Any marketer familiar with paid advertising undoubtedly realizes that Facebook ads and Google Adwords are the most utilized ad platforms in existence. However, many might be surprised to know that Amazon is sprinting in this race and gaining tremendous ground.
In fact, Amazon ad revenue reached 15.73 billion in 2020, and is predicted to reach 40 billion by 2023 according to analysts at Juniper Research. For context, Google’s ad revenue was 187 billion and Facebook’s was 84 billion. While Amazon’s numbers still pale in comparison, its rapid growth shows amazing promise.
Ad growth in the 4th quarter of 2020 (64%) surpassed the growth rate of both new sellers and prime members.
Of course, Amazon is continuing to take over the universe and make Jeff Bezos even richer. What else is new, right?
Well, this is all good news for marketers and advertisers too. According to a report from Analytics Partners, Amazon ads have a 20% higher return on investment than typical ad marketing on other platforms.
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Not to mention that due to this insane growth and massive revenue, Amazon will continue to invest heavily into offering more robust advertising options for its customers and sellers. They’ve already shown this by expanding into video and artificial intelligence algorithms that work to only show the most relevant ads to ready buyers.
Ok…Ok…You’re probably thinking Well that’s great but Amazon only accounts for a portion of our distribution channels and sales.
But did you know that 48% of display ads impact non-Amazon sales?!
So overall, it appears that Amazon has a lot to offer media buyers, both on and off Amazon’s marketplace. In fact in an ad-buyer survey conducted by Cowen of 52 senior U.S. ad-buyers, it was revealed that Amazon ads have the second highest ROI next to Google search!!
See, Amazon has immeasurable amounts of shopper data that allow audiences to be targeted based on known behaviors. This gives them quite a leg up. Further, Amazon owns many popular websites on which they can track, gather more data, and serve ads as well.
Basically, Amazon gains the shopper, owns their data, and owns the sites they visit outside of the marketplace, creating the necessary components for a profitable ecosystem of constant commerce for advertisers.
The IOS 14 update from Apple sent ripples throughout the marketing and media buying community.
The reason is because Apple is forcing a prompt asking for explicit permission to track across platforms for every app and website Apple users visit/use. This means there is no more pixel tracking for those who opt out (most people). The tracking that is available is limited to a 7 day attribution window and less events.
Some data is already in regarding the impact this has had and it isn’t great for advertisers. Tracking permission has dropped from 70% to 4%.
Making less waves in the community, but still incredibly impactful, was Google’s choice to get rid of cookies. In fact Google is looking to phase out cookies entirely in Chrome Browser by 2022. Firefox and Safari have already phased out third-party tracking.
Essentially advertisers have had a rather unfair advantage, up until now, with such loose restrictions on privacy. With tracking taking place across any number of platforms, ad-buyers could retarget potential customers almost anywhere.
Now, the value of those strategies has diminished dramatically, making way for the next generation of best practices, all revolving around first party data.
What is first party data anyway?
First party data is simply information collected by the web property or app itself. For example, when you collect subscriber and buyer information in your Shopify store, that’s first-party data. Similarly when Amazon collects shopper information, they are amassing first-party data.
All of the restrictions coming from Apple, Google, and other platforms are around the sharing of data to third parties. But when you gain data from a voluntary opt in through a property you control, you aren’t sharing anything with a third party.
This means that all tracking throughout properties you own or within your properties owned by the ad platform (as in the case with Facebook) will still work.
How does this benefit an Amazon seller though? Amazon isn’t a property WE own…
One way to take advantage of Amazon’s massive first party data is through their Demand-Side Platform (DSP). Remember those external websites that Amazon owns that they can serve ads on (mentioned above)?
Those are DSP ads.
DSP offers one of the most impactful opportunities for advertisers to scale in the post-third-party-data world.
Not only can ads for your products be served on a vast number of Amazon controlled websites (as well as within audience network partner sites and apps), and a number of placements and media player options within the Amazon website itself, but Amazon lends targeting options to DSP advertisers as well.
That’s right. Amazon gives YOU, the advertiser, the power of their first party data.
Here’s a quick list of targeting options offered by Amazon DSP:
- In-Market – These are actual browsers and shoppers of specific products or categories ON Amazon.com.
- Lifestyle – These are people who’s shopping patterns have been identified to fit a specific pattern that can categorize them as tending to make certain lifestyle choices.
- Demographic – Gender, age, income level, etc.
- Retargeting – Remarketing people who viewed your detail pages but didn’t convert.
- Advertiser Audiences – Not only can you upload a custom audience of your own (email list or customers from your website), but you can also add a pixel to your site to create this audience.
- Other Custom Audiences – You also have the ability to target interests based on things like Prime Video views.
These are the reasons why current advertisers are increasing their DSP budget every quarter. However, compared to Sponsored Products and Sponsored Brands, DSP is still pretty underutilized, which creates an opportunity for undervalued ad real estate.
Ultimately Amazon offers tremendous value for ad-buyers and marketers, and DSP is the hottest thing on the block right now. If you aren’t taking advantage of it, you are leaving money on the table. Period.