
Amazon Associates Arbitrage: Amazon’s Own Success May Be Hurting Themselves - jmarbach
http://jmarbach.com/amazon-associates-arbitrage-how-amazons-own-success-may-be-hurting-themselves
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fpgaminer
Doesn't seem like a terrible deal for Amazon. Amazon effectively paid $0.036
per click, which in the grand scheme of things is not that much. It's a
premium on top of what Reddit charged ($0.02/click), but then Amazon didn't
have to pay any humans to write and set up those ads, nor research where to
put the ads. Basically they paid a premium to have a third-party figure out
the advertising for them.

Plus, the associates program has other benefits for Amazon. As the article
points out, authors use affiliate links to promote their books for sale on
Amazon so they can get a higher cut of the profits. Seems like that scheme,
not even limited to books, would motiviate a lot of people to sell their wares
on Amazon.

And then there's the benefit of squeezing out other affiliate link programs.
An ad can only have one affiliate link, so by making the Amazon program
attractive they out-compete other stores in the ads with affiliate links
marketplace.

~~~
resoluteteeth
It's a bad deal for Amazon if, as the author assumes, the people aren't buying
the product featured in the ad, but rather just happen to buy something else
from Amazon within the 24 hour window without any connection to having seen
the ad.

I wouldn't be surprised if in future amazon changes the system so that it only
pays the fees when the original product from the link is purchased (or perhaps
switches to this only for prime users.)

~~~
LyndsySimon
I disagree.

I've been in the Amazon Associates program for several years - at one point, I
had an LLC set up specifically for it, because my state at that time was
having a bit of a legal battle with them.

My job is to get people on Amazon's site. _Why_ they're on the site almost
doesn't matter, because my job ends when the user's eyeballs hit Amazon's
page.

Amazon's job is to convert eyeballs on their pages into sales - and they're
_really_ good at their job, as is evidenced by their position in the market.

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imaginenore
If you have access to cheap traffic that's not complete garbage, giving it to
Amazon is one of the dumbest things you can do.

I really tried AA on a few of my sites, and eventually gave up and switched
back to Adsense. I even created a custom ad system which tried different
Amazon products, tracked impressions and clicks, which gave me the data on
which ads were more likely to be clicked on. I went up from the initial 0.5%
CTR to 5% CTR, which I felt really proud of. But then you have to realize that
once these people land on Amazon, they have to convert again in order for you
to get paid, and the conversion rate is like 1-2%.

So you end up with shit like this: 250 clicks, 4 items ordered, $2.40 earned
(straight from the earning report).

Now think how much Adsense would pay you for 250 clicks. I average $0.432 per
click (just checked). So $108 is what I'd expect to earn with Google. That's
45 times more than Amazon.

~~~
LyndsySimon
I run several sites, one of which is mostly gun reviews. I know my audience on
that site very well, and I can hand-select Amazon products that will sell.

On some pages, I have ads for things like a P-38 can opener. They're around $3
each or $10 for 10. Something like 5% of my traffic clicks that ad, and 70%
buys the product. Because it's so cheap, I make only a couple of pennies per
sale... but the number of items sold bumps me from the default 4% commission
for the month to 6.5% or more without working for it.

On other pages I might link to a $400 rifle optic, or a $50 gunsmithing book.
Because of all those little sales, I make $26 on that optic instead of $16 -
it makes a big difference.

I've put Adsense on those pages in the past, and it averages around 10% of the
revenue I get from Amazon.

~~~
imaginenore
That's interesting. 70% buy rate is tremendous though. I've never heard of
anything like that.

