Amazon’s ad business is currently only a fraction of Facebook and Google’s. Why, then, do industry pundits consider it a formidable threat? Consider these recent statistics from the WWP Group:
• 55% of U.S. consumers now begin online product search at Amazon, 20% start on a search engine and 10% begin on a retail site.
• Amazon.com and Prime Now accounted for 43% of all online sales and 53% of the sales growth in 2016.
• 63% of U.S. households are Amazon Prime members.
Those figures were quoted in a press release announcing a partnership between WWP agencies Mindshare and POSSIBLE that will provide Amazon advertising services to advertisers, joining a growing list of specialty agencies focusing on Amazon. In the U.K. only 38% of searches currently begin on Amazon, but that is enough for L’Oreal (Chapter 12) to shift some of its search budget to Amazon.
Amazon has two advertising platforms:
• Amazon Marketing Services (with video) is a vendor-only platform that supports the advertising needs of Amazon Affiliates.
• Amazon Advertising Services (with video) allows advertisers to “reach Amazon customers wherever they are.” Ads can be placed on Amazon itself or on a network of external sites.
Amazon Advertising Services is a self-service platform that allows any publisher to advertise on Amazon. Formats offered are PPC, Sponsored Products and Product Display Ads. Amazon also offers formats for eCommerce Ads, Non-Standard Media (special formats) and Mobile. The Landing Pages formats illustrated provide an example of the variety of options within each format. Their advertising platform (AAP) offers a large array of display ad formats. The important difference in the AAP is that it also allows the publisher to place ads on non-Amazon sites that create “a brand safe media environment that meets Amazon’s high brand bar and is appropriate for all audiences and ages.” It also offers ads that appear on Amazon Kindle and Amazon Fire devices. All of this is offered as a premium service to brands and agencies under the umbrella of the Amazon Media Group.
Amazon Business is the new business marketplace launched in 2015. It is believed to be enjoying rapid growth and offers access to Sponsored Products ads and Headline Search Ads. That is the way AMS started, so it seems safe to assume that the business platform will offer more advertising options as time goes on.
This is a rather bewildering array of advertising offerings but when you look at the underlying structure of AMG it makes sense. It also seems to make sense that Amazon’s ad revenue will grow. Whether that will be the result of organic growth or of advertisers diverting some o their advertising budgets to Amazon remains to be seen. For sure, you haven’t heard the last about Amazon advertising.
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