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Affiliate Death Blow? Amazon Fires a Shot across the bow

Amazon dealt a major blow to its affiliates this morning. Amazon has long been a leader in online marketing, and affiliates often cite Amazon as a company built by affiliate networks. Amazon now takes a step that we at RKG have long advocated: barring affiliates from the Paid Search arena. In an email to its affiliates this morning Amazon writes:
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. ... 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 has clearly done the math and determined that having affiliates competing against its own PPC efforts makes no sense. Not only do affiliates cannibalize sales on Amazon's trademarks, they effectively increase the CPCs Amazon pays in its PPC program. We expect this move to reverberate throughout the online retail community and would be surprised if other smart firms don't follow suit. Many thanks to Jeff Molander, a Web marketing speaker and CEO of Molander and Associates for passing along this news. Commentary welcomed!
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