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Amazon Change Referral Rates – Consumer Electronics Publishers Hit Hardest

Amazon Affiliate program members have received an email today announcing the new referral fee rates for the second quarter of 2006. There are a few significant changes.

The first is a ‘simplified’ structure for link premiums. As you’ll see from the following image the commission earned has increased in each number of items shipped except for 1-20 items when it goes down by 1%.

Q2 06 Us Chart 2

This covers all products EXCEPT consumer electronics which will now earn a flat 4% fee regardless of units volume.

It also means the loss of the ‘direct link premium’ which was confusing but it was also quite lucrative for some publishers who now how to use it. This means that instead of getting 7.5% commission on CE products if you use direct links to specific products you’ll be getting 4% – quite a hit!

This is disappointing for me as someone who makes most of his money in the Amazon program by referring business to Amazon in the form of gadgets. I understand that the margin on electronics is not high but this will lead to significant downturns in income for some publishers.

I’m not sure that this is really a good move from Amazon – while the percentages are very small they do have an impact, especially when you’re selling products that are worth thousands of dollars. For example I had one sale today that earned me $30 (it was at 7.5% commission from a direct link premium) – if the same sale went through in a few days time it would be almost halved.

My own Amazon earnings are not massive (I stand to loose an estimated $400+ a quarter) but I do know some CE publishers who look carefully at these tiers and work very hard to climb them and I can imagine the feedback Amazon will get as a result of this announcement as a result of their income being slashed.

Update – the Amazon publisher discussion boards are going crazy. The main compaints:

  • Not enough notice – on the second last day of the quarter they tell of the changes
  • No acknowledgement that the changes will impact some people hard – the email notification presents it as if it was the publishers who asked for the changes. They may have asked for a simpler structure but no one asked for a cut on earnings of up to 50%.
  • The only people who seem to benefit from this are those who send untargetted traffic to Amazon. The ones who go to the effort of directly linking to specific products will lose out.
  • Amazon has previously promised no more major changes to their commission structure.
  • Other CE affiliates offer 5% with 30 day cookies – Amazon is now down to 4% with 1 day cookies – many are suggesting other alternatives and are talking about moving on from Amazon.

To say that there is real anger among Amazon publishers would be an understatement and there are lots of people calling for people to let Amazon know what they think of the changes.

Contact Details:

Amazon Associates: 701-787-9740 (US number)
Email: [email protected]

About Darren Rowse

Darren Rowse is the founder and editor of ProBlogger Blog Tips and Digital Photography School. Learn more about him here and connect with him on Twitter, Facebook, Google+ and LinkedIn.

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Comments

  1. brem says:

    Well, since Amazon rules how it works, it’s their right. People who disagree should probably stop using this stream of revenue.

  2. Darren Rowse says:

    you’re right brem and by the looks of things some publishers are already looking for alternatives. Amazon’s commissions have been on the decrease over the time I’ve been in them and while they do come up with new features for displaying their products it seems that the incentives for publishers to use them are decreasing every few months.

  3. DaEMoN says:

    I guess Chitika will have a boost, then.
    .. And I actually would use that instead of Amazon anyway.

  4. Well I guess tht this is a bad deal when looking at the lowest number of 4% but I get about 30-60 sales a quarter so I would stand to have my referral fee drop from 7.5% down to 6% a bit of a hit but not much really fro the little that I make.

    One of the real problems is that Amazon pays crap in the first place when compared to the pay per click of Google or the 50% for good and bad products at Clickbank. I think that the best bet for individual sites that do not run a Amazon store script is to find a better referral source and replace the ease of use of Amazon completely.

    I hope I start to listen to my own advice.

  5. I guess that this is one of the challenges when building an income model using services like Amazon Affiliats. We have been building a book review site with the income model based primarily on direct links with Amazon. It has not been up for long yet, but this will definately impact the income stream of this site.

    Anyone know of another on-line book store that has an affiliate program? Clickbank doesn’t really have many books that I can see.

