Digital Advertising on Amazon Has Potential to Jeopardize Google and Facebook
Digital Advertising on Amazon is on the rise. One would not typically consider Amazon a digital advertising company. However, the online retail giant is the fifth largest generator of digital revenues in the US. With major growth potential, competitors are wise to beware. .
Analysts estimate Amazon’s ad revenues will total $1.65 billion this year. This figure is far below that of Google or Facebook, but above brands such as Twitter and Snapchat.
Amazon’s advertising success is completely dependent on it’s retail business. Consumer goods companies are now spending more on digital advertising than all varieties of nondigital advertising, according to industry study by Cadent Consulting Group.
Advertising plays an important role in Amazon’s direct-to-consumer marketplace, where Amazon, at added cost, provides warehousing and shipping to third-party sellers.
Amazon has a huge set of data uniquely valuable to the marketplace- the data of their own consumers’ behavior. Already, more than half of all online searches for products start on Amazon. The e-tailer knows what you are looking for and how often you are looking for it. Advertisers can benefit and drive sales from strategically placed, high-value features on the site.
Amazon’s Digital Advertising team has much more data to access with the recent buy-out of Whole Foods. The innovation of “cashierless Amazon Go” Stores could be a cause for disruption in the marketplace as well.
All of this could give Amazon an edge over Google and Facebook. In order to scale that business, it will have to look beyond ads targeted at consumers who are already shopping on its sites. By the looks of their business strategy they will no doubt be able to collect this data.
It looks like the sky is the limit for this retail behemoth in more ways than one would think.