This summer, Amazon launched a new program for brands that it’s calling the Amazon Brand Referral Bonus program.
Teresa Coats, Brand Success Manager at Volitant Consulting, sees a lot of potential upside for this program. She said, “This is probably one of the coolest opportunities Amazon’s given sellers.”
Who can take advantage of the program, how does it work, and is it worth it? We’ve got you covered with all the answers, including tips and tricks you might not have considered.
This is probably one of the coolest opportunities Amazon’s given sellers.”
What Is The Amazon Brand Referral Bonus?
The Brand Referral Bonus incentivizes brands to run off-Amazon advertising that drives traffic to Amazon. It does that by giving brands back a percentage of the referral fees associated with the sale.
When a brand makes a sale on Amazon, the marketplace takes a cut as a percentage of the sale. Now, if a brand participates in this program, when the sale results from an off-Amazon ad, Amazon reduces the referral fee.
How Are Amazon Brand Referral Bonuses Calculated?
The bonus varies by category, but a 10% bonus is the average. The highest bonuses are for Amazon-related categories like Amazon Device Accessories. More expensive items tend to correspond with lower percentages.
Referral bonuses don’t only apply to purchases of the advertised product, but also include additional purchases made from the brand’s catalog within 14 days of the initial click.
Bonuses are credited to accounts on a two-month lag to account for potential returns. You can track your bonuses with the Brand Referral Bonus Report from Amazon.
Let’s look at an example. Say you sell a set of spatulas on Amazon for $14.99. Spatulas are in the Kitchen category so the referral fee that Amazon claims is 15%. So they would withhold $2.25.
However, if you’re enrolled in the Brand Referral Bonus program and this sale was the result of an off-Amazon ad, Amazon will now issue you a fee refund. For the Kitchen category, the refund is 10%. So instead of withholding $2.25, they would withhold only $.75.
If you spent $1.50 on the off-Amazon click that led to the sale, you essentially broke even on the advertising. And if you spent less than $1.50 your profit is greater than it would’ve been without the Brand Referral Bonus.
Who Can Participate In The Brand Referral Bonus Program?
Brands selling in the U.S. that have registered with Amazon can currently take advantage of the program.
For non-brand owners, the Amazon Associates program remains a way to get rewarded for driving traffic to Amazon listings.
What Other Considerations Should Brands Know About?
The program runs on Amazon Attribution which measures the performance of your non-Amazon advertising such as search or email marketing and helps you to understand how those campaigns impact your on-Amazon sale. So if you haven’t already, you’ll have to set up Amazon Attribution to qualify for the referral bonus.
Be aware that opting into the Brand Referral Bonus program could have tax implications for your business.
Is Brand Referral Bonus A Good Deal For Brands?
The program is still pretty new and thus far, brands are mostly speculating about whether this new program constitutes a good deal for them or only a good deal for Amazon.
If you have a DTC site, sending off-Amazon ad traffic to that site might be more cost-effective. That way you don’t have to deal with Amazon fees and you’ll own the customer data.
On the other hand, there is inherent value in sending traffic to Amazon even before accounting for the Brand Referral Bonus program. The sheer number of loyal Amazon shoppers – especially Prime members – means you have the potential to acquire shoppers through Amazon who might not ever convert on your DTC site.
“The Brand Referral bonus Program is free. Amazon Attribution links are free,” points out Justin Coats, Founder and CEO of Volitant Consulting. “So regardless of anything else that you do on Amazon, if you only use attribution links and you’ve enrolled your brand in the Brand Referral Bonus program, you’ll get a reduction of fees.”
If you don’t have a DTC site there’s not much downside in getting a fee reduction for sending traffic to your Amazon listings. Even if you do have your own site, if your brand doesn’t have much recognition and you think trust in the Amazon brand will help your potential customers to convert, this could be a boon.
In other words, if you were going to send traffic with off-Amazon ads to Amazon anyway, this is great news. If you’re deciding whether to implement off-Amazon that drives traffic to Amazon, the Brand Referral Bonus adds a tally mark in the column of reasons to go for it.
The Brand Referral bonus Program is free. Amazon Attribution links are free, So regardless of anything else that you do on Amazon, if you only use attribution links and you’ve enrolled your brand in the Brand Referral Bonus program, you’ll get a reduction of fees.
A Brand Bonus Trick From Teresa and Justin
Teresa and Justin from Volitant Consulting suggest pairing the Brand Referral Bonus program with the Amazon Launchpad program.
Launchpad is a program designed to accelerate smaller brands on Amazon. Participating brands must have been selling on Amazon for less than five years and have generated less than five million in revenue.
Launchpad costs an additional 5% referral fee for all sales on Amazon during the term of the program. Participants in the program get access to opportunities for rapid growth such as high visibility placements, category-specific marketing emails, and detail page tools for increased differentiation.
The trick in pairing the two programs together is that one increases referral fees but the other decreases referral fees, creating the potential for them to cancel each other out.
In Teresa’s words, by taking the time to set up Amazon Attribution and the Brand Referral Bonus “you basically negate the cost of the Launchpad program.”
How Does the Brand Referral Bonus Fit In With Amazon Trends?
The introduction of the Brand Referral Bonus fits in with bigger trends at Amazon around brand development, advertising, and claiming market share.
Amazon has been rolling out new brand-building programs, all requiring brand registry at a steady clip. These include social selling options like Amazon Live and Amazon Posts, customer communications templates, and Brand Stores.
In that sense, it’s unsurprising to see Amazon creating yet another program targeted at brands, and at this point, if you’re a brand selling on Amazon you really should be registered so you can take advantage of all these programs.
It also makes sense as Amazon’s next step in advertising programs. Sponsored Products are still the foundational ad for Amazon sellers but they’re now part of a robust and expanding ad ecosystem that includes advertising on Amazon’s other media properties.
Finally, many have commented that this represents yet another of Amazon’s bids to claim market share and defend their place as a dominant player in the ecommerce space.
As other marketplaces ramp up and nearly every site on the internet moves toward becoming shoppable, Amazon is making sure wherever brands advertise there’s a good reason for them to send the shoppers to Amazon for the sale.
To recap, Amazon’s Brand Referral Bonus program rewards brands for directing non-Amazon ad traffic to their Amazon listings. Here are the details:
- The Brand Referral Bonus program is available to registered brands selling in the U.S.
- It rewards brands for advertising off-Amazon that generates sales on Amazon
- The reward comes in the form of a referral fee discount
- Discounts average 10% of sales but vary by category
- Brands should do the math to determine if this program will increase their profit
- If you’re already driving traffic to Amazon from your off-Amazon ads, joining the program gives you an easy win
- It might be worth testing off-Amazon ads and the Brand Referral Bonus program to see if the Amazon brand gets you new customers who wouldn’t convert on your DTC site
- Amazon is focusing heavily on brand programs, so if you’re a brand you should definitely at least register so you can choose which programs to take advantage of
We’ll keep an eye on this program to see what Amazon does with it next and how much benefit it brings to brands.
In the meantime, Justin offers a challenge for sellers looking at how to make the most of Amazon’s new programs. Volitant Consulting figured out the trick of pairing the program with Launchpad. Now, it’s your turn.
Justin asks, “How creative can you get in utilizing the attribution link to recognize the benefit of the referral bonus?”