Hundreds of thousands of websites link to Amazon in the hope that its visitors will buy something on it, earning the site a percentage of the sale. As it is the largest e-commerce site, most of the publishers only associate with Amazon, which helps them to grow and increase their reliance on it for monetization.
The Amazon Associates Program, launched in 1996, was one of the first to offer a percentage of sales that started from links placed on a website. It offers up to 10% off sale in some categories but has kept dropping prices over the years. As recently as April 2020, when it was actively trying to slow sales growth. The largest publications generate $100 million annually from affiliate links to Amazon.
But Amazon only pays the partnership fee if the shopper purchases in less than twenty-four hours of clicking the link. If the shopper returns the next day ready to make the purchase, none of them will be paid. And if a shopper reads a few articles, only the latest publishers get paid. Thus, Amazon only pays for some of the transactions that originate from affiliate links, and only if those links generate sales. It’s a traditional performance marketing model that costs Amazon as much as it generates sales.
The importance of the affiliate program is perhaps most evident as Prime Day approaches. Affiliates are largely responsible for creating Prime Day.
Every year, starting in the months leading up to the event and continuing throughout, publications and blogs flood the internet with articles covering the event’s history, expected deals, best deals, and the like. They do this because most shoppers are looking for this type of content, and because most of their readers are also Amazon shoppers. These articles end up generating meaningful affiliate earnings.
Affiliates leave Amazon without having to do the same amount of marketing and effortlessly organizing deals. All publications will do this for Amazon. The affiliate payments that Amazon will pay are minuscule compared to the revenue it will pay, especially from newly subscribed Prime members. This is why the affiliate fee for new Prime members is $3-5 depending on the type of membership.
The problem is that other retailers get very little coverage, even though there are similar affiliate programs. They all run their own sales events during Amazon Prime Day. However, because it is smaller than Amazon and therefore has fewer shoppers, the chance of a reader buying after reading an article is significantly lower. So most of them don’t even bother to write about them.
If Amazon’s share of the US e-commerce market is around 40% by most estimates, then Amazon’s share of the e-commerce affiliate market is much higher. They are the only ones with an affiliate flywheel that drives publishers to write about Amazon, and bring more shoppers to Amazon, which makes writing only about Amazon reasonable. There are affiliate networks that allow publishers to create content without being tied to a specific retailer; However, it is not effective or common.
As more of the nation becomes prime members, and Amazon increases market share, affiliates play less of a role. Publishers bring in shoppers who previously bought on Amazon. This realization allows Amazon to lower affiliate prices because the value they bring to Amazon is now smaller – if Amazon is the default choice for many shoppers, you don’t need to pay a premium to affiliates. Because they’re not likely to stop writing about the upcoming Prime Day. And if some do, others will take their place.
Amazon affiliate links are found on news sites, online magazines, blogs, video platforms, and social networks. Amazon got it there because those with audiences realized they could monetize them better with affiliate links than ads. Paying a 3% affiliate fee for a transaction in the gaming category from the 15% referral fee charged to a market seller is a no-brainer.