Why You Can't Afford to Ignore Amazon Advertising

While comparing total ad spend across platforms for REQ’s client portfolio in 2018, we came across a surprising trend. Amazon moved into the top 4 right behind the usual suspects Google, Twitter, and Facebook. In 2017, it didn’t even break into the top 10.

A company that undeniably disrupted both retail and e-commerce is now making major inroads in the advertising industry. But how exactly are they doing that? Let’s dive in.

Amazon is making advertising a priority for their own brand.

In 2018, Amazon was the 5^th largest advertiser among US advertisers, spending $1.8 billion on advertising for its own brands and products—an increase of 72% year-over-year. You may have seen their commercial promoting Alexa during the Super Bowl, a city bus or metro car dressed in an ad for the new Amazon Prime series Jack Ryan, or a banner ad promoting the latest deals at your local Whole Foods.

Advertising campaigns on Amazon perform incredibly well.

Amazon accounts for 50% of all online sales in the US and 92% of shoppers who start their search for a product on Amazon end up purchasing it there. For our clients who maintain Amazon seller accounts, Amazon ads consistently produce the highest amount of sales at the lowest cost per conversion.

Advertisers are allocating more of their ad budget to Amazon.

Amazon recently overtook Oath and Microsoft to become the 3^rd highest revenue-generating digital ad platform in the US, lagging only behind Google and Facebook. In the coming years, experts expect them to steal even more market share from the two advertising giants. In recent months, Amazon made major updates to it’s self-serve advertising platform for retailers—introducing new ad formats and more sophisticated bidding options. Aggressively hiring advertising, marketing, and account management professionals is further evidence that they are investing significant time and resource to bolster the ad side of their business.

Amazon is being more transparent with sellers about their proprietary shopping data.

Just last week, Amazon released access to an internal analytics platform, Amazon Brand Analytics, to marketplace sellers that are Brand-Registered. With this access, sellers can view keywords users are searching, the popularity of keywords, and click share of the top three products for a keyword. Previously costing a minimum of $30,000 per year, this data is likely to spark competition and increase investment from sellers for keywords that they know their audience is searching for.

Amazon’s ownership of massive amounts of shopper data can also benefit non-retailers. Through their Demand Side Platform (DSP), Amazon audiences can be segmented and targeted anywhere via video and banner advertising. Businesses can learn a lot based on shopping habits, making this type of advertising extremely valuable.

Jeff Bezos, who once believed that advertising was only needed for “unremarkable” products, is now realizing how powerful advertising can be, even for the most valuable company in the world.