For a while there, Amazon.com (NASDAQ:AMZN) wasn't just the leading online retailer. It was also a major moneymaker for small and medium websites. Through its Amazon Associates program, anyone could single out books or other Amazon merchandise on their websites and refer as much as 15% off the sale in affiliate income.
It was a welcome, personalized alternative to banner ads. I know it. I have been using Amazon ads on my travel sites since the 1990s. Here at Fool.com you will occasionally stumble across an affiliate link to the Amazon bookstore. A few years ago, I worked with my son's elementary school to set up a page featuring each grade's summer reading list, with the proceeds earmarked as a school fundraiser.
Unfortunately, Amazon has grown less relevant in the realm of affiliate marketing. Paid search giants like Google (NASDAQ:GOOG) and Yahoo! (NASDAQ:YHOO) have rolled out networks that have often proven to be more lucrative to site publishers by serving up perfectly targeted text ads in volume.
Google the Disruptor
Until 2003, my travel sites were mostly labors of love. Amazon and Expedia's (NASDAQ:EXPE) Interactive Affiliate Network helped subsidize my hosting costs and provide a little pocket change to boot. That all changed in the summer of 2003 when I enrolled in the Google AdSense program and saw the revenue-generating power of my collection of sites grow tenfold.
Amazon ads that converted poorly were marginalized to make room for more text ads. It certainly didn't help that Amazon has kept hacking away at that 5% to 15% referral royalty. As it stands now, the rate range is between 4% and 8.5%, with several areas of the site exempt from generating commissions.
In the old days, I had too many visitors being whisked away from my site, and came up empty if they didn't ultimately purchase a travel guide or book a room. Through Google, over the past three years, my site visitors are being treated to a wide range of perpetually updated pitches. Meanwhile, I'm generating spare change the moment a click is made and I have facilitated the introduction between my visitor and a waiting sponsor.
Amazon wasn't going to give up without a fight. It improved its product. It added features that would dynamically update the products being promoted on third-party sites. Earlier this year, Amazon rolled out Omakase Links -- in beta form -- that would deliver ads algorithmically, based on several factors, including the content on the site and buying habits of the visitor.
It's still too early to gauge the success of Omakase, much less pronounce it, but now Amazon is hoping to raise the stakes again by rolling out its new aStore feature.
The convenience aStore
Until now, affiliate marketing has revolved around the assumption that participants have a rudimentary grasp of HTML programming. Whether it's Amazon, Google, or more traditional associate networks like ValueClick's (NASDAQ:VCLK) Commission Junction, codes need to be inserted into related pages, emails, or message board posts to get the process started.
Things have been getting easier. Google's popular Blogger.com provides seamless integration into the AdSense program for qualifying bloggers. Now, Amazon's aStore is taking simplicity one step further by providing a simple store creation interface where users can create free storefronts loaded with Amazon.com merchandise. Follow the simple steps and presto, an aStore store is born.
Associates only need to remember a simple web address in Amazon's aStore subdomain. Armed with that, they can go about promoting their personalized commission-generating virtual storefronts.
Naturally this can't compare to the merchant-oriented Amazon zShops or the eBay (NASDAQ:EBAY) Stores that are making headlines these days after eBay's latest round of fee hikes. The Amazon aStore is a passive, practically effortless way to cash in on sending traffic to Amazon. In that sense, it's just what Amazon needs these days.
Net sales at Amazon inched just 22% higher last quarter and are expected to climb between 17% to 25% higher in the current period. That would be heady growth if you ran a bricks-and-mortar shop with a limited expansion policy, but that's not the kind of growth rate that most investors expect when they're buying into the Internet migration story.
One gimmick isn't enough to dramatically accelerate growth at Amazon. However, if Amazon promotes this feature the right way and targets schools, bands, church groups, MySpace celebrities, radio stations, and charities, it may have a viral monster on its hands.
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Longtime Fool contributor Rick Munarriz has been shopping online for about as long as Amazon.com has been in business. He does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. T he Fool has a disclosure policy.
