It was reported last week that Amazon’s revenue from ad sales nearly doubled year-on-year to $3.4bn in Q4 2018 and it comes as a new survey of digital marketers confirms that this part of its business is expected to continue to grow strongly.
Ad tech firm Nanigans, working with researchers Advertiser Perceptions, said half of US marketers at 100 retail companies that generate at least $50m in annual digital spend expect to increase their budgets allocated to Amazon this year.
These retail marketers already spend 14% of their digital advertising budgets on Amazon and, while that currently ranks the company third behind Google (21%) and Facebook/Instagram (19%), they say budgets for Amazon will increase by an average of 25% in 2019.
Around a third of them plan to shift adspend from Facebook/Instagram (34%) and Google (29%), while 41% are also adding new incremental budget to support their increased spend on Amazon.
Explaining the company’s growing attraction for digital marketers, Ryan Kelly, VP of marketing at Nanigans, said: “Amazon has a unique advantage as an advertiser, an ad network and a marketplace.
“Amazon had a marketplace that existed long before its ad business, so when the company decided to compete with the Duopoly, the supply and demand already existed – so Amazon was able to gain momentum quickly.
“Amazon also had very accurate and robust audience data from its users, including purchases and search history data, which enabled the platform to compete with others from day one.”
According to the survey findings, retail marketers thought Amazon outperforms both Google and Facebook/Instagram on some key performance indicators, although they expressed some reservations about its advertising platform.
On the plus side, 39% of respondents said they got 39% higher return on adspend (ROAS) than on Google and 54% higher ROAS than on Facebook/Instagram. A third (32%) also reported lower CPMs than Google, with 38% saying the same about Facebook/Instagram.
However, 40% said they were worried about Amazon having too much of their data and almost a third (31%) regarded Amazon’s retail business as a competitor with their own.
In addition, more than half (57%) predicted that Amazon will end up misusing consumer data, as other large digital players have done, while 48% expected consumers to become increasingly turned off by their advertising experience.
Sourced from Nanigans, Advertiser Perceptions; additional content by WARC staff