Specifically, Clickriver Ads, a subsidiary of A9, a Search Engine owned by Amazon, started beta testing this month of their sponsored links program. The sponsored links program allows businesses to advertise their products and services on Amazon pages. This is Search, just like Google and Yahoo provide, but with a twist. First of all, advertisers are able to get access to Amazon's 61 million customer user base, one of the largest in the world, and get to completely bypass Google and Yahoo, chipping away at their monopoly. Secondly, advertisers get to engage these users at a more "qualified stage" of the buying cycle than just general search. Whereas many Google and Yahoo Search users are just starting the process, few people go to Amazon because they are bored and surfing. They know that Amazon sells products and it is where you go to buy products. The users are definitely already in the buying mode. The Clickriver ads appear next to Amazon Search results and on Amazon product detail pages.

We believe this has interesting potential for Amazon as it is likely to be a much higher profit margin product that will effectively flow straight down to the bottom line. The ads themselves will probably be a better use of page space than just a more detailed product description and they give Amazon the chance at making two or more sales as opposed to "one or none". Since Amazon is already one of the lowest cost sellers on the web, advertisers will get the most utility from advertising products that complement the corresponding Amazon category as opposed to trying to sell something that competes with Amazon. So, Amazon gets to sell the original product the user was searching for and then possibly receives some additional incremental revenue from products they don't sell. In addition, as the Clickriver ads are offered on a bidding platform like Google and Yahoo, if Advertisers like the results they will bid more for the ad space, pushing up Amazon's revenue even further.

Amazon has been spending a lot of money on new technologies, $172 million alone just for the most recent quarter, a number that has some analysts cheering and others losing sleep. Spending money on new technologies is good only if it can be translated into profits. We think the Clickriver initiative may just be one of those that does translate into profits.

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