Amazon's efforts to grow its $47 billion advertising business beyond its core search advertising are starting to gain traction among advertisers.
According to Laura Mayer, founder and CEO of Amazon agency Envision Horizons, about 70% to 80% of advertisers' Amazon budgets go to search ads that drive sales. That's what it means. But Amazon is increasing its investment in ad technology to grow its ad business beyond search listings and better compete with giants like Meta and Google.
Over the past few months, Amazon has added features to its “demand-side platform” for buying targeted programmatic ads, including the ability to centrally manage campaigns and allow advertisers to quickly vet creatives to ensure they're the right fit. We have added new features such as the ability to confirm that Do not violate the policy to improve competition with other DSPs such as Google and The Trade Desk. Advertisers say Amazon is touting DSP as the primary way to buy Prime Video ads.
Patrick Miller, co-founder of advertising agency Flywheel Digital, said Amazon's data comes directly from shoppers and shows what products people are interested in. said it was better than The Trade Desk and Google.
Separately, ad buyers said Amazon is touting a so-called data clean room that would solve the impending demise of third-party cookies. Advertisers use Clean Room to find audiences to target ads based on Amazon's first-party data about shoppers.
And Amazon recently posted a job opening for an internal team called ID++. ID++ will create cookie-free advertising products such as modeled context solutions, he reports Ad Age. Amazon later removed the job listing.
Mark Power, CEO of Amazon consultancy Podean, said these new features are effectively stealing advertising dollars from Meta and Google.
“We've seen brands double their spend on Amazon, but some of that budget is going to be spent on meta and Google at the expense of brand budgets and performance budgets, but Part of the budget comes from other parts of their business,” Power said.
Power said brands often spend 8% of their Amazon sales on advertising, with most of that being search ads that drive sales. He said customers are now increasing their budgets to account for 12% to 15% of Amazon's sales, with the increase going toward Amazon's ad tech formats.
Amazon is targeting big brand budgets
The goal of Amazon's ad tech products is to convince brands that Amazon ads can increase brand awareness and drive sales by using Amazon shopper data without the use of third-party cookies.
One advantage Amazon has over Meta is that Google uses shopper data to acquire new customers. Envision Horizon's Meyer said it's becoming increasingly expensive and difficult for advertisers to find new customers on Meta.
“Right now, many marketers are just trying to find the best return on their next ad spend,” she says. “Companies need to continue to push the boundaries and ensure that when they reach a point of diminishing returns in one channel, they look for new channels to invest in.”
Amazon has long pitched to advertisers that its tools can not only drive sales, but also increase brand awareness and affinity. These two metrics are used by large advertisers that don't sell on Amazon, such as insurance and financial companies, to scrutinize the platform. .
Ross Walker, retail media team leader at ad agency Acadia, said Amazon is finally realizing its ambitions, thanks to more advanced advertising tools and salespeople savvy at helping advertisers grow brand awareness. he said.
“They're starting to build it up to the point where they can promote it more aggressively,” he says. “Before, it was super bespoke and probably a very small team or collective within Amazon.”
