Amazon Takes It Up To Google & Facebook CE Sellers Set To Benefit
A battle is brewing in Australia between Amazon, Google and Facebook and right in the middle are distributors and online merchants who use the Amazon web site to sell goods along with advertisers who are looking for better qualified data.
Amazon who are set to unleash a new marketing thrust to attract buyers in the second half of the year has started selling advertising space across its sites to merchants who have traditionally used Google and Facebook.
The exercise which has already kicked off in Europe and the USA has been stunningly successful with Amazon doubling their profits last week.
The world’s largest communications group WPP had directed $200 million of its clients’ ad budgets to Amazon in 2017 and predicted that number would rise to $300 million this year.
The $2 billion in advertising revenue that Amazon is already generating from merchants, is dwarfed by Alphabet’s Google and Facebook, but it is growing fast, and is already ahead of the struggling Twitter and Snapchat.
What Google and Facebook now have to compete with is the mountain of data that Amazon has from paying and visiting consumers.
Amazon has users’ purchase data and knows what shoppers need, said Jason Damata, founder of Fabric Media, which advises companies on marketing and business strategy.
Google only knows what people are searching for, while Facebook only knows “what you want your friends to think you like,” Damata said.
Some of his clients began directing their ad budgets to get customers to buy their products on Amazon, Damata said, and saw sales jump as a result.
Amazon who does not reveal their advertising revenue, they lump it in with its “other” section, which hit $2.0 billion in the first quarter. After adjusting for accounting changes, that is a 72 percent increase from a year earlier, Amazon said.
Chief financial officer Brian Olsavsky called the ad sales business “a multibillion-dollar program and growing very quickly.” Advertisers of all sizes were interested in sponsored product ads “to drive brand awareness, discovery or hopefully, purchase,” he said.
“Amazon is coming over the hill. Amazon certainly poses a big threat on search and advertising,” he said, adding that its voice assistant, Alexa, would make it an even stronger competitor.
Internet research firm eMarketer last October forecast Amazon would hit $3.19 billion in net US digital ad revenues by 2019, or 3.0 percent of digital ad spending.