I’m pretty sure that’s how the first meetings went about a decade ago:
“Well, we are paying our affiliates 5% for referrals. If we tithe the money to the charity and call it a donation, it will be great PR and we will also make a profit on every sale because we don’t have to pay the full commission…”
Amazon didn’t invent the online affiliate concept, but the company has certainly turned it into a significant engine for growth. If a consumer buys a $100 item that someone in their program has linked to, they will pay the referrer about $5. This meant that they were less likely to actually make a profit on those sales, but it led to millions of new customers, who came back again and again. This usually turns a sale into a few…
The end result is that Amazon pays many billions of dollars in affiliate fees, and their affiliates (such as Wirecutter, CoolTools, and formerly, Squidoo) have sometimes built entire businesses around the simple idea of recommending a product and sending someone to the largest online retailer. It can be income to buy.
Smile has turned over a million non-profit charities into affiliates at a bargain rate. Now, that $100 purchase turns into forty cents sent because of your choice.
I used to send you, my esteemed readers, to Smile Links, but when I realized how little each donation was, I switched to geni.us, and so our donations increased 10 times.
To date, Amazon Smile has sent over $500,000,000 to charities. It’s definitely not a ‘donation’, it’s just an allocation of marketing costs. And yet, half a billion dollars makes them a very important donor overall, one of the largest corporate donors in the world.
So why cancel the program?
I have some guesses:
- New management at Amazon is aggressively streamlining programs and costs to enable focus and increased profitability. Programs that involve a lot of people and time have become difficult to justify.
- They’ve always done a poor job of explaining the program, which proves that many people (including me) were surprised that the total grant numbers were so large.
- Most charities are not very good affiliates. My guess is that few of the million recipients have done much to persuade their donors to buy from the Smile Link that has donated back to them.
- And perhaps most of all, as Amazon continues to dominate online retail, the affiliate program is perhaps less strategically important, and cutting costs on that front may seem like an easy way to increase short-term profits.
Western art culture has had a hard time thinking about charity in the community chest and the United Way. If the ‘game’ is to maximize profits, sending money to good causes seems to undermine that. Some people argue that companies have a corporate social responsibility, the contract they sign with communities not to take as much profit as possible but to invest in the long-term welfare of the places they work and the people they work for. with. Or, as may be the case here, it’s simply a marketing tool.