Isabel Walcott Hilborn

Amazon's big announcement

Got an email from the Amazon Associates Program today announcing a that they are no longer going to pay referral fees to associates who use paid keyword search (i.e. Google Adwords et al.) to drive traffic to Amazon.

Amazon is good at research.  They've clearly determined that the amount of purchases they generate through these channels are not worth it.  Since keyword buys are priced based on demand, associates' use of these keywords is driving up Amazon's own paid search advertising costs.  So Amazon has decided that it costs them more to pay the referral fees and higher ad prices, than they earn from this incremental traffic.

It's quite obvious that, as an e-commerce company, if you can figure out on your own every case where you can make money getting your customers via paid search, there's no reason to share that revenue with anyone - just do it yourself.  With handy companies like Marin Software (my brother's company) to help organize your paid search campaigns, you no longer need to rely on your Associates to figure out these sweet spots for you.

Amazon may also have noticed that they were funding Google's revenue growth with a share of their profits -- perhaps that factored into their decision as well.  I wonder how much of Google's Adwords revenue comes from Associates-type referrers, and how much of a hit Google will take if the idea of cutting off payments to referrals that come via paid search takes off.

Many other e-commerce sites have referral programs as well.  If their programs are working, they're probably thrilled to have the extra revenue, and perhaps haven't considered that referrer buyers are bidding up their search prices or that they could do this advertising by themselves and skip the referral fees.  Now every company in this position will need to take a look at their situation and see whether they couldn't do better on their own.

Another interesting question is how angry will the Associates be who have come to depend on a revenue stream from buying search keywords and referring customers to Amazon - and how hard will they bite the hand that no longer feeds?

Here's the text of the email:

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

Advertising world thinks Google isn't leveraging enough user data

"Advertisers have also been looking for Google to leverage its dominance in data into a full-feature behavioral-targeting ad offering. Google announced what it calls "interest-based targeting" last week, but Mr.[Michael] Hayes [of IPG] said, "given the breadth of their data, we haven't seen it yet." " Ad Age article (by Abbey Klaassen and Michael Learmonth)

And I hope we never do.

Here's a serviceable description of Google's new initiative.  They've made more than a passing effort to put control in the hands of the viewer.  If you like ads, you can manage preferences so you don't see the wrong categories.  If you don't like the idea of having your search patterns trigger what people try to sell you, you can delete the cookie.

Don't Give Up on Vista

On the front page of the New York Times website this morning was a banner ad that I just had to click: "Don't Give Up on Vista", it said.  Could Microsoft actually have resorted to begging?

Of course not.  Clicking on the ad sends you straight to Apple's site for Mac OS X Leopard Guided Tour.

I think this is the funniest banner ad I have seen in a long time.  Go Apple!

Ad-free Views Touch a Nerve

Just found this cool post about the newly billboard-free Sao Paulo over at Faris Yakob's blog. 

He featured a video made by Sky Movies, an ad-free movie channel, celebrating the ad-free Sao Paolo. 

Yakob also quoted an amazing essay from Harper's -- a blog, really -- by Howard Gossage, an advertising executive in the 1950's.  I pulled some great quotes for your reading pleasure:

"Outdoor advertising is peddling a commodity it does not own and without the owner’s permission: your field of vision."

"What is the difference between seeing an ad on a billboard and seeing an ad in a magazine? The answer, in a word, is permission–or, in three words, freedom of choice. Through a sequence of voluntary acts you have given the magazine advertisement permission to be seen by you...You cannot throw U.S. 40 out the window, especially if you are on it. Nor can you flip a billboard over. Or off. Your exposure to television commercials is conditional on their being accompanied by entertainment that is not otherwise available. No such parity or tit-for-tat or fair exchange exists in outdoor advertising."

Seems as though my "quid-pro-quo" idea wasn't original after all.  But what's even more disturbing is that this idea has been around for 50 years and ad agencies still don't get it.

"Having myself arrived at a point where the billboard no longer exists for me simply because I just can’t see it, I wonder how many others feel the same way."

"The billboard’s day of judgement is surely at hand, yet awareness of this fate seems to elude the still-embattled principals, i.e. the public and the outdoor industry, as it is called in the trade."

Hopefully not for long.