Was this a wise move by the California government? Tell us what you think.

Democrat Governor Jerry Brown has called it a “common sense idea,” according to one report from the LA Times. Though clearly many disagree with that notion, thinking that it will do more harm that good. Amazon CEO Jeff Bezos has said in the past that the company is protected in the U.S. constitution’s prohibition of state’s interference in interstate commerce:

And in the U.S., the Constitution prohibits states from interfering in interstate commerce. And there was a Supreme Court case decades ago that clarified that businesses — it was mail-order at that time because the Internet did not exist — that mail-order companies could not be required to collect sales tax in states where they didn’t have what’s called “nexus.”

So there’s that, but as my colleague Josh Wolford noted in a recent related article about Texas, more and more states are saying that Amazon affiliates count as physical presences and are enacting sales tax regulations already.

That’s why Amazon has been shutting down affiliate programs. Amazon has told affiliates in the past that they’d have to move to another state to continue earning commissions on referrals. Overstock.com has reportedly done that before too.

It’s worth noting that California’s sales tax rate in general will be dropping to 7.75%. Here is the bill that was signed into law (pdf).

Some groups representing brick and mortars feel the law should be extended on a national level, claiming the taxes take away competitive advantages from Internet retailers that don’t have a physical presence in a particular state. Consumers are able to avoid fees from purchasing from these retailers that they’d otherwise have to pay by buying in-state.

Affiliates have been informed of the termination of their contracts with Amazon. They have received a letter from Amazon saying:

(The bill) specifically imposes the collection of taxes from consumers on sales by online retailers – including but not limited to those referred by California-based marketing affiliates like you – even if those retailers have no physical presence in the state.

We oppose this bill because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we must take this action.

Danny Sullivan, a California resident wrote Bezos an open letter “thanking him” on his personal blog Daggle. It begins:

“Thank you for your letter today, informing me that after seven years of being one of your affiliates — and having earned for you about $150,000 in that time — that you “deeply regret” unilaterally terminating my contract with Amazon to be an affiliate. I also especially appreciated the part where you reassured me that this action wouldn’t affect my ability to keep buying from your company. Nice touch.”

He goes on to add that while he is fortunate enough to have a successful day job, the loss of income will have a far greater impact on many other affiliates. He also makes a good point about how Amazon will continue to get paid from existing affiliate links without the actual affiliates getting paid.

“I’m not sure how many affiliate links I have on the blog,” Sullivan writes. “Not that many, maybe 25 to 50 in all. But until about an hour ago, those links were worth something to you. Now, because of your squabble over the sales tax issue, you’ve decided to just take for free what you’d previously paid for. If I don’t find time to track down and kill those links, you keep grabbing orders that get made through them and keeping the cut I previously received”

“Over the next day or so, you’re going to get a lot of orders this way,” he adds. “Bigger affiliates will eventually move. Plenty of smaller ones won’t be bothered to change. But those small ones that don’t will add up into plenty of money for your company. You, of all companies, really understand how all that long tail stuff can mount up, right?”

Danny makes some fair points, but the fact that the law was passed is likely to drive businesses away from the state, as clearly they will have no choice if they wish to continue relying on Amazon for income.

jjlwils55, commenting on the LA Times report says, “Okay, here’s the answer…start buying products from overseas companies.  In this day of internet technology, this is a job killer and at the end of the day will not raise additional taxes.”

In the same thread, a small business owner says his company was a victim of similar circumstances all the way back in the early 80′s. “We operated out of Pennsylvania until they ‘needed $65 million’ and ‘targeted only 4 industries’ for a ‘new sales and use tax’. Lots of Exemptions only to the connected cronies in Harrisburg (lawyers of course). WE VOTED WITH OUR FEET AND MOVED TO FLORIDA. We moved the Business and Six Families after ‘growing up there’. We are still angry.”

From the sound of it, there are plenty of people getting ready to pick up and move, or at least consider it, as a result of this California law now. But how long before they are greeted with similar issues at their next destination. You can see how the ordeal has been playing out in various states in this map from TheStreet.com:

Amazon isn’t the only one the law will affect, by the way – just the biggest.

What do you think? Should states tax online retailers the way California is doing? Should about federal law? Share your thoughts in the comments.

The letter comes after Amazon’s decision to stop its affiliate program in some states that require the online retailer to collect sales tax on purchases.

 In the letter, Barnes & Noble President, John Foley, says Amazon would rather “ threaten small businesses’ livelihood than comply with state law.”

“Barnes & Noble wants Amazon.com affiliates who have been terminated to know that you are welcome to join the Barnes & Noble affiliate family,” wrote Foley.

“If Amazon doesn’t want you, we do! And, we will take care of collecting and remitting all sales taxes due on BN.com sales to its customers so you and our customers don’t have to worry about being hassled or prosecuted by state tax auditors.”
 

