“If you build it, they will come” is the playbook that Amazon has been using in recent years to shore up its paid search and display advertising platforms. In 2017 Amazon created 2,000 new jobs in New York City, mostly in advertising, to fuel its ambitions. And it’s been on a tear in recent months, adding more features and reporting to its platforms and finally launching a self-service training console for advertisers.
In response to more investment in an advertising offering, many brands are moving beyond just experimenting with Amazon advertising, and towards shifting budget from incumbents Facebook and Google.
Two new studies released in recent weeks explain why Amazon’s advertising offering has become so compelling. Performance marketing agency Nanigans surveyed 100 retail marketing executives for its "Amazon's Advertising Ascent" report, each responsible for $50 million or more in annual online sales. Amazon already captures 14% of this group’s budgets (compared with 21% for Google and 19% to Facebook), but over half of these brands are planning to increase ad spend on Amazon. Forty-one percent are spending incremental ad budget on Amazon, and others are shifting ad budget from Facebook and Google to Amazon.
1. Direct sales data means clearer ROI
The Nanigans study shone light on a major factor for the shift: Retail marketers find the metrics from Amazon more compelling. Amazon is generally the place shoppers go to actually buy stuff, as opposed to simply discovering or researching a product, the historic domain of Facebook and Google.