You can be forgiven if you’re starting to feel like the media is all Amazon all the time these days. In the last few months, the ecommerce giant has rebranded its various ad offerings under one umbrella, introduced new capabilities like attribution, refined others such as its programmatic services and entered into ad-supported free streaming. And all these stories came after those noting Amazon had passed the $2 billion mark in ad sales (a 139% increase over 2017). No wonder eMarketer said Amazon will take the No. 3 place in digital domination behind Google and Facebook by 2020 and the New York Times says it’s aiming to earn an even bigger piece of the $88 billion ad market. But what does all this news mean to marketers? Here are some big-picture takeaways to keep in mind.
The Data Is the Thing
As marketing becomes more data-driven, Amazon is only becoming a more attractive—and necessary—platform for marketers, particularly when it comes to search advertising. Why? NBC summarized it aptly when it noted that while Google knows what consumers are interested in and Facebook knows who they are, Amazon knows what they buy and how they shop. The company’s ability to use its wealth of data and analytics on shoppers’ buying habits lets it put ads in front of consumers right when they are shopping for something specific or looking for recommendations. That means consumers are more likely to see ads as helpful rather than intrusive. It’s no wonder then that half of all product searches start on Amazon these days and retail brands continue to up their search investments there. That data advantage is a powerful draw for advertisers but there are detractors, which we’ll get to later.
Video Becoming a Bigger Focus
With the ongoing convergence of TV and video, Amazon’s entry into the free streaming video market comes at a time when marketers are looking for more ways to use sight, sound and motion to tell their stories and consumers want additional ways to watch. Following a similar move by connected TV platform leader Roku, Amazon’s offering (rumored to be called Free Dive) will be ad supported and built into the company’s popular Fire TV platform. According to MediaPost, the benefits to Amazon look substantial. Because they control the platform, they can use their significant scale to drive viewers to their own channel. Marketers stand to gain because Amazon knows which viewer is watching which Fire TV device and can help brands tailor advertising offers accordingly and leverage its new programmatic offerings.
No growth comes without challenges and for all the good news marketers can take away from Amazon’s focus on expanding its advertising and media offerings, some in the industry have expressed concerns. A big one is how Amazon manages its role as both an ad platform and a retail company. With more than 50% of product searches starting on Amazon, advertisers can’t afford not to have a presence there. But as Amazon grows its private label business—and steers consumers to those products—advertisers will face new competitive forces. Another sticking point voiced by some is that Amazon’s self-service approach to advertising has the potential to leave some media agencies out of the game. Amazon told Digiday that agencies remain “important and relevant to Amazon” but the same article covers how the company has always had a direct line to brands and is continuing to deliver technologies that are designed to cut out the media agency middlemen.
While it’s too early to tell how Amazon’s grab for a bigger chunk of the ad revenue pie will play out, its efforts shouldn’t be ignored. As Amazon CFO Brian Olsavsky said on a recent earnings call “advertising continues to be a bright spot from a product standpoint and a revenue standpoint and we’re continuing to make the offerings more valuable, both to customers and advertisers alike.” Marketers have big opportunities in the here and now to capitalize on all that the company’s new moves have to offer.