Web site publishers who rely on Amazon Associates' affiliate program are unhappy with a new compensation plan announced by the company today. The online retailing giant sent an e-mail to its affiliates notifying them that beginning in Q2 2006 (April 1), a new compensation plan will be in place that introduces flat-rate commissions and does away with link bonuses.
The Amazon Associates program currently allows affiliates to build links to Amazon content and merchandise with an embedded affiliate tracking code. When a user actually buys something from Amazon, the affiliate gets a percentage ranging from 4 percent all the way up to 10 percent. Affiliate links can be built via Amazon Associates online tools or via Amazon's E-commerce Service, which allows affiliates to build their own virtual store.
According to the new referral structure, affiliates using the "Performance Structure" compensation plan will receive between .75 percent and one percent more in commissions. This applies to 21 or more total items shipped in a quarter. Affiliates earning commissions on 20 or fewer items shipped in a quarter will actually receive a smaller commission - four percent instead of the old five percent. Associates will now also earn a flat four percent commission on consumer electronics items. Electronics currently follow the tiered compensation schedule.
The reason for the flat-fee, Amazon said, is "necessary to maintain a healthy Associates program over the long term."
To add to the pain (and anger) many affiliates will feel, the company is also doing away with bonus link commissions. Currently, Amazon pays an additional one percent over the base rate for all items referred via "Easy Links." Using "Direct-Links" Associates earn an additional 2.5 percent over the base rate for items referred through direct links.
In the e-mail sent to its Associates, Amazon states, "Using your feedback and suggestions, we simplified the Performance fee structure and made it easier for you to make more money!"
Many of Amazon's Associates aren't buying that, however, and are venting their displeasure on the Associates' discussion boards. "Terrible news, at least for me," said one poster. "More than 2/3 of my items are direct-links, so I'm going to lose between 0.5% and 1.0% on all non-electronics items over the course of a quarter."
"And the electronics at just four percent — might as well bring back the $10 cap while you're at it, Amazon. There are plenty of other places to promote if that is going to be the new rate. Buy.com is only three percent but they usually offer bonuses to get that up to four percent or more. Amazon was always my first option because of low prices and good-enough commission but not anymore. Probably 75 percent of my sales $ were in electronics. Not anymore," he added.
Another poster was even more blunt with his criticism.
"I AM ** F U R I O U S **," he wrote.
"I spent all of my efforts creating and placing direct links to specific products. I was actually up all night last night creating links for specific products; then they pull this on us just 2 days before it takes effect? You bet your sweet BP that if I had known, I wouldn't have done that. I have to imagine that within a very short timeframe most Amazon Affiliate sites will look like giant Amazon search engines like all the other garbage sites out there, rather than the carefully matched and highly targeted traffic like I send to them now," the poster wrote.
"A very high percentage of my sales are direct links (except the ones that Amazon couldn't track properly or twisted my customers off with the 'You clicked on this, but how about this other non-direct-link product'), and now my commission is going to go down by 1.75 percent on almost all of my sales; since I'm in the lowly 91-330 bracket, that means my commissions are (should be, if tracking worked properly) going down by about 20 percent," he added.
The poster gave an example of the commissions he earned this past quarter and showed the same items earning 17 percent less using the new referral structure.
"Even with their dysfunctional link tracking, my commissions, based on this quarter's actual earnings will go from a composite 7.23 percent to 6.50 percent, a 10.1 percent drop in commissions,' he said.
Another user made his thoughts about the new pricing structure and Amazon's e-mail fairly clear." I would have preferred an honestly worded letter. Something like, 'competitive pressure has forced us to reduce and restructure our associate compensation, but we continue to rank among the best-paying programs, blah, blah, blah.' What they sent out goes way beyond spin, and is just deceptive," said the Associate.
Not all Associates posting to the program's discussion board were upset. One poster said after doing an analysis, he will actually benefit from the new structure.
"When I analyzed the referral fees by product line, I found that my fees on Apparel, Beauty, Books, Computer & Video Games, DVDs, Food, Music, Other, Software, Sporting Goods, and VHS would have gone up between 4.1 percent and 16.9 percent, or anywhere from two cents to $10.33 per category. If I had only products from these categories, I would have increased my earnings by $27.78, or nearly seven percent overall. It's only when I take electronics into consideration that I lose money," said the Associate.
Amazon hadn't responded to an ECommerce Guide inquiry as of press time.
Are you an Amazon Associate? What do you think of the new referral structure? Tell us now in the Small Business Computing forums.
Devin Comiskey is the Managing Editor of ECommerce-Guide.com.
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