Amazon.com Inc yesterday pulled back a pay-per-click advertising programme that allowed businesses to divert traffic from the retailer's platform to their own websites, saying it would permanently shut down the programme in October.
Under the programme many businesses that were not necessarily sellers on the retailer's online marketplace could buy ad space on its website and divert the traffic to their own sites.
Amazon's website would feature targeted ads for specific items that popped up and drove shoppers to the retailer or manufacturer's own site.
"Our customers performed really well with it because it provided a middle ground of being able to partner with Amazon but also not allowing them to see all their transaction data," said Scot Wingo, the executive chairman of ChannelAdvisor, which helps retailers and manufacturers sell on ecommerce platforms, Reuters reported.
According to Wingo, the programme was known for its high conversion rate.
He added advertisers were surprised when they received an email from Amazon notifying them of the change this week.
An Amazon spokeswoman confirmed the change adding, the advertising programme would not be available after 31 October.
"At Amazon we are constantly reviewing the services we offer partners to help them best reach our customer base and grow their businesses," the company said in an email to Reuters.
The retailer's move comes in wake of the closure of its web-hosting service called Amazon Webstore in March, a solution that allowed sellers to build their own standalone website.
According to commentators, with Amazon committing huge resources into its Prime membership program to get shoppers to sign up and spend more on its own marketplace, it decided to do away with legacy programs that drove shoppers away from its site.
According to The Wall Street Journal, the Product Ads, which appeared with product photos under Amazon search results, were being replaced by simple text ads running alongside product searches, and it had something to do with Google.
"Amazon has sought to cut into Google's online advertising market share, including a program to place more ads on sites other than its own," the newspaper wrote, saying the new Amazon Text Ads would "presumably push Google off the site."
Amazon, however, continued to run two ad programs for sellers on its site - Product Ads (which is going away by the end of October); and Sponsored Ads, which sent shoppers who click on the ads to the merchants' listings on Amazon.com.
With upbeat forecast for the third quarter, coupled with positive sentiment voiced by company executives over its Prime delivery service and rapid growth in its cloud computing service, Amazon cheered Wall Street posting reporting a profit of $92 million for the second quarter. (See: Amazon reports Q2 profit at $92 mn)