Amazon persuades developers to put ads in mobile applications

Amazon is boosting its presence on mobile apps by offering developers incentives to implement advertisements for its products in their applications, as online shopping via smartphones booms. Under a program announced on Tuesday, app owners can earn a commission fee of up to 6% from Amazon when users buy a product that they have promoted on their app.

The Amazon program is targeting apps that run on devices using Google’s Android operating system, including Amazon’s Kindle Fire tablet. The online retailer is also rumored to be developing a smartphone of its own.

Amazon suggested its new plan would appeal to developers whose apps specialize in areas such as nutrition or fitness, as they could choose to promote vitamins or sports equipment available on Amazon.

Rebecca Madigan of the Performance Marketing Association, which represents businesses that host online adverts, said to Financial Times that Amazon’s move was “fantastic” for developers, but added: “I think [Amazon is] playing catch-up with the rest of the world.”

She said online advertising businesses such as Commission Junction and Rakuten’s Linkshare had enabled their corporate clients to have product advertisements incorporated by app developers for at least a year.

Amazon said app developers had three options: they could promote a single item, showcase a category of goods on Amazon, or bundle the purchase of physical goods with the purchase of digital goods – for example, giving a customer an online version of a board game when they buy an old-fashioned one.

Mike George, vice-president of Amazon’s app store, said: “Developers now have the ability to create an even deeper connection between their app and the products customers value and purchase through Amazon.com.”

Analysts say shopping on mobile devices is a big part of Amazon’s growth. Amazon’s sales increased by 22% year on year in the past quarter, but it made a $7 million net loss that underlined questions about its long-term profitability.

Amazon shares slumped 1.84% yesterday while gaining 14% since same month last year.