Amazon is turning advertising into its next huge business — here’s how

  • 07/20/2019 12:00 AM
  • Source: CNBC
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If you were browsing Amazon in search of deals for Prime Day, you undoubtedly came across a lot of ads. That’s because Amazon has a trove of information about buying habits that makes it a valuable place for advertisers.

Think about it: Amazon knows the last time you bought toothpaste on the site and which brand you typically like to buy. Advertisers can use that information to try to get you to buy their brand of toothpaste right when you’re running low.

Other advertisers can use Amazon to target ads, even if they’re selling products that you can’t necessarily buy on Amazon, like insurance or a car. These advertisers can use Amazon’s extensive customer data to figure out who might buy their product or services, and they can use Amazon’s ad products to reach those people, both on Amazon’s properties and through a network of third-party sites.

This rich trove of data has made Amazon into the third-largest digital ad platform in the U.S. and a growing contender to take on the digital ad duopoly of Google and Facebook. Earlier this year, eMarketer said it expected Amazon to claim 8.8% of U.S. digital ad spend in 2019, up from 6.8% in 2018, while expecting Google to drop from 38.2% to 37.2%. Meanwhile, Facebook was expected to pull 22.1% of digital ad spend in 2019, up very slightly from 21.8%. Amazon’s net sales in its “other” category, which consists primarily of advertising sales, was $2.72 billion in the first quarter.

In September, the company simplified its branding, bringing together areas like Amazon Media Group, Amazon Marketing Services and Amazon Advertising Platform under the name “Amazon Advertising.” Amazon’s ad boss, Paul Kotas, said at the time that the move was meant to make the company’s ad options “simple and intuitive for the hundreds of thousands of advertisers who use our products to help grow their business.”
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