The Rising Power of Amazon Ads

By: Heather Roth

Amazon has become synonymous with ecommerce as it has led the way in creating online exchanges between consumers and vendors but they are now making noise in the digital advertising space by revamping their offering to create a simplified experience for users. 

Amazon has long been applauded (and jeered) for pioneering the direct-to-consumer ecommerce space, leading the company to over 50% household penetration with their Amazon Prime subscription and a vast ecosystem of product offerings and perks for its members. Now Amazon wants to show its advertisers a little love, too – so you can expect to see some big changes in the ad platform in the coming months.

For those familiar with Amazon’s advertising offerings, there are currently three distinct platforms: Amazon Media Group (AMG: more awareness-based and custom units), Amazon Marketing Services (AMS: pay-per-click performance search), and Amazon Advertising Platform (AAP: the demand-side platform that offers the programmatic solution) – all which serve a different purpose.

This platform structure was created when advertising was just a small part of Amazon’s business model and when first- and third-party buyers were using separate platforms. But as the digital advertising landscape has grown, media buyers have found a lot of value in buying across all platforms for acquisition and more sales-driven campaigns, and that results in managing ads – and budgets – across separate platforms.

But as Amazon’s ad platform becomes more of a force in the advertising space, and as a viable business unit within Amazon (nearly $2.2B in revenue as of Q2 earnings reports) – the company is hoping to streamline the experience for advertisers under the new Amazon Advertising platform, which will encompass all ad products including video ads, display ads, Amazon’s DSP, stores, sponsored products, sponsored brands and Amazon’s measurement solutions.

Benefits brands and advertisers can expect to get out of this offering:

  • Sellers running paid ads across both sides of the Amazon marketplace may have been artificially increasing bids on their ads. The consolidation will avoid this issue with a single data set.
  • A unified data set will also make it easier for companies to understand total metrics for their product and where the traffic is coming from. Amazon will have an analytics offering within this consolidated platform, and will be testing an attribution product.
  • Buying video ads and headline search ads will no longer require advertisers to work with two different services (Amazon Marketing Services and Amazon Media Group).

This consolidation is a big move for Amazon and shows that they are ready to invest in the ad space. This move comes on the heels of Google’s move to consolidate their advertising offerings into a more uniformly managed experience, and has analysts speculating that Amazon is looking to take on the current duopoly of Google and Facebook. The inventory for their buys are still more limited than other demand-side platforms, which could increase prices as more media buyers vie for inventory, but with Amazon being Amazon, chances are we will see more moves from them in the next 12 months.

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