Because of its first-party data, and because of the high demand for user purchase data, it is poised to outshine its competitors in the ad world in the coming years. That will happen both on its marketplace — which is becoming flooded with advertisements — and its off-platform ads business, the latter of which is gaining buy-in from a larger share of sellers.

Amazon has already made significant gains in the ad market since the start of the pandemic. While it is still well behind Facebook and Google in its overall share of the ad industry, brands significantly shifted their ad budgets toward Amazon in 2020, according to a report from Feedvisor. Among brands, 28% of ad budgets went to Amazon last year, compared with 22% to Google and 23% to paid social. That’s a notable boost from 2019 when Amazon accounted for 25% of all brand ad budgets. At the same time, Amazon has also increasingly integrated advertising across its own products — most recently, by adding Twitch into the larger Amazon Advertising network.

For years, advertisers have considered Amazon to be a dark horse to upend the Google-Facebook duopoly. In 2020, it grew ad revenue by 52%, to $14.63 billion. While that pales in comparison to what Google ($67.21 billion) and Facebook ($35.22 billion) brought in last year, Amazon’s growth may be accelerated due to the privacy developments on the horizon.

How display advertising may change

The coming privacy changes are certain to hit smaller publishers that rely on third-party data the hardest. “Most display budgets will move from third-party DSP to big publishers,” said Melissa Burdick, president of Pacvue, a platform focused on e-commerce advertising.

For Amazon, the opportunities are significant. Amazon’s ad business is sprawling, consisting of both ads on the actual Amazon marketplace (for instance, ads in search results or sponsored product displays on product detail pages) and off-Amazon ads (for instance, an Amazon product ad that might pop up on an external publisher’s website).

“I think that brands are going to prioritize their budgets to where consumers are shopping and it’s clearer than ever that that’s Amazon,” said Natalie Taylor, a content manager at Feedvisor who conducted the company’s advertising study. Taylor added that 62% of brands surveyed said that Amazon ads give the highest return on investment, compared to all other ad types they run. 44% of the brands, which ranged from Fortune 500 to enterprise-level retail brands, told Feedvisor they saw returns between 7x and 10x on Amazon ads.

Ads on Amazon have become so successful for brands — and so profitable for Amazon — that they are now omnipresent. Over the last few …read more

Source:: Digiday

Author: Aaron