News

POV: Amazon Merges Ad Business

Background:

Amazon has announced that they are in the throes of streamlining their advertising vehicles to enable marketers to purchase campaigns from the same place, whether it’s a retailer selling their products directly on the site, or directly to its shoppers as third-party sellers. It means that Amazon Media Group, Amazon Marketing Services (AMS – a self-serve paid search marketing tool) and Amazon Advertising Platform (AAP – Demand Side Platform/DSP) will all exist in one platform, with all products and campaign reporting in one place.

Details and Implications:

Amazon is not the same thing to everyone. For users, it’s a place to buy something quickly and conveniently from either Amazon or third-parties.  For sellers, it creates unrivalled access to a huge marketplace of customers.  For brands, it’s many things: a marketplace to sell products as a third party, a search engine to invest their marketing budget in, and provides access to Amazon’s rich first-party data, which can be targeted within Programmatic buys via AAP.

The latter element has helped Amazon deliver its second consecutive high-profit quarter in the first quarter ($2.2bn) after years of unprofitable or low-profit quarters so it’s not a surprise that they streamline their products to facilitate a marketplace coupled with advertising.  A more pragmatic reason for this is that having one platform would eliminate the risk of two systems bidding against each other for the same brand – where an advertiser is running campaigns within AMS and AAP. 

In addition, marketers have reported a certain degree of clunk within the existing AMS, including a lot of manual workflows including budget controls, targeting and reporting.  AAP has only recently released a self-serve platform for media buyers to buy Amazon first party audiences across Amazon properties and beyond.  Catching up on more traditional DSPs is arguably a key strategic aim.

Summary:

Amazon is quietly making moves towards consolidation across their complex and disconnecting platforms in order to bolster their position within the triumvirate with Google and Facebook. There is an underlying acknowledgment of how important advertising revenue streams are to them and perhaps also an acknowledgment that their platforms need work in order to make it easier for brands to spend their dollars within their walls. Brands need to have presence in Amazon to be relevant to users (their scale cannot be ignored) and access to their rich data in terms of targeting customers is compelling in a world of driving the right message to the right user at the right time.

Further Reading:

Forbes Digiday / Ad ExchangerMarketing Dive