zett - 8:29 am on Apr 7, 2009 (gmt 0)

According to a message I found on another board, the possibility to do arbitrage was present only in 2005. It worked like any PPC arbitrage - cheaply purchased ads promoted expensive goods (e.g. Plasma screens), and the owner of the ad got a referal fee. A screen may be $3000, and the referral would bring in 4% of the transaction value. At that time, it was possible to buy ads from Google for, say, 30 cents per click. At a conversion rate of, say, 1%, you'd do a healthy profit from this scheme:

100 clicks
@ $0.30
= $30 cost for clicks

1% conversion
= 1 customer
x 3000$ revenue
x 4%
= $120 payout
- $30 cost for ads
= $90 profit

But this opportunity vanished when in 2006 Google increased PPC cost and Amazon lowered their referral fees. This made it difficult to make money from this scheme, and that's why people dropped it.

So, Amazon is just chopping off a dead product.