What the North Carolina government is proposing would apply sales tax to purchases made through online affiliates based in NC. It has not yet passed.

Now NC residents have received an email confirming that they are indeed severing ties. Andy Beal at Marketing Pilgrim received one of the emails and shares it on his blog. It reads:

We are writing from the Amazon Associates Program to notify you that your Associates account has been closed as of June 26, 2009. This is a direct result of the unconstitutional tax collection scheme expected to be passed any day now by the North Carolina state legislature (the General Assembly) and signed by the governor. As a result, we will no longer pay any referral fees for customers referred to Amazon.com or Endless.com after June 26. We were forced to take this unfortunate action in anticipation of actual enactment because of uncertainties surrounding the legislation’s effective date.

Please be assured that all qualifying referral fees earned prior to June 26, 2009 will be processed and paid in full in accordance with our regular referral fee schedule. Based on your account closure date of June 26, 2009, any final payments will be paid by September 1, 2009.

In the event that North Carolina repeals this tax collection scheme, we would certainly be happy to re-open our Associates program to North Carolina residents.

Given that the tax law has not passed, it isn’t hard to understand why Amazon’s NC affiliates would be a little upset. A News-Record article that was picked up by Slashdot offers the following quote:

"Local affiliates say they were ‘blind-sided’ by the company’s action. ‘I got this e-mail at 4:30 this morning,’ said James Barrett, a technology consultant from Winston-Salem. ‘It wasn’t saying your account will be shut down. It said it is shut down. That just blew me up right there.’ Barrett said that he is frustrated at lawmakers for considering the tax, but equally aggravated with Amazon. ‘They’re trying to tick off all their associates and get them to call down to Raleigh,’ Barrett said. ‘I think that is pretty tacky. That’s not the way to use people who are referring business to your business.’"

So far, there is no mention of the North Carolina situation on the Official Amazon Association Blog.

The change is not temporary. Amazon will not reinstate payment of referral fees to paid search associates. They say the decision to make the change is based on their review of how they invest their advertising resources.

For items ordered by customers before May 1st, but don’t ship before that date, the referral fee rates users were eligible to earn previously will still apply as long as items were placed in a shopping cart before then.

No accounts will be closed as long as users cease paid search activities and remain in compliance with Amazon’s Associates Operating Agreement (like by sending users to Amazon sites through links on your site).

The company sent affiliates the following email laying out what’s ahead (via Marketing Pilgrim):

    Dear Amazon Associate:

    The Amazon Associates Program

That FAQ page with more information can be found here.

A MarketingVOX article notes, "In another effort to bolster net revenue at the expense of Associates, last month Amazon debuted a program called Product Ads, which enables third-party e-commerce sites to promote their own items on Amazon product pages."

eCommerce sellers seem to be fairly content with Amazon. Disgruntled eBay sellers often sing praise for the site as an alternative.

As of April 1, 2008 the program will be dropped from the largest affiliate network – Commission Junction. They handle the reporting and pay affiliates in behalf of customers like Yahoo!, Home Depot, and Buy.com. Commission Junction is owned by ValueClick (which recently had some bad news of its own).

eBay started their affiliate program in 2001 and it has more than 100,000 affiliates globally. For those unfamiliar, an affiliate marketer is a person or business who promotes eBay’s products on their web site, blog, or forum and makes money each time they refer a sale. Existing affiliates must move to the eBay Partner Network by May 1st. Not much time to change all those links.

I asked a newer affiliate, Ariel Adams for his perspective. Adams blogs about luxury watches and makes money referring people to auctions that sell watches on eBay. He talked about problems with reporting and how he can’t tell which watch sells. Mostly though it’s a huge problem to change all the links (and too bad there’s not a tool to help this process, because so far eBay hasn’t offered a lot of details on how the quick change is going to happen).

“This creates a huge inconvenience for people like me because we rely on lots of existing links, which now all need to be changed. For me we are talking 100s of links, and so far I don’t see anything that can make the switch particularly easy.”

For long-time affiliates this is an even more daunting task.

Comments

Will you bring your affiliate income to the next level by promoting PJN affiliate programs?

More on that shortly, but rather than repeat the information that other bloggers have highlighted, you can read write-ups and view videos at:

• Shawn Collins’ Pepperjam Network intro and video
• David Lewis’ Revenews preview/review of PJN

Having been an early tester for PJN since its beta stage, I’ve seen the fledgling network (with a great pedigree) go through its early development stages, but the questions for most affiliates is: Does it deliver on it’s promise of an “Affiliate Marketing 2.0″ network?

With about 100 merchants under its belt and have recruited a number of star Super Affiliates to promote its programs, Pepperjam will be focusing on building up its merchant and affiliate support and promotion efforts in the coming months. You can likewise expect to see an impressive booth at the Affiliate Summit West next month.

