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As Amazon’s Advertising Platform Grows,Marketers and Brands Look to Make the Switch

SEATTLE, WA — July 23, 2017. Amazon Advertising Platform (AAP), which launched in 2014, is fast becoming a viable and lucrative option for brands trying to promote and increase the sales of their products.

Often overlooked by companies who focus their marketing dollars on conventional advertising platforms like Google and Facebook, Amazon Advertising Platform’s success is largely owed to its unique ability to allow marketers to speak directly to shoppers as they browse for products — a big advantage over platforms that require customers to go off-site to purchase or learn more about their product.

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The net digital advertising revenue of Amazon in the United States from 2014 to 2017. © Statista 2017

Amazon Advertising Platform works by giving brands the ability to market their products or services across all Amazon-owned sites and mobile apps including Amazon.com, Amazon Prime Video, Twitch, IMDb, and Audible.

Amazon Keeps me up at Night, says CEO of World’s Largest Ad Group

Amazon is still the new kid on the block and their advertising revenues are beans relative to the likes of Google and Facebook — $1 billion compared to $34 billion and $15 billion for Google and Facebook, respectively. But those numbers haven’t stopped WPP CEO Martin Sorrell from saying the growing threat of Amazon’s advertising capabilities keeps him awake at night. Amazon Advertising Platform, seen as a sleeping giant by the CEO, grew 60 percent in revenues in 2016.

The growing advertising platform has two key advantages over Google, Facebook, and other social media platforms

The first advantage is the sheer amount of data Amazon has about shoppers and their buying behaviors as the world’s largest online retailer in the world. The e-commerce behemoth attracts over 180 million unique visitors to its US website per month, more than double that of the next two highest, Wal-Mart and eBay. Using the robust data on their customer’s buying habits and their ad tech, Amazon buys targeted advertising for their retail partners.

The other advantage being Amazon Advertising Platform’s direct advertising to active shoppers. Unlike Google, customers on Amazon are much more likely to be looking for something specific to buy rather than just researching products.

Recently, Amazon has devoted more attention to drawing in bigger companies who normally advertise on TV and care about brand image. A shift from their previous advertising efforts that focused narrowly on brands pushing their products. Another sign that Amazon wants to compete with Google and Facebook.

Amazon Advertising Gives Companies All the Right Tools

Amazon Advertising Platform facilitates the buying of ads on other websites
through ad exchanges controlled by advertising firms. The ads have a far reach — marketing to consumers in a multitude of places across the web while at the same time giving brands useful analytics.

Just last year, Amazon launched two new technologies to help generate revenues for marketers. “Header Bidding” is Amazon Advertising Platform’s push to enable web publishers to allow multiple ad buyers to bid on the same ad space at the same time.

The second technology, Shopping Insights Service, gives websites access to the vast amounts of Amazon’s consumer data so that publishers can better know who is visiting their site. Publishers can then use Amazon’s data to court various brands for targeted advertising.

And in March, they dug even deeper into new tech by releasing Amazon Video Ads, a new way for advertisers to target customers with autoplay videos as they browse the Amazon site. Amazon is also one of the few companies that can track consumers across all devices, a valuable tool to determine advertising success on mobile devices.

Amazon’s finger is squarely on the right pulse, as mobile advertising will be the biggest online advertising market with video advertising being the fastest growing, according to a report by Business Insider.

Brands can Leverage Amazon Advertising Platform for Better ROI

According to a survey by e-commerce start-up BloomReach, 55 percent of product searches originate on Amazon and not Google. Most of the reason for this shift is that more and more companies are now selling products their products on Amazon.

This has made buying ads on Amazon more important than ever and marketers are rushing to buy up ad space on the site. Currently, Google commands more than 76 percent of search ad spending while Amazon garners a meager 1 percent, according to The Wall Street Journal. But that is set to change drastically in the coming years because many brands and ad agencies are now investing more in advertising on Amazon.

From May 2016 to May 2017, the paid click rate on Amazon sponsored ads grew by 25 percent, according to data from Hitwise, further proof that more and more people are using Amazon search to find and buy their products.

In an interview with Business Insider, Micheal Duda, the managing partner at the ad agency Bullish, said his team took some of their ad spendings and invested it in Amazon advertising and sales increase by 10 percent.

In May 2014, coffee-machine maker Nespresso switched to Amazon Advertising Platform for the bulk of its marketing and found three times higher sales than before and most of the increased revenue could be attributed to ad generated sales on the site. Plato Pet Treats, another Amazon Advertising Platform success story, saw a $1.21 return on each ad dollar spent by utilizing Amazon’s platform.

Amazon made a major play this week by buying the rights to stream and sell advertise spots during Thursday night NFL games, which is another big step in its burgeoning advertising ambitions.

While it’s true that Amazon Advertising Platform is not a huge threat to the giants of advertising yet, it’s clear that the e-commerce site is poised to challenge Google and Facebook’s supremacy. Amazon Advertising Platform will also continue to grow and be a far more profitable place for marketers and companies as product searches continue to migrate from Google to Amazon in the future.

Written by Mantas Malukas

Entrepreneur, journalist & professional marketer certified by American Marketing Association (AMA), with over 12 years of progressive and diverse experience. Follow me on Twitter @mantasmalukas

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