Amazon offers brands a 'bonus' when ads drive sales to its site
Amazon announced a new advertising program that encourages brands to drive sales to its online store, as opposed to linking elsewhere online, with what it calls a “brand referral bonus.” The bonus is awarded to brands that run ads on platforms outside of Amazon that direct consumers to the e-commerce giant’s website, instead of say Walmart.
The incentive could have a broader impact in the online shopper marketing world, according to advertising experts.
On Thursday, Amazon announced the program, which works like this: A brand runs digital ad campaigns outside of Amazon. Those product ads run in search engines, on websites and on social media. If the brand sends the traffic with links to Amazon, and it results in a sale within 14 days, the seller receives an average “bonus” of 10% of the sales price of the product. The bonuses accrue and can later be used to off-set other sales costs like "referral fees," which are the percentage that Amazon takes from sellers on its site. For instance, book sellers pay a 15% referral fee, while cameras, phones and other electronics are hit with an 8% fee.
“With more than 300 million customers worldwide, Amazon is one of the best places for brands to launch new products,” Mike Miller, worldwide director of Amazon brand program and selling partner development, said in a statement. “We’re launching the Brand Referral Bonus to help brands make their marketing spend go further. When brands direct their non-Amazon marketing traffic to our store, we’ll provide them with a bonus averaging 10% of the applicable sales.”
The 10% average bonus might seem like a small nudge to motivate sellers, but given Amazon’s size it could factor into how brands think about where they link their ads for sales.
Amazon is fighting to maintain its position as the No. 1 e-commerce site as rivals like Google, Walmart, Target, Kroger, Instacart, and even Facebook, try to encourage more sales to their online destinations. A recent eMarketer report showed that Amazon will be the No. 4 fastest-growing e-commerce site in the U.S. in 2021, increasing sales by 25% year-over-year. Meanwhile, Etsy, Walmart and Chewy were the No 1, 2 and 3 fastest growing this year, albeit from a lower base of sales. It shows that online commerce is heating up for all categories of products. From handmade goods on Etsy to pet goods on Chewy, all categories in which Amazon competes.
Jason Colon, managing director of integrated media planning at OMD USA, says that Amazon’s program is part of larger changes to its strategy to work with sellers and fend off e-commerce rivals. Brands that point sales to products on Amazon could see benefits like higher placement within organic searches on Amazon, meaning they naturally achieve more visibility on the site.
“Amazon will put more weight behind share of traffic to product pages and sales that are driven from off-site,” Colon said in an email. “The more traffic and sales that occurs from external traffic sources, the higher ranking for a seller’s product in search results. The referral program should be looked at as an extension of this strategy.”