Amazon Ads Business Taking Over Major Players

Amazon is a giant not just in the ecommerce and retail space; it is rising rapidly in the digital advertising space. Amazon ads work just like Google ads; your search and the top results appear. While earlier, the Amazon search displayed products based on your purchase history and demography, but now you can see a subtle “sponsored” mentioned below the product details – that’s how it works. It goes beyond brand campaigns, the Amazon store, video ads and much more.

In 2021, the Q3 revenue of Amazon ads was USD 8 billion – almost 2.5 times the combined revenue of Twitter, Snapchat, Pinterest and Spotify, which tells a lot about the growing stature of Amazon in the digital ads business. 

Amazon’s Ad Business – How Big Is It Today?

In 2019, The global digital advertising market reached USD 325 billion. The pandemic halted the growth in 2020. However, the industry has bounced back and is expected to reach $526 billion in 2023. Among key players like Google and Facebook (now Meta), the fastest-growing player is Amazon.

Amazon’s revenue stood at USD 3 billion in 2019 and has increased YOY by 83% in just two years. Its global market share in digital advertising was 5.2% in 2020, and it is expected to cross 7% by 2023. No wonder many are touting Amazon ads to be the next Google. Amazon currently ranks at no.3 in the US (behind Google and Facebook). Globally it is at 4, with China’s Alibaba marginally ahead.

What Does Amazon Ads Offer to Brands?

Apart from sponsored products in search results, it offers a wide range of advertising space and opportunities to the brands. Amazon also allows clients who don’t sell their products on Amazon to use its ad space like video and voice ads.

 

• Sponsored Brand Campaigns: keyword-targeted ads based on Pay per click (PPC) model.
• Product Display Ads: banners on Amazon’s homepage and product pages.
• Video Ads: ads on Amazon-owned platforms like FireTV, Twitch, MiniTV, IMDB
• Voice Ads: brands can use voice ads to be played on Alexa.
• Amazon Store: Brands can have their multiple-page Amazon store and Amazon URL. They can view, monitor and analyze traffic to make marketing decisions.
• Amazon Native Ads: Brands can place ads by integrating relevant recommendations, search ads and custom ads. 
• External partners:  Amazon programmatically places your ads on third-party websites, for example, news portals. 

How Can Brands Benefit from Amazon Ads?             

 Brands and sellers can get a lot of benefits from Amazon advertising platforms. Including:

• Create, improve and enhance brand awareness.
• A secure environment, protected from Ad frauds.
• Reduce sales cycle and improve sales history.
• Data tracking and performance measurement to make changes to rectify marketing strategy.
• A vast amount of consumer data, buying habits, behaviors help retain and acquire more customers.
• Build customer trust.
• Enhance brand visibility by customized ads across devices and platforms. 

Profitable Amazon Advertising Business Model: Case Study

 One of the critical differentiators between Google and Amazon ad services is the Intent of search. While consumers use Google search to find out more about any product or service, On Amazon, the search intent is highly inclined towards purchase. This is one of the reasons Amazon was able to turn around the revenue by generating profit in its marketing business.

As per a recent study, every 2nd person in India does an amazon search before buying any product online or finding out about product details and comparison. No wonder the pandemic only enhanced the Amazon ads business. Amazon ads are likely to be more profitable than its widely used AWS (Amazon web services) model. Do you know why? While AWS needs additional infrastructure (data center and servers) to generate revenues, Amazon ads require nothing literally.

Amazon DSP (Demand-Side Platform) allows sellers to programmatically buy ads and target audiences on multiple platforms, providing excellent advertising options and benefits. Be it targeted display or video ads, amazon store’s analytical capabilities, or Amazon ads brand-safe environment. If you are a digital marketer, this is the right time to explore and make the best use of Amazon ads if you are not doing it already.