5.2 Make Money by Linking to Amazon

Instead of trying to compete directly with every other existing site for a visitor's attention, Amazon has turned other site owners into potential partners with their Associates Program. By paying site owners 2.5-15% of qualifying item sales that are referred through those sites (called referral fees), Amazon has encouraged hundreds of thousands of independent site owners to send potential customers to Amazon.

People are using the associates program in hundreds of creative ways to earn money for their web-related activities. Here are a few examples:

Niche Product Pointers

Though Amazon has products in every possible category dealing with every possible subject, it's not always easy to find the best for a given niche. Some sites find the best stuff available in narrow subject areas and refer the sales to Amazon directly from their site [Hack #60], getting some money in the process.

Banner Ads

Some sites want to earn a bit of money, but don't have enough traffic to use a large banner-ad service. Amazon provides the tools for do-it-yourself banner advertising [Hack #62].

Personal Publishing

As more and more people publish online with journals and weblogs, they're sharing the books they're reading or movies they're watching. They're providing commentary and criticism [Hack #69], and Amazon's referral fees can compensate them for their efforts.

Email Newsletters

Anytime there's a chance to drive traffic to a web site, there's a chance to earn money through Amazon referrals. You don't have to run a web site to take advantage of the associates program, you just need to build the proper links [Hack #59].

5.2.1 How It Works

Each Amazon associate applies for an associate account, and each account has an associate tag (also called an Associates ID) that's used to link to Amazon. The associate tag is a series of characters that uniquely identifies an associate account. For example, if a site is called Fable Portal, it may be assigned the associate tag fableport-20. The site owner can then add fableport-20 to any Amazon links, and sales made after clicking the link will be associated with that particular associate account.

When someone clicks a link to Amazon with an associate tag, a 24-hour window is opened. Any qualifying items that the visitor adds to their shopping cart within those 24 hours will count toward referral fees. It doesn't matter when the items are actually purchased; as long as they're added to the cart within the initial 24-hour window, the associate will receive credit for the sale.

So how much money do you receive for referring paying customers? For most items on Amazon it's 5% of Amazon's selling price. If you send a customer to Amazon and they buy a book for $20, you'll receive a $1 referral fee.

However, if someone buys a $3,000 plasma flat-panel HDTV through one of your associate links, you don't get 5% of the selling price. There's currently a $10-per-item cap on referral fees.

In some cases you can earn 15% for books that are purchased immediately [Hack #59], but 5% is standard for most of Amazon's items.

If your linking efforts pay off and you find that you're earning referral fees on hundreds or thousands of items every few months, you could earn even higher percentages by using another payment structure called Tiered Compensation. If you opt into the Tiered Compensation program and you sell a certain number of items across a variety of product categories, your affiliate percentage on qualifying items increases. To participate, you need to let Amazon control some of the product placements on your site. To get the details about tiered compensation, read the fees FAQ (https://associates.amazon.com/exec/panama/associates/resources/help/faq-fees.html). Be sure you have the required traffic before signing up, or your affiliate fees could decrease with the Tiered Compensation option.

5.2.2 What You Need

Joining the associates program is simple and free. Visit the associates home page (http://www.amazon.com/associates/) and click "Join Now." For simplicity, you can use an existing Amazon account [Hack #13], or, if you'd like to separate your regular account from your associate activities?especially if you're creating the associate links for your business?you can create a new account.

When you apply, Amazon requires payee information so they know who should get the referral fee checks. They also need a tax ID in case your associate efforts are very successful. If you're a U.S. citizen, your tax ID is your social security number. If you earn over $600 per year, Amazon reports your earnings (as a 1099 form) to the IRS. If you're applying on behalf of a U.S. company, you must include its tax ID number.

If your business is not physically located in the U.S. but is taxable in the U.S., you'll need to send Amazon a U.S. Treasury Form W-8ECI (http://www.irs.gov/pub/irs-fill/fw8eci.pdf).

Next you can choose your preferred payment method: direct deposit, Amazon gift certificate, or check. Amazon adds an $8 fee for check payment, so choosing one of the other options will save you some money each quarter you're paid.

Finally, you'll need to add some information about your web site including your site's name, URL, and the types of items you'll be listing. Amazon will use this information when evaluating your site.

Because your site name will be used to generate your associate tag, use the shortest term possible. Keeping links short will help them fit in emails without wrapping.

Once you've applied, you'll receive your associate tag. It'll be in the last line of the welcome note. Jot down this associate tag, as you'll need it to build associate links manually and for many of the hacks in this book.