Digital Advertising's Unlikely Giant Killer

  • 03/29/2019 12:00 AM
  • Source: Forbes
Facebook Tweet LinkedIn ShareThis
In 2019 it’s clear that Amazon is finally getting serious about becoming a full-fledged advertising platform.  This is interesting because it’s the only company with the reach and resources to threaten the Facebook-Google duopoly that dominates online advertising.   In 2018 Amazon ascended to become the third largest ad platform – but with only 4.1% of the U.S. market in comparison to the 61% shared by its rivals.  I expect that to change – especially if Amazon takes a different approach in regard to the most valuable asset all three of them share – user data.  To understand how this might play out, let’s take a deeper look into Amazon’s advertising business.

Amazon’s high-margin ad revenue has seen explosive growth, more than doubling from $1.88 billion in 2017 to $4.61 billion last year.  This has been despite poor coordination among three separate business units: Amazon Marketing Services, Amazon Media Group, and Amazon Advertising Platform.  As has been pointed out by Digiday, advertisers running more than one ad type have had difficulty navigating among these silos and their service teams.  Last fall Amazon consolidated all these divisions and their ad products under one roof, Amazon Advertising.   This should make it much easier for big marketing agencies to run major campaigns on Amazon, whether for Sponsored Products and Brands (Paid Search style listings) or for video or display ads on Amazon’s website.

The element with the most transformative potential is Amazon’s Advertising Platform, renamed to industry standards as Amazon’s Demand Side Platform or DSP.  Amazon’s DSP represents a direct challenge to Facebook and Google for brands’ marketing budgets by enabling ad buying on other publisher properties, both web and mobile.  As evidence of their intent, Amazon is releasing a proprietary attribution tool to demonstrate the relative efficacy of its ads over those served by other sources.  Amazon knows that advertisers likely use Google’s attribution tools to measure the performance of ad campaigns on Amazon.  The combination of a DSP to serve ads wherever there is quality inventory and its own attribution to measure their performance will enable Amazon to leverage its strengths to capture as much of the overall advertising pie as possible.

Amazon’s key strength is data – specifically, the historical purchasing data that comes from doing 50% of all online retail sales in the U.S.  Where Facebook and Google have an unmatched ability to target individuals’ identities and personal preferences, Amazon knows what people actually buy.   In addition, for the over 100 million Amazon Prime subscribers in the U.S., this purchasing data is combined with knowledge of what movies and TV shows they watch and what music and audiobooks they consume.  Amazon has more complete visibility into the complete consumer journey, from searching to comparing to purchasing, and this insight can drive ad conversions once its users leave Amazon’s site and view ads.  For example, a golf resort could advertise on non-Amazon travel website targeting an Amazon user who had recently purchased a new set of golf clubs and might want to try them out somewhere exotic.
Read more at Forbes

Connect With Us

Political Media, Inc 1750 Tysons Blvd Ste 1500
McLean, Va 22102
202.558.6640
COPYRIGHT ©2002-2018, POLITICAL MEDIA, INC., ALL RIGHTS RESERVED | Support