Of course this makes perfect sense. Amazon is bidding against its own affiliates, who are driving up prices and diluting its click-through rates (thus reducing click-through volume and further increasing its bid prices). In the cases where they are already the top search result, they don't need or want AdWords links from themselves or affiliates distracting the user and costing them money unnecessarily.
Amazon only paid out if the keyword successfully translated into sales. Thus they only paid if it worked - the affiliate ate the cost if the keyword failed.
Q: Was Amazon’s policy on bidding on words such as “amazon,” “endless,” or “kindle” changed?
A: No. Associates are still prohibited from purchasing or registering Amazon’s proprietary terms such as “amazon,” “endless,” and “kindle,” and misspellings of those words) to send traffic to any site. Please refer to the Operating Agreement for more information.
This sounds questionably legal. If I write a book about the Kindle, I can't buy a search ad to advertise it?
I really like Amazon, but not when I read things like this.
You can buy a search ad to advertise it, you just can't be an Amazon Associate. Google has rules against trademarks anyway, which could be used if you really wanted to break their rules.
No, it affects people who play the game of adsense/affiliate arbitrage - that is, people who find keywords in which the average CPC of an adwords ad is less than the average return from the affiliate (which is both very risky, and very profitable to those who succeed).
Amazon is just trying to take them out of the equation, which makes perfect sense because they provide nothing of value to Amazon; they are just middlemen who drive up the cost of Amazon's CPC campaigns and collect commissions from customers that would have ended up with Amazon anyway.
Don't undervalue the benefit that search arbitrage provides. It finds inefficiencies in the paid traffic market (which they exploit for a time until it re-balances), and also serves as a "filter" or refining mechanism of sorts that helps consumers find products they wouldn't ordinarily.
Just because people are clicking an ad that leads them to another page with more ads does not mean there's any dilution going on. These websites are providing a service Google and other can't/won't do.
While I agree that search arbitrage can be good to smooth out imbalances in CPC prices, I also believe that it does Amazon more harm than good to pay people who participate in arbitrage.
In the best case scenario (bidding against an affiliate who is good at arbitrage), Amazon probably breaks even because they get good sales from those affiliates with whom they're competing for keywords.
But in the worst case scenario, Amazon is competing against their affiliates who are bad at arbitrage (people who are losing money) and are blocking Amazon from winning CPC bids without actually effectively converting those clicks to commissions.
And I would bet that there are far more people losing money to arbitrage (amateurs who bought some ebook from a spammer about how to make money on the internet) than people who are profiting.
The net result is that google and yahoo get more money.
