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Amazon: Advertising’s Rising Power


Amazon: Advertising's Rising Power

According to a report from ROI Revolution, roughly twice as many shoppers begin their searches on Amazon versus Google. And as Google showed the world with AdWords and Google Shopping, paid placements atop a robust organic search engine transformed eCommerce. But Amazon isn’t just a search engine with a “buy” button next to everything, it’s also a destination for people to research products and read reviews, with potential to drive offline brick and mortar traffic. It’s becoming clear that, for brands, Amazon represents tremendous potential as a platform for advertisers and marketers.

Amazon has been offering paid/promoted placement (search) for a while, but wait, there’s more. They want to expand, offering brands better data and algorithms to ensure their items get in front of the ideal customer. They’re also selling custom pages with built-in video and stories to help brands stand out from the competition. Just take a look at this Acura ad.

In September 2017, Amazon announced a 360,000-square-foot office in New York City, creating 2,000 new jobs to support Amazon’s advertising unit, encompassing marketing, design, and product roles as well as data analyst and engineering teams. Even WPP CEO Martin Sorrell remarked on his company’s August 2017 earnings call, “Amazon is becoming a force in advertising.”

CNBC’s Michelle Castillo reports that while the immediate focus seems (smartly) focused on Amazon’s search and video products, they also have plans to increase advertising sales off its platform, including partnering with third-party technology companies to sell partnered TV and mobile ads. One source even shares that Amazon “is working with third-party mobile advertising companies such as Kargo to pair advertising on television and on mobile screens.”

They’ve got their sites on YouTube too, pitching select brands on bespoke sponsored content in the form of branded videos to be created by established media publishers or Amazon’s own internal production team. Sargi Mann at Havas shares with CNBC, “We have been having conversations of how do you take advantage of the video offering on Prime through digital advertising. Instead of having superfluous ads, how can a brand have a part of that dialogue that is not advertising in its traditional form? I am always open and like to discuss new and innovative ways in media where ads can be more of an organic insertion.”

And, if that isn’t enough, they’re in the voice game via Alexa and are rumored to be in talks with Procter & Gamble and Clorox for how Alexa’s responses might promote certain products. In one experiment, someone asking Alexa for help cleaning up a spill might be nudged to use a specific brand – a scenario I shared back in 2015 at the Un-Conference. (While voice is a “cool” trend to watch, I doubt we’ll see much traction here until it goes more mainstream.)

While Amazon is a welcome alternative to the digital ad duopoly of Google and Facebook, which together accounted for 70% of ad revenue in 2017, it has some disadvantages. Thomas Choi at RPA says, “The reality is Amazon makes a lot of brands and companies nervous, and presence on Amazon is a necessary evil. For others in categories like automotive, it’s going to replace the existing sales and purchase process. It’s a little bit of a mixed bag about how brands perceive [Amazon].”

The takeaway for brands is to pay attention to the “non-obvious” (a Rohit Bhargava term I love). Unlike Facebook and Google, Amazon is the shortest step between people and the stuff they want, and they have a fierce loyalty program that keeps growing. They’re also excelling in the original content game which offers opportunity for some very creative innovations connecting high-quality programming with promotions. And when/if voice becomes more ubiquitous, Alexa seems to have the most potential given the infinite world of products it can be the gateway to.

Also, despite Facebook and Google having the lion’s share of digital ad revenue, they’re not immune to problems. I agree with Bob Hoffman who says, “Facebook’s ad model is dangerous.” They do everything they can to blur the lines between what’s an ad and what’s content. And while Google is attempting to make YouTube Red a viable alternative to Netflix, Hulu and Amazon Prime Video, will free YouTube’s monetization of stupidity (as evidenced by the current Logan Paul controversy, or countless “rooftoppers” falling to their deaths) force the platform to change, either from regulation or public pressure?

Increased regulation around data privacy and GPDR could also adversely impact many digital ad platforms. While Amazon has fabulous customer data, how and with whom that data can be leveraged should be expected to change too.

The bottom line: Amazon is gearing up to be a major ad player at a time when disdain for the established digital duopoly of Facebook and Google is at an all-time high. Smart brands are watching.

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