Amazon, long the dominant player in online commerce, achieved another major milestone in 2018, also becoming one of Madison Avenue’s dominant suppliers of advertising inventory.
According to estimates released in September by online ad tracker eMarketer, Amazon nudged out Microsoft to become the third-biggest supplier of digital advertising.
That Amazon is now one of digital’s “Big 3” is more than symbolic. It represents an important potential hedge in a marketplace that has become dominated by a so-called “duopoly” of Google and Facebook, which have been sucking up 80 cents of every digital dollar, despite concerns by advertisers and agencies that they are incredibly opaque “walled gardens” that provide little direct data and insights on the consumers brands reach through their ad buys.
In a way, Amazon is the exact opposite, providing some of the most granular tools for brands -- both products and retailers -- to optimize advertising in a way that converts consumers into customers.
“Amazon targets people based on their actual purchase history and on their recent search history,” explains Negeen Ghaisar, head of digital strategy at Bigbuzz Marketing Group.
“The purchase intent and the needs of consumers are a lot more evident on a platform where you can not only search, and learn, but where you can also buy. And I think that’s the big differentiating factor for Amazon.”
While Amazon’s share of digital ad budgets is still a fraction -- 4.2% vs. 20.6% for Facebook and 37.1% for Google, according to eMarketer -- it’s expected to grow for a variety of reasons, including the ones cited by Ghaisar.
“Advertising spend is going to continue to shift away from Google and Facebook, especially when looking at direct intent for shoppers,” she says, noting that both of the Big 2 have had their own endemic problems in 2018, including consumer and regulatory backlash over privacy and their use of consumer data.
In fact, if there was an anti-supplier-of-the-year in 2018, it likely was Facebook, which repeatedly demonstrated both an ineptitude and a disregard for protecting its users’ data.
Beyond that, people simply are rooting for Amazon as a competitor, according to Leo Kivijarv, executive vice president and research director of media industry economist PQ Media.
“I think people like Jeff,” Kivijarv says, referring to Amazon founder and CEO Jeff Bezos, “Whereas they have difficulties with [Facebooks’s] Zuckerberg and they don’t like working with Google because they’re so dominant. When people talk about Facebook now, they ask if it’s going to be the next MySpace. When they talk about Amazon, it’s because they like it.”
That doesn’t mean Amazon isn’t tracking people’s intents and behaviors. If anything, it’s making a more explicit connection between the two, but it appears to be doing it in a transparent way based on a direct correlation that fulfills what people are looking for.
“They’re also tracking all that consumer behavior. They’re a retailer as well, and they’re one of the biggest catalogue providers,” says PQ Media CEO Patrick Quinn, noting that the consumer intent data Amazon sits on is explicitly linked to researching, discovering and ultimately purchasing a product.
In fact, Amazon has already overtaken Google as the No. 1 platform for product searches.
“Its strong handle on consumer purchase behavior sets it apart from Google and Facebook in the digital ad market, which has made the company an attractive option for advertisers," eMarketer Senior Director of Forecasting Monica Peart said in September when it upgraded Amazon’s digital ad share to No. 3.
Noting that many consumers now begin their product searches on Amazon, she said, “That increased search traffic gives third-party sellers a reason to increase bids for keywords on Amazon.”
Amazon’s influence is pervasive and impacts areas of the industry that people in other siloes wouldn’t otherwise see. Search executives have long understood the power of Amazon, as have ecommerce pros, but the fact that they’ve become ascendant in digital advertising as well, still surprises some.
But take a look at an often overlooked area of media-buying -- so-called “co-op” ad spending by brands driving consumer intent into stores and online shopping destinations -- and you’ll find that Amazon already overwhelmingly dominates hundreds of millions of dollars in that segment, as well.
The fact that there is goodwill for Amazon and its founder Jeff Bezos may be icing on the cake. The President’s critiques to the contrary, Bezos has managed his ownership of The Washington Post separately and masterfully since acquiring the financially beleaguered newspaper publisher, and every major city in the United States courted him to become one of Amazon’s second headquarters during its search for locations this year.
Whether they’re consumers, ad execs or municipalities, Amazon is the ascendent digital platform people love to like.