Get a demo Do I subscribe? News sign-up
Print

Amazon's ad business is growing

News, 14 September 2017
Topics

GLOBAL: Advertising accounts for only around 1% of Amazon’s annual revenues but that is set to change thanks to a combination of its unrivalled shopping data, new ad tech tools and its lead in voice technology as well as changing consumer behaviour.

A new WARC Trends Snapshot, Amazon’s growing advertising empire, explores how the online retail giant is poised to make further inroads into the digital advertising sector and potentially break the dominance of Google and Facebook.

Research suggests that over 50% of product searches in key markets now begin on Amazon, rather than on Google.

That in itself marks a significant shift, one that gives Amazon greater influence higher up the funnel, as well as lower down at the point of purchase. It adds the element of consumer intent to its huge store of data about actual purchases.

As a result, brands are beginning to shift search marketing budgets towards the e-commerce platform.

At the same time, the company has been developing its Amazon Media Group division and its range of self-service tools for advertisers.

Its Echo device has also grabbed the attention of consumers, with advertisers experimenting with how they can unlock the Alexa voice-activated personal assistant for search marketing purposes.

These factors haves resulted in agency groups developing dedicated Amazon practices, much as they created social media agencies in response to the rise of Facebook and Twitter a decade ago.

Frank Kochenash, global senior vice president, commerce, at POSSIBLE – who will oversee WPP’s new dedicated Amazon practice – says there is a growing appreciation of Amazon as a multi-faceted platform, offering retail, search, media and voice opportunities for brands.

“As a media channel, we believe Amazon will grow to rival Facebook and Google in size and importance,” he told WARC.

“The growth in importance is not just due to Amazon’s audience size,” he added. “It has exceptionally good data on its audience, knowing important browsing and purchasing activities. As its offerings grow to include more video and music content, Amazon’s ability to understand its audience will also grow.”

That much is indisputable, but Amazon’s priority will surely continue to be its own relationship with its customers and how it can persuade them to spend more.

Advertising – already worth an estimated $1.7bn and set to reach $7bn by 2020 on some estimates – is likely to remain a secondary business, albeit one that brands, especially those selling through the platform, can profitably utilise.

Data sourced from WARC

Topics