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Four Reasons the Amazon Advertising Ascent Will Continue

Written by: Shane O'Neill, Director of Content

Note: Nanigans advertising automation platform does not integrate with Amazon.

2019 is set to be a watershed year. For the first time, U.S. digital ad spend will eclipse traditional advertising.

One of the main beneficiaries will be Amazon. Amazon ended 2018 owning 6.8% of total digital ad spending in the U.S. and is predicted to own 8.8% by the end of 2019, according to eMarketer.

Amazon’s advertising advances show that “triopoly” isn’t just a snappy catchphrase. By the end of the year, nearly 70% of U.S. digital ad spend will go to three platforms (Google, Facebook and Amazon).

We’ve been keeping an eye on Amazon’s fast rise in digital advertising. Using our previous articles as a guide, here are four reasons why Amazon has made fast strides in advertising and will continue to do so (sometimes at the advertiser’s expense).

Amazon delivers ROI to advertisers

In our recent survey of 100 retail advertising decision-makers, respondents said they plan to increase spending with Amazon over the next year at an average of 25%.

One of the top reasons brands keep advertising on Amazon, according to our survey, is that it’s outperforming both Google and Facebook/Instagram on key performance indicators, including ROAS (return on ad spend). Thirty-nine percent of respondents saw higher ROAS than Google, and 54% saw improvement over Facebook/Instagram.

Read the full blog post: Triopoly Calling? Brands Lured by Amazon Advertising’s Strong ROI

Amazon has a diverse ad platform

The technology driving Amazon’s advertising growth is not well-known, but behind the scenes lives an array of services for placing ads on Amazon properties and the open web.

Last fall, Amazon rebranded its three ad services — Amazon Publisher Services (APS), Amazon Media Group (AMG) and Amazon Marketing Services (AMS) — with a much simpler naming structure, “Amazon Advertising.” The new name did not change how the platforms function however.

Amazon’s advertising advances show that “triopoly” isn’t just a snappy catchphrase. By the end of the year, nearly 70% of U.S. digital ad spend will go to three platforms (Google, Facebook and Amazon).

We cooked up an infographic that explains the advertising services under the Amazon Advertising banner and how brands are using them.

Check out the infographic: The Inner Workings of Amazon Advertising

Amazon has access to transaction data

Amazon is still in a distant third place behind the Duopoly in terms of advertising market share. But it’s a safe bet Amazon will own spot three for the foreseeable future.

One huge advantage is having unrestricted access to first-party transaction data from logged-in users. Amazon can use this data to improve ad targeting. It also helps the company determine which products sell well. It can then create its own Amazon version of that product and undercut the seller.

Amazon also has the wherewithal to challenge Google’s search market share. Some 52% of shoppers begin product searches on Amazon, according to Raymond James Research. At the same time, Google’s market share has slipped from 88% in 2011 to 78% in 2016.

For advertisers, Amazon facilitates a direct connection to sales. Much of Google’s searches are general interest and can’t be monetized. Amazon searches, on the other hand, are almost always done with the intent to buy something.

Read the full blog post: Three Ways Amazon Could Join Facebook and Google as a Triopoly

Amazon has an undeniable advantage as both advertiser and retailer

What’s often overlooked is the power Amazon has as an advertiser, an ad network and a ecommerce marketplace all at once.

In many ways, Amazon gets others to foot the bill for much of its ad spend. Google Display Network (GDN) and Facebook Audience Network (FAN) ads don’t go back to Google or Facebook for purchase. But Amazon ads go back to Amazon, where the company gets a cut of the transaction fee.

Amazon also has data on an advertiser’s audience and on which sites the ads are succeeding. Google and Facebook have this information too, but they won’t turn around and compete with the advertiser the way Amazon does.

Advertisers are well-aware of this threat. Respondents from our recent Amazon advertising survey clearly view Amazon as a competitor.

  • Forty percent say they’re worried about Amazon having too much of their data.
  • Almost a third (31%) see Amazon’s retail business as competitive with their own.
  • Nearly three-quarters (75%) of marketers advertising with Amazon would prefer that Amazon link back to their own sites, rather than Amazon.com.

Read the full blog post: Your Ad Tech Tax is Amazon’s Opportunity

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