Amazon will no longer allow retailers to advertise their products and take users away outside of the Amazon website.
The change is expected to take effect on Oct. 31, after which advertisers will no longer be able to post the Product Ads that are proving to be very lucrative for small businesses that are selling their products on their own websites outside of Amazon. By all appearances, Amazon's Product Ads look exactly like its own product listings, with the only difference being the heading that says "Product Ads from External Websites."
Amazon quietly announced the news to its network of advertisers in an email obtained by Reuters and the Wall Street Journal, which says that advertisers can still access their performance reports until Dec. 31. Other than that, the e-commerce company did not provide any explanation as to why it is suddenly closing down its pay-per-click ad program.
"We are disappointed with the news," Angela Hsu, vice president of Internet business and marketing at home décor retail firm Lamps Plus, says, noting that her company's participation in the advertising program has brought about an 80 percent growth in sales.
For its part, Amazon says it values its partners' businesses, which is why it is still encouraging them to work with Amazon. One option that Amazon offers is its Text Ads pay-per-click ads program, where instead of the image-based ads they used for Product Ads, advertisers can place alongside search results.
Amazon is also inviting retailers to sell their products on Amazon itself, an option that is not too attractive for businesses that want to stay in control of the buying experience and their customers' information.
The Product Ads program was sort of a win-win situation that lets retailers take advantage of Amazon's popularity while still retaining full control of how their customers shop for goods and what information they share. Amazon says it makes around $0.10 to $2.05 for every Product Ad that gets clicked on its website.
"Our customers performed really well with it because it provided a middle ground of being able to partner with Amazon but also not allowing them to see all their transaction data," Scott Wingo, executive chairman of ChannelAdvisor, a company that helps businesses set up their e-commerce stores, says.
Photo: Lars Plougmann | Flickr
