Amazon Projected to Surpass $4.5 billion in Ad Revenue in 2018
How did Google make most of its money early on? How has Facebook continued to make billions of dollars every year? Data and advertising. Luckily for Amazon, they are extremely well positioned in both of these areas – so much so that they are set to challenge Google and Facebook and emerge as a third digital ad platform.
Amazon has data on every single shopper who has made a purchase through the platform. Considering that over 50% (and growing) of all product searches begin on Amazon, that is a massive amount of data. But the data that Amazon has is different, and arguably more valuable, than both Facebook and Google combined. Where Facebook data is interest centric and Google data is search centric, Amazon data is purchase centric.
When working in the Google/Bing/Yahoo SEO sphere and attempting to drive conversions, there is still a massively human element that is needed to bridge the gap between what someone searched for and their behavior on a web page. Even ecommerce websites pose a difficult challenge when looking at how to increase conversions. Most of the time it is a three prong approach between UX, UI, and SEO, and even then there is a lot of ambiguity.
Amazon, on the other hand, is purely transactional. Shopper are not using Amazon like a library, rather they use Amazon like a retail store. Amazon’s massive shelf necessitates the use of their search.
Imagine walking into the largest store imaginable, whose layout and stock is constantly changing. You wouldn’t attempt to browse or wander through the store* if you knew what you wanted to purchase; rather, you’d probably find the nearest associate and ask them where the product you are looking for is located. Amazon’s search bar is that associate and hundreds of millions of shoppers are asking it where they can find products. They want to make a purchase and Amazon has been collecting data since it started on how to help people make a purchase.
Now, take all of that data and apply that to digital advertising. How many times have you searched for something on a search engine only for an odd or irrelevant ad to pop up? Granted, they have gotten much better and much more targeted, but they still happen. Or take the ads or sponsored links in an article; how many times do those apply to anything you re interested in? How often are they about losing weight or finding a Russian bride or something else that is clickbait?
What if, instead of these irrelevant ads that only inspire you to turn your adblocker on, you start seeing ads, promotions, or coupons for things that you use and purchase or are interested in purchasing? Imagine reading this article and seeing an ad on the side of the page for 20% off laundry detergent through Amazon, and it just so happens that you are getting low on detergent because the last time you ordered detergent from Amazon was three or four weeks ago and Amazon knows that you purchase laundry detergent every three or four weeks. How much do you think advertisers would be willing to pay for ad space like that? Now there is no such thing as a guaranteed conversion in digital marketing, but the above example gets pretty close.
*Side note: browsing Amazon by clicking on products in the “People also viewed these products” portion is a great way to waste an afternoon.