I’ve spoken to Pepperjam Affiliate Marketing Director Robyn Jones a number of times about the affiliate programs they’ve managed and you can see many of these programs, previously listed at Commission Junction and the other major networks now offered on PJN.

I have faced a number of issues with affiliate cookies not lodging correctly on some of the major networks (with sometimes less than enthusiastic support in pursuing these lost sales), and PJN’s affiliated-focused approach means that you have a higher chance of ensuring that your marketing efforts are accurately compensated. (eg. less “lost” sales).

The panel to search for merchant programs and get affiliate links is similar to other tier-1 affiliate networks, as is the ability to tag Sub IDs to your links for better tracking.

I believe the design of the program has a lot to do with Pepperjam head honcho’s experience as a PPC marketer and incorporates a number of PPC-friendly tracking and analytics features.

One of the interesting features of PJN is the ability to create a customized widget, known as pepperjamADS.

Smarter and more sophisticated affiliates will be able to select and rotate merchants and create a changing widget on their blogs or content sites.

Think of a more user-controlled Google adsense block on your sites, featuring merchants you select. The performance-based nature (pay-per-lead or pay-per-sale) of the payouts means your potential return on investment (ROI) will be at least 10 times higher than what you might expect from a comparable contextual pay-per-click advertising program.

Note: This payout is only going to give you these returns if you spend some time doing appropriate strategic marketing to match appropriate offers to your traffic profile, rather than the “fire-and-forget” nature of Google Adsense, AdBrite, Yahoo Search Marketing or other contextual type ads.

In my eyes, Pepperjam has been really strong in recruiting merchants in the lifestyle/fashion niche, such as fashion lines from Kimora Simmons (of BabyPhat Fashion/America’s Next Top Model fame), Nelly, Beyone’s Dereon and other lines.

If you’re running a mass entertainment/lifestyle website, you’ll have ample tools at your fingertips to monetize effectively.

-

What I’m interested in looking at will be the included and constantly evolving datafeed capabilites form the merchants. If you’ve worked with XML datafeeds, you’ll know that they’re not the easiest data to work with, unless you’re using a script to process the data, or a service provider like Asif Malik’s GoldenCan.

So it’ll be interesting to see how smart affiliates are going to create shopping and catalog sites from the datafeeds.

-

Additionally, PJN has an education/resources area, for new affiliates.

This is a great idea and something I had mentioned would be useful to include some time back:

At the moment it’s mainly outgoing links to blogs, forums and paid affiliate training (like Affiliate Classroom).

Over time, it’ll be great to see some of the PJ team develop in-house training resources because I think the “software” training materials are probably just as important, if not more important than the “hardware” feed generators, widget code and analytics.

—

The Bottomline: Having a new affiliate network entrant always means more choice for affiliate marketers, and the test and mettle of the network will be proven as affiliates promote the programs and check that leads and sales are being tracked accurately.

Also with PJN entering the arena, it means that sales going through their system will go past adware detectors, like the ones built into Windows and third party adware software like Spybot and AdAware which have flagged tracking cookies from the major affiliate networks as “potential security threats”.

If you are in a consumer-related niche, eg lifestyle, entertainment, fashion, you’d want to monetize your traffic more effectively with PJN’s merchants as it’s going to give you a higher ROI compared to contextually-targeted advertising systems.

-

If any, one grouse I have with Pepperjam’s in-house affiliate recruiting system (to recruit sub-affiliates) is that it’s a flat $5 payout per lead, unlike the typical 2% – 4% commission that a number of the other networks are paying out.

Granted it does go up to $7 per signup once you hit a high number of sub-affiliates, but it’ll be nice to have a recurring overriding commission to provide an incentive to groom those you recruit.

==

To sign up for PepperjamNetwork, check out:

–> The PepperjamNetwork Affiliate Network

Comments

Answer: Giving affiliates the same set of data is indeed a duplicate content nightmare, and it makes it hard for the affiliates to push their sites into the core organic parts of the web. If they have a product database and the same reviews and content that exist as the core branded site there is nothing remarkable about what they are doing. You can look back to this post on leaked human review documents to see how Google views affiliate sites.

Instead of cloning all your content and giving affiliates access to that, I recommend encouraging affiliates write personal journals on their own subdomain. I would encourage them to promote your products and blog about topics other than your products. This will allow some of them to work their sites into the organic parts of the web while encouraging them to write content interesting enough for people to want to subscribe to it. Sure some of the affiliates will not get much traction, but enough of them try it a few will, and they will boost your brand whenever people visit their sites.

