Amazon is testing a new way to pay publishers for driving traffic to its platform, and it could be a bright spot for the challenged digital media industry.
Under the pilot, called NCA, or native commerce advertising, the publisher earns money when it drives readers to Amazon through product recommendations, regardless of whether they end up buying the product or not, three people familiar with the program told Business Insider. These people requested anonymity because they weren't authorized to speak publicly about the program; their identities are known to BI.
CNN, Vox Media, and tech publisher Future are among the publishers participating in the NCA pilot. Amazon plans to roll it out more fully this year.
Amazon is pitching the NCA program to publishers as a way for them to make additional money on top of its Amazon Associates program, which launched back in 1996. That program lets publishers earn a commission by driving sales from recommended products or services. It pays varying commissions by category, from 3% for toys and furniture to 10% for luxury beauty and up to 20% for Amazon video games.
Publishers can enroll in both programs and make money two ways if the reader completes a purchase.
For Amazon, the NCA pilot is a way to expand its advertising inventory without further cluttering the top of its search results, where sponsored ads have become a common source of user complaints.
Amazon declined to comment.
Affiliate revenue has become a sizable business for many publishers at a time when competition for advertising and subscription dollars is tough, and Amazon is often their top revenue source. The New York Times, in the fourth quarter, reported $95 million in "other revenue," which includes its Wirecutter product recommendation business as well as licensing revenue.
One participating publisher said they were seeing a decent uptick in revenue from the NCA program. But they said the program, at least in its test phase, is complicated to implement. They added that the cost per click varied widely, with rates ranging from 20 to 60 cents, and it was hard to know how lucrative the program would be in the long term.
That variability could present some added risk to publishers.
With NCA, there's an incentive to recommend vendors offering a high cost per click, whether or not their product is the best. Amazon teams have even recommended publishers do so, two people familiar with the program said.
Publishers have dealt with a similar dilemma in the affiliate business more generally. Those with commerce businesses usually share a disclosure saying they may earn money from products they recommend, but that their product recommendations are based on independent research and analysis. Reputable publishers work hard to safeguard their product review editorial teams from the revenue side.
Still, the variability between different products in the same category in NCA is beyond the norm, and could tempt some less scrupulous publishers to take advantage.
While the money from NCA might not be huge, any new source of revenue is welcome to digital publishers. Many publishers have faced business challenges as Facebook has deprioritized news and tech giants have gobbled up the bulk of the digital advertising pie.
Some publishers' affiliate businesses have also come under attack. Google has cracked down on sites that try to rank high in Google searches by publishing material provided by third parties, such as product reviews and coupons. For example, some of CNN's product recommendations, under CNN Underscored, used to be provided by a company called Forbes Marketplace, which is partly owned by Forbes.
Several publishers saw traffic to their product recommendations pages decline as a result of the crackdown, Adweek reported in November. Some publishers, including Gannett's USA Today, have protested the crackdown, saying it hurts publishers and consumers alike.
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