Amazon.com Inc. pulled the plug on its marketing affiliates in Colorado after the state enacted a law that imposes new sales-tax regulations on online retailers. On Monday, Amazon sent an email to members of its associates program, who earn a fee for providing links to the online retailer on their own Web sites. In the email, Amazon informed them it was ending its business with them as of that day. "As a result of the new law," Amazon said, "we have decided to stop advertising through associates based in Colorado." The Seattle retailer added that it would continue to sell to Colorado residents and advertise through other channels.
Part of the attraction of search advertising is that since it targets consumers toward the bottom of the purchase funnel, ads are served to users likely to convert. But display ads appear to a wider swath of consumers, pulling some into the purchase funnel and thus energizing search.