  6. Shaun Carter says:

    Looks like Amazon may be seeing a decline in revenues/profits in the near term and is looking for ways to cut back expenses. Chitika will definitely get a boost from this I think.

  7. Paul says:

    I’ve heard bad press about Amazon’s affiliate program in general – low payout’s… tracking not so hot etc. (It may be unsubstantiated – I’m a n00b)

    Will you personally be dropping / minimizing Amazon referrals as a result of this change Darren?

  8. Darren Rowse says:

    Paul – I’m in two minds. I’m definately looking at alternatives – my only problem is that I’ve put many many hours into implementing them deeply into my blogs and so I’m not about to delete all the links. However for future links I’m strongly considering moving to test other programs.

  9. Rich Owings says:

    Darren,

    What are some other affiliiate options for people selling consumer electronics? Amazon is my leading revenue stream.

  10. Darren Rowse says:

    everyone in the Amazon forum is raving about WalMart’s program paying more and having longer cookies. I’m yet to look into it though.

    The other is Chitika which isn’t an aff program but seems to have alot of CE ads.

    I know of some people who are part of shopping.com and pricegrabber’s aff programs and like them.

  11. Rich Owings says:

    Thankas Darren. I’m using Shopping.com and Chitika, but still get more $ via Amazon. WalMart’s prices just don’t match Amazon’s, and people usually go for the low price / trusted vendor. I’ve had good luck giving people some shopping choices, and Amazon was one of them, but I’m certainly going to look for alternatives now.

  12. airfreddy says:

    I came accross this when I was trying to install carp on one of my websites. Carp also has a program called grouper that will let you put amazona feeds up with your affiliate link in it. But I have not pushed amazon since they don’t pay a bunch.

    airfreddy

  13. Bill, Powells.com (bookstore) has an affiliate program similar to Amazon’s, though the last time I looked at it, it didn’t seem quite worth going for. I forget exactly why…

  14. Chi An says:

    I’ll run Amazon until got my 1st payout. Btw, my Walmart revenue always higher than Amazon with more commision and return days.

  15. Dave says:

    What are the alternatives to Amazon? Are there any other companies who offer the same amount of advertising methods?

    Personally I think Amazon have made a mistake and soon enough they will realise it and implement a new system. (although they won’t admit it was a mistake, they will try and play it off as “an update on their current system”.)

  16. Hi Darren,

    I know a lot of people link to Amazon.com for products, but what other options are there that have the same level of credibility and pricing in the eyes of the people making the purchases? If you know of any, especially with a similar level of credibility, I’m sure a lot of people would be interested in reading about it. Just a thought for a follow-up article…

    Regards,
    Stephane Grenier
    http://www.FollowSteph.com

  17. Kim says:

    In an effort to support independent business, I switched to Powells.com from amazon.com a couple of months ago. I anticipated not as many sales going through, but I’m surprised I’m making more money now. Part of this is that Powell’s offers a higher affiliate rate, and part is that Powell’s sells books at full price, instead of the ridiculously discounted Amazon prices (as an author, I value paying full price for books). Plus, I’ve been to the enormous Powell’s store in Portland, OR, and could spend every day of my life there. The selection can’t be beat, the people who work there love their jobs and are super helpful. In line with my personal priorities, I won’t touch Wal-Mart with a ten-foot cyber pole.

  18. The removal of the deep link premium is especially stupid, because chances are that many smaller publishers relied on the higher conversions of deep links to make up for reduced volume. Given that it’s probably damn hard to have more than 20 items shipped this change in policy mostly affects smaller associates.

    I have a feeling that amazon will go back to the old style if and only if some major afiliates change over to other sites. For lots of people wal-mart isn’t an option, so that may not happen.

    How is overstock.com’s affiliate program?

  19. icooltools says:

    They’ve obviously thought about this before taking such a drastic measure. I sympathise with the drops in incomes for small publishers, but clearly they actually want certain people to leave their program or don’t care if they do.