I targeted the products to my audience too, and still didn't get above 2%.

~~~
LyndsySimon
It's not a lot of traffic, but it's consistent. More normal is 5-7% for most
things.

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assoc
To anyone who thinks this is a great idea, read and understand the Amazon
Associates Operating Agreement [https://affiliate-
program.amazon.com/gp/associates/agreement](https://affiliate-
program.amazon.com/gp/associates/agreement) and the Linking Requirements.
Buying search ads and using redircting links may lead to account closure.
Usually ad links are redircted and even redirects within your own domain for
tracking purposes can cause trouble. When in doubt, ask the associates team
before implementing questionable advice you found on the internet.

------
shellerik
I have an Amazon Associates website and I've considered trying to use ads to
generate traffic. This adds another step in the process vs what the article
describes. Users have to click on the ad, click on my affiliate link, then
make a purchase.

Users of my site click on an affiliate link about 40% of the time and those
that do make a purchase about 2.5% of the time with an average commission of
$5. This means I make about $0.05 per visitor so I would need ads with a CPC
less than that. In my niche this does not seem remotely possible.

Luckily I'm getting over 1,200 visitors per day without paying for them.

------
kennywinker
I built an app to help make Amazon and iTunes affiliate links from iOS,
because I was playing with some similar schemes. Might be useful to others
interested in this. The app is currently free, though I'll likely add an in
app purchase of some kind soon.

[https://geo.itunes.apple.com/ca/app/rivet-effortless-
affilia...](https://geo.itunes.apple.com/ca/app/rivet-effortless-
affiliate/id961301050?at=11lJMF&ct=hn&pt=273687&mt=8)
[http://rivet.link](http://rivet.link)

~~~
tschuy
Perhaps you could make one in every x links be an affiliate link with your
key, and the IAP get rid of that?

~~~
kennywinker
I've thought about that, but I haven't figured out how to clearly communicate
what's happening and make sure it's not percieved as scummy/untrustworthy
behavior.

------
lxchase
If we were to dive in further, we can also expand on the ad-commission
arbitrage and go ad-ad arbitrage. By finding price differences between ad
exchanges, one can find arbitrage opportunities. Granted this would apply to
display inventory on a CPM basis. Here is an article that sheds some light:
[http://www.bloomberg.com/news/articles/2014-11-07/high-
speed...](http://www.bloomberg.com/news/articles/2014-11-07/high-speed-ad-
traders-profit-by-arbitraging-your-eyeballs)

------
kposehn
Note: You can still put affiliate links in AdWords, and many people do. Google
just has a higher bar than it used to.

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paulpauper
This seems similar to cookie stuffing, which is prohibited by amazon. The idea
is to send lots of low quality traffic to skim commissions from the session

A major problem is that amazon has a 2-month lag in payments (feb payment are
made in late april), so it would really suck to spend $1000's on ads and not
get paid.

~~~
yesthrowaway
It's not really cookie stuffing. In the end, people have to click on the ad to
get the cookie.

Cookie stuffing would be, for example, HN embedding a hidden iframe with their
Amazon code and placing cookies on users.

I did something similar a couple of years ago with a _very_ cheap traffic
source I found. I bought traffic and sent it straight to the Amazon homepage.
I had a good run for about 4-5 months. On my last month I really ramped up
traffic, spent like $250 and made around $6k in a single month. But amazon
caught on and like you said, cancelled my account and didn't pay me.

It's a sucky thing to do I guess. I know of massive operations where guys are
pulling in $10-20k per month. If someone wanted to really put their brains in
to it, cookie stuffing is very hard to detect.

------
dfc
Where is the arbitrage?

~~~
jmarbach
Pay $0.02 per click, send that click to Amazon, earn $0.04 per click. Earn
$0.02 per click margin for funneling cheaply acquired traffic to an entity
that is willing and able to pay more for that click.

~~~
AznHisoka
I'd love to know where you can pay that amount per click

~~~
jmarbach
The cost per click is dependent on an ad with a high CTR, in addition to a low
cost per thousand impressions. Reddit ads, as mentioned in the post for
example, are one place with low priced ad inventory.

~~~
beeboop
You pay reddit per impression, not per click. Getting an ad that works out to
$0.02 per click is not as easy as it sounds, especially if you're just trying
to make them buy something on Amazon. Clickbait doesn't lead to sales very
much, and advertising to capture attention of people who'd actually buy it
leads to a very high cost per click.

