From his own numbers his conversion rate is coming in at 1.6%. Quick Google search suggests that 1.7% is average for referral programs, so his ad wasn't exactly a failure. The failure happens when we take into account Amazon's referral fee. It simply doesn't make sense to spend extra money on something that's intended to be used in no-cost situations, like alongside blog posts.
Numbers: http://www.grokdotcom.com/2008/09/22/top-10-online-retailers...