Amazon sent out an email today and announced inside their affiliate program pages the following:
Change to Amazon Associates programAfter 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.
There is more to it but I am sure you can find the rest in the news. It may not seem like a big deal, but I am sure that it could put a certain number of people virtually out of business. Key word bidding on certain retail items is both science and art - and Amazon's decision, at this stage of the recession, is pretty curious. Do they feel the Google has their merchandise covered well enough that they are throwing money away paying these affiliates? Or do they plan on advertising themselves more? Either way I am sure it came as a shock to some SE marketers who may have seen a big chunk of their business disappear in an instant. I am sure lawsuits will follow.
How will it impact your business
No issues for me as we use it as a straight affiliate situation - we list items on our site that link to Amazon. The issue is for people buying text ads (most likely) on Google (and other networks). They are playing an arbitrage game of paying x per click and then making 6,7,8% or more in commission to whatever it is they are linking to on Amazon. Obviously Amazon thinks that they can do this better themselves, or they have high enough organic placing on these products that they are tired of losing the affiliate commission on sales of whatever it is. Either way I bet they did a lot of math first and must see it as a win for them, but they are no doubt going to hurt a lot of people with this move and create some backlash.
amazon will make more profit after cut out the PPC competitor.