    Many companies once they achieve a certain stage “rationalize” out small players to cut administrative costs. If they improve the benefits to the big guys that locks them in and then makes other competitors deal with the small fish first.

    I would say it’s strategic. People may not like it but I think they (amazon) are prepared for that.

    A manufacture would rather deal with Woolworths than having to flog their where’s to 100,000 corner stores. Sorry for the analogy. I’m a corner store as well. So know crowing here. Just trying to see it from their perspective.

    The only people that complain will be the ones losing and my guess is that they obviously don’t care if they lose them anyway.

    You can never rest in this game can you?

    Thanks for listening.

  20. Darren Rowse says:

    you could be right icooltools although I’m not sure about that. I know of one Amazon publisher that earns $20,000+ per month from Amazon and who sends them thousands of visitors per day who is set to loose up to 40% of his income from these changes. He’s angry and on the hunt for a new program. He’s also finding other programs are willing to cut him special deals to get his traffic.

    The other thing I wonder whether Amazon has factored in is what impact that cutting our their small publisher might have on them in terms of PR. Can you imagine what’d happen if the blogging community got put offside by Amazon for cutting their earnings (however meager they are).

    It’s going to be interesting to watch what happens.

  21. Michael says:

    Darren (and others)–any experience with Barnes & Noble’s affiliate program?

  22. Jon Heizer says:

    Grrrr… And I was just starting to add Amazon to my sites. I haven’t made anything from them yet, but I am not sure if I am going to add any more links now.

  23. Well there is one very very good use of Amazon.com ads, you can serve them to people who have javascript disabled and so arent seeing your Adsense ads. I’ve modified all my Adsense ads, after my value investing blog became popular with linux users.

    What you do is enclose the amazon.com ad units inside of tags right after the adsense ads. If someone has Javascript enabled, the broswer will ignore the Noscript content, and the adsense will be displayed. If the sneaky bastards have javascript disabled, then the NOSCRIPT content will be activated and they will see Amazon ads.

    I learned about this trick from:

    http://www.jensense.com/archives/2005/10/monetizing_from.html

    Market Participant

  24. I’m with Chi-An #14 .. I’ve never received anything EVER from them. However, my amazon account has been sitting at 98.27 since last quarter 2005 (less maybe 40cents or so) .. and that includes my time before blogging.. for years now. So, I doubt I will continue after hitting the $100 payout level and probably disable the plugin in my wordpress.

    I also have been complaining about the country issue too (amazon.com vs amazon.ca for instance). When I put amazon.com links on my site, and fellow canadians or other countries actually buy an item – i get nothing – because the sale then defaults to their local country amazon for purchase and delivery. Even though I now have affiliate accounts in the other countries, it works just the same in reverse. If people in US click and buy stuff from my canadian affiliate link – I also get nothing. I think that’s more unfair, when you think about it, then the reduced rate on consumer electronics.

    Despite what you think about lowered margins .. I’ll bet the sales of consumer electronics have been growing exponentially in past 2 years (erm – that is just a gut feeling, and not based on any facts) .. So I’m not sorry that people who sell C/E product commission earnings have only grown by 1000% (at the lowered rates) instead of 5000% (with the higher rates). C’mon .. Sure you could be earning more – but dollar for dollar .. how did you do this year over last year?
    Is it really that bad? Before that .. it used to be mostly books and CD’s .. now people are buying everything and the kitchen sink.

    Of course – it’s really that bad for me. Included in my stated Lifetime earnings above .. was one sale – commission of $80.74 for the sale of a a 10,000 watt portable generator meaning I’ve only earned about $17 over 3-1/2 years promoting Amazon products. That’s why I added the letter “L” after my name on this post!

  25. coffeerama says:

    it seems to me that Amazon has always had a habit of squeezing their affiliates, which is a good reason to never get involved with them to begin with; i guess it’s nothing personal, though, right?

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