Linda your right. This doesnt make sense. Their has to be more to this story than is public right now.

    Jaan Kanellis’s last blog post..Back To Work and Happy About It?

  • http://www.marketingpilgrim.com Andy Beal

    @Linda & @Jaan – maybe the top affiliates aren’t doing PPC arbitrage, so Amazon’s cutting of the little fish that do more harm to the Amazon brand and not hurting the bigger affiliates. I guess we need either more info from Amazon or someone that’s heavy into Amazon Associates to chime in.

  • http://www.midwiferytoday.com/ Donna Zelzer

    Here’s the FAQ about it, for what it’s worth:
    https://affiliate-program.amazon.com/gp/associates/promo/paidsearch

    This appears to answer Allen’s question

    Q: If my paid search advertisement directs a user first to an interstitial page, then to http://www.amazon.com, http://www.endless.com, or http://www.amazon.ca, will I earn referral fees?
    A: No.
    However, if you place paid search advertisements to send users to your own website, and then your website displays links to http://www.amazon.com, http://www.endless.com, or http://www.amazon.ca in accordance with the Operating Agreement, you may earn referral fees for qualifying purchases made by users who click on your paid search ad, click through to your site, then click through to an Amazon site.

    Donna

  • http://www.sem-advance.com Clint Dixon

    The new policy does not allow Amazon Associates to link to Amazon via paid search using their associate ID links.

    You can use your website or blogs and send traffic to those via paid search, and then send the traffic to Amazon through your associate links….. however be sure to not use Amazons protected keywords…..

  • http://ozaffiliate.com Robert Skelton

    Perhaps Amazon decided that people seeing Amazon ads like “Get Pink Monkey Soup at Amazon” when they search for Pink Monkey Soup, will conclude that Amazon are idiots, and that it diminishes their brand.

  • http://www.thedeets.com Ed Kohler

    In my case, I’ve bid on a large portfolio of model #’s of obscure under-advertised products. It’s not hurting Amazon’s brand to be associated with this tactic.

    I think you’ll see more wildcarded strange PPC ads for Ebay since it’s more of a flea market. It is also influenced by how companies incent affiliates.

    Ed Kohler’s last blog post..Run Minneapolis: Shingle Creek

  • http://kketefia.wordpress.com/ Kirk Ketefian

    Channel conflict. Assuming that Amazon is expanding its internal SEM initiatives and getting more sophisticated about playing in the tail, they will begin competing with their affiliates more and more, which would drive up CPC costs. They’d rather cut out the middleman and get those leads directly themselves. It’s nice to have multiple listings on SERPs if it’s a competitive marketplace (i.e. head/torso terms), but it’s better to have the only link in shallow marketplaces (i.e. the long tail).

    -kirk

    Kirk Ketefian’s last blog post..Second-Tier Social Networks Struggling

  • http://www.sem-advance.com Clint Dixon

    @EdKohler

    As long as you use your website as the destination URL in your ads its not a problem.

    @ Kirk Ketefian

    The only issue is direct linking to Amazon from PPC ads ,.,,no longer allowed,.

    Linking to your own site from PPC ads is still allowed….

    Has nothing to do with what keywords someone bids on other than protected terms…..

    Remember its important to read everything involved before just adding random comments….

  • http://www.thedeets.com Ed Kohler

    @clint Good point, but conversions drop with a 2-step. And google has cut down on ads with redirects.

    Google has also cut down on the display of multiple ads from the same domain so if Amazon and an affiliate were to both advertise on the same term, only the higher revenue ad for Google would display.

    Ed Kohler’s last blog post..Run Minneapolis: Shingle Creek

  • http://kketefia.wordpress.com/ Kirk Ketefian

    @Clint Dixon

    Good point. But adding that layer to the “funnel” (i.e. your own landing page/site) introduces a large hurdle in the economics of PPC arbitrage for a variety of reasons (trust being a big one). So, it makes life a whole lot more challenging for the arbitrageur affiliates, to the point of driving many of them away from the marketplace.

    One could make the argument that these affiliates would just switch over to other e-tailers and hurt Amazon in the process. Amazon clearly thinks that the pros outweigh the cons here, but I’d love to hear people’s opinion about this potential risk.

    Kirk Ketefian’s last blog post..Second-Tier Social Networks Struggling

  • http://www.sem-advance.com Clint Dixon

    @Ed

    I am not speaking of using a redirect link in Adwords….send straight to your website landing page that matches the product being sold…..I use AOM script to build out sites and my conversion numbers are very nice. My ads run along side Amazons with no problems….in fact I try to write better copy just to pull the traffic…..

    @ Kirk as noted above using the AOM script the product page on my site looks almost exactly the same as the product page on Amazon, if I were more of a designer / developer I could probably do an even better job of building the trust factor. There are always hurdles to overcome in business. This one tells me to keep pushing my SEO efforts for my sites.

  • http://www.getelastic.com/ Linda Bustos

    Ahh, I like the channel conflict point by Kirk.

    Another possibility is Google is putting the pressure on. Like Serps full of subdomains to the same site, a page full of Amazon links isn’t what the searcher wants, most likely. And other advertisers can get annoyed.

    Linda Bustos’s last blog post..Price Guarantees: No Substitute for A Unique Value Proposition

  • http://www.newreil.com basmin

    why should a headache thinking amazon. whereas many other affiliate programs like clickbank? :D

    basmin’s last blog post..Kampanye Damai Pemilu Indonesia 2009

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  • Jordan

    :). What do you want to bet Google’s going to have a committed searchbox: GoogleAmazon, Googazon, Amagoog, in the near future? They’d lock up commissions on everything Amazon sells through its channel and Amazon would only have to write one check.

  • http://www.ereadworld.com JoJo

    The deal has to be cost savings. Suppose you are paying $1 per click for a Kindle and when you sell it you get $39.50 from Amazon. If I was Amazon I would rather spend the $39.50 on PPC and hope to sell more Kindles for less cost.

    JoJo’s last blog post..Free Kindle Book

  • http://free-xbox-360-premium.blogspot.com mark

    A landing page could work. I’m not a member of the program, but it sure seems a way around the direct referral rule.

    mark’s last blog post..Free XBox 360! Get A Free XBox 360 Elite/Premium Now!

  • http://www.kindlehelpdesk.com JoJo

    Everyone has a work around until they get caught. If people put the same amount of time they put into cheating the system as the did in publishing decent content, the internet would be a better place.

    JoJo’s last blog post..Kindle Personal Documents Update

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