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The Rise of Amazon as an Advertising Beast and Leader

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Amazon has established itself in the e-commerce arena and with other reputable products like Amazon Web Services (AWS), which is one of the prominent names in the cloud computing industry. Recently, their business of search advertising capabilities is gaining new attention as well.

In September of this year, this global advertising giant brought all different ad products and systems under one brand, Amazon Advertising.

Amazon’s ad business used to be known as the sleeping giant until recently. However, now the giant is awake and ready to expand on a path to rapid growth. “By 2021, we believe it is likely that advertising operating income will exceed AWS [Amazon Web Services],” analyst Michael Olson wrote in August 2018. Revenue expectations for the advertising business of Amazon believe revenues will reach $16 billion in 2021 in comparison to $15 billion for AWS.


Amazon Advertising Competitors

Well-known digital advertising leaders, including Google and Facebook, are seeing the growing dominance of Amazon’s ad business as a threat to their digital ad business. Sources say that some advertisers are moving up to 50% of their search budget to Amazon from Google.

The Seattle-based internet giant manages almost half of the entire sales in the United States, giving it access to a huge database of consumer information. The rise of this advertising giant will upset several Silicon Valley titans. With its enormous growth rate, Amazon is not only on track to grab the top position in online advertising, but it will also change the pattern of doing business to a large extent.

As the largest online retailer in the US, Amazon has climbed to the 3rd position in the U.S. digital ad market segment, just after other two giants, Google’s parent company Alphabet Inc. and Facebook Inc. With only 4% of the total market share now, this digital juggernaut is hiring aggressively for its ad business to open opportunities for its marketers.

Jumpshot CEO Deren Baker said in a recent Bloomberg TV segment, “54% of product searches across the entire internet now occur on Amazon.” This shift, while stunning, is not necessarily a surprising revelation.


Amazon and Google Ad Platform Wars

More than half of United States’ online shoppers are now seen searching for their products on Amazon directly instead of Google, which was the most popular platform for all kinds of search on the web until recently.

Google lacks understanding of the behaviors of online shoppers in detail. The data intelligence that Amazon has today is tremendous which includes what products the user had bought earlier, what type of transactions they made, where all the shopper visited to purchase the product, and also what additional products the buyer added to the shopping cart before checking out.

Here is the significant disadvantage for Google. The layers of data intelligence that Amazon has collected can help it in making smarter sales pitches.

As Amazon is all set to become the all-in-one company, it is natural for marketers and advertisers to get drawn to this emerging advertising giant. The new Whole Foods acquisition business of Amazon will help it in making the connection between its offline and online shoppers too. Similarly, its more than 100 million Amazon Prime members can give Amazon insight into the video and music choices of its users. Moreover, it provides advertisers more opportunities to reach their target audience through Amazon OTT advertising.

All in all, today, Amazon is the most popular and preferred choice for any online buyer for any buying event which makes the company a strong competitor for digital advertising space and buying.


Amazon’s Data Power Position

Lastly, and importantly, Amazon is a step ahead of incumbents concerning all the purchase data is has tied to attribution, the science of assigning credit and allocating dollars from a sale to the marketing touchpoints a customer experienced before a purchase. This metric is used by companies to help optimize campaigns and allocate future ad spend based on performance.

While Amazon has threatened to become the first choice of marketers and advertisers because of its data-rich features, it needs to be cautious about the brand safety features for many of the brands that may find Amazon threatening for their brands.

It would be very reasonable for the industry to put Amazon through scrutiny similar to that of other giant advertisers regarding privacy. With so much user data in its custody, it would be Amazon’s responsibility to follow and reshape its data policies to make its platform more and more transparent and safe.

However, for now, one can only venture to guess the amount of disruption Amazon poses to the digital marketing and advertising space.

Thanks for checking out The Rise of Amazon as an Advertising Beast and Leader.

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Written by Robb Fahrion

Robb Fahrion is a Co-Founder and Partner of Flying V Group. Robb has helped over 350+ companies build their businesses online and is responsible for building Flying V Group into one of the premier marketing agencies in the United States. Robb and his team have managed over $10M in marketing budget and continue to accelerate the growth of clients' businesses. A love for business and competition is what fuels Robb to create dynamic marketing plans to help his clients grow exponentially.

February 26, 2019



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