The (Advertise) Everything Store

  1. Advertising Vehicles with Huge Potential

Amazon has been increasingly taking control over the consumer's experience across the purchase funnel -- from awareness (with display ads) all the way down to retention (with subscribe-and-save).  In addition, Amazon is a key player in the following spaces, all of which could be fertile territory for advertising:

  • ecommerce.  More online product searches now start on Amazon than Google, according to BloomReach.  Amazon has already started to offer Product Listing Ads, but the broader eCommerce opportunity is huge -- even outside the platform, with ad space available on coupons, shipping boxes and Amazon Lockers.
  • Content.  Even if the shows and movies on Prime are mainly ad-free, we are increasingly seeing hints of direct monetization of their premium, default-sound-on video inventory.  Structurally, Amazon is monetizing its content production beyond a flat-fare, all-you-can-watch model.  For example, Manchester by the Sea was released in theaters before going on Amazon Prime.  Also, starting months ago, Amazon has been testing pre-roll ads on their videos.  Moreover, Amazon recently announced a deal to live stream NFL games -- should we be surprised if we start seeing ads during the games?  If their ad monetization efforts in video succeed, audio (via Amazon Prime and Audible) would likely follow.
  • Alexa.  Amazon seems to be winning the AI voice-controlled device battle, with integrations into smart TVs and other household appliances.  Brands like Tide would most certainly want to become the default product when we say "Alexa, buy detergent."
  1. Robust Tech and Data

Amazon collects extremely attractive data across its multiple platforms, having not only a deep understanding of users' interests and preferences, but also what they actually purchase (rather than merely intent).  Other than just improving targeting, this unique information offers a straightforward attribution metric.  And, in a world where advertisers are increasingly pushing for transparency and performance-based models, being able to directly attribute a purchase action to a marketing action is very compelling.

Finally, Amazon has recently become the most used Demand Side Platform (DSP) and Amazon Web Services (AWS) is the cloud computer market leader.  Both are examples of Amazon's ascendancy in domains that used to be controlled by Google.

  1. Massive Scale

Unlike Snap, Twitter, or even Verizon, Amazon has enough scale to compete head-to-head with the duopoly.  We have already mentioned that Amazon is the preferred starting point for product search.  Now let's take a look at their financial scale:

Amazon is the only one with a market cap similar to Google's or Facebook's.  As for reach, current estimates have Amazon Prime at nearly 70 million members -- who are paying $99/year for subscriptions -- in the U.S., which represents more than half the households in the country.

Amazon might be distracting us with flying drones or check-out free stores -- and these cool, futuristic products effectively captivate our attention. But their revenue growth in the short term will come from monetizing their current products through advertising, not from inventing new ones.

Lately, Facebook and Google have been increasing their efforts around ecommerce, adding new features to their platforms.  Is this really a surprise after all?

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The opinions and points of view expressed in this content are exclusively the views of the author and/or subject(s) and do not necessarily represent the views of MediaVillage.com/MyersBizNet, Inc. management or associated writers.

Ramiro Sanchez Caballero

As Senior Partner of Global Corporate Development at GroupM, Ramiro works with the group leadership to develop and refine the acquisitions and investments strategy. This means, he oversees the identification, evaluation, and implementation of M&As, inv... read more