You can include a bunch of WordPress themes and extensions with their blogs, create a free guide to blogging, create an affiliate directory, and other offers that make it easy to get affiliates into sharing information. Maybe even install a Vbulletin forum and write a blog just for your affiliates. Bonuses to further entice a sense of community might be highlighting daily or monthly top posts, offering free design services to top affiliates, giving away prizes like link building, and interviewing some of your better affiliates in a monthly community newsletter.

Creating a platform for sharing passion is a much better affiliate strategy than duplicating content is.

Comments

Sure it is easy to earn yourself a quick $40 or whatever by promoting it, by dropping text links all over the place such as this one:-
Kindle: Amazon’s New Wireless Reading Device

Or you can use some other creatives such as a nice sidebar widget (might not show in a feed reader)

Amazon’s Success Is At Least In Part Their Affiliate Program

For years affiliates have been driving traffic to Amazon. They don’t get the benefit of recurring or lifetime commissions, the affiliate program is effectively make a sale on the visit or get nothing, but because the products were mass market, some people made a fair amount of money from Amazon, and many still do.

Will Kindle Kill Affiliate Sales Of Books?

If it is successful, it could certainly have an effect.

People who buy Kindle will be the mass consumers of information, the people who buy a lot of books, especially people who have taken training to read faster such as I did at Rich Schefren’s Acceleration 2 Seminar, assuming Kindle has the features to allow faster reading.

These aren’t your "one book for Christmas" types, these are people who buy 20 books because they are going on a trip somewhere, or researching a specific topic over a few days.

Kindle Is A Direct To Amazon Sales Cycle

Amazon is cutting out the middle man. Just because you might make a $40 sale now, those people who buy the device for $400 are quite possibly no longer going to generate affiliate revenue.

It is quite possible that such people go to Amazon direct, but they are also the kind that might be influenced by a review of one book somewhere on the web, go to Amazon following an affiliate link, and buy 20 related books.

I have been monitoring the discussion around Kindle, I know Robert Scoble has mentioned making money from people reading his blog on Kindle (30% ?) but that seems like it might be only a select few. We are not going to see "Subscribe On Kindle" buttons on the vast majority of blogs any time soon.

• I would have expected Amazon to provide a lot more information on Kindle to Affiliates and what it means to them if there was a money making opportunity (not just selling the device).
• I would expect residual earnings for selling a device which will provide a residual income for Amazon.

How does this launch affect other players in the ebook market such as Clickbank?

I keep reasonably close tabs on the affiliate marketing industry, and I haven’t seen anyone rejoicing the introduction of Kindle. Have I missed something?

Comments

Tag:

*Originally published at AndyBeard.eu

The Inside AdWords blog has a post called, "Websites that may merit a low landing page quality score" which mentions the kinds of websites that will be penalized with low landing page quality scores:

• "Data collection sites that offer free gifts, subscription services etc., in order to collect private information
• Arbitrage sites that are designed for the sole purpose of showing ads
• Malware sites that knowingly or unknowingly install software on a visitor’s computer"

In addition, it’s important for advertisers of these types of websites to adhere to our landing page quality guidelines regarding unique content.

• "eBook sites that show frequent ads or install malware
• ‘Get rich quick’ sites
• Comparison shopping sites
• Travel aggregators
• Affiliates that don’t comply with our affiliate guidelines."

For more information landing page quality, visit the AdWords Help Center.

Comments

Is Google Replacing Affiliates With Big Brand Spenders?

Complaints began surfacing about a week-and-a-half ago at WebMasterWorld as affiliates felt the brunt of Google’s most recent quality score update.

The eight-page conversation thread is kicked off by a representative of online marketing company Internet Marketing Solutions Group:

So I’ve had a campaign running for keyword and I happen to have keyword.org as the domain. Ad and landing page are all about keyword. Suddenly overnight all the keywords that were getting double digit CTR’s have been reevaluated to "poor" and I’ve been asked to pony up 20X more per keyword.

Anyone else seen this and why would this be when everything is relevant? BTW I don’t use analytics or anything else to allow any tracking of conversions from their side, but I can tell you the kw’s that got bumped up high were converting.

A number of affiliate marketers echoed "eljefe3," relaying their own troubles.

"Pexcornel" writes:

My account had 700 groups with some 5000 keywords on a 1300$/month budget.
Only the best converting keywords are disabled. From 0.26-0.30 to 10$

And that type of complaint goes on for eight pages. So what’s happening? SEObook.com‘s Aaron Wall thinks its not just about relevance, but also about replacing low-budgeted affiliates with big-paying brand marketers.

"As soon as enough brand advertisers find your space you are no longer needed," he writes in a detailed blog post. "Thanks for sharing the keyword data needed to tell the brands what to bid on, and best of luck getting traffic from somewhere else."

Comments on these developments are welcome (and encouraged) below. Has the latest Google quality score update sent you digging for money to keep up with the big boys? Are you going to be able to?