In September, Amazon reportedly became the third biggest ad seller in the United States. A new study conducted by Marketing Land parent company Third Door Media, released Thursday, underscores Amazon’s ad business is just getting started.
Is Amazon ready to rival Google and Facebook? Marketers acknowledge the platform’s rapid growth but say before it can truly compete with Google and Facebook, it needs to solve some persistent pain points. In our survey, forty-six percent of those advertising cited inadequate reporting and 43 percent said limited optimization tactics as their biggest challenges in using Amazon ads. But there are also other challenges, say marketers.
Brand safety from a seller’s perspective. Matthew Biboud-Lubeck, VP of consumer engagement strategy at customer data platform Amperity said Amazon has its own flavor of brand safety challenges.
“Amazon is also not a universal fit for all brands in all categories,” Biboud-Lubeck said. “Brand safety is always a challenge marketers are facing when deciding what inventory to buy, what to white label and what to blacklist. Amazon has a counterfeit and grey market goods problem through their reseller marketplace that continues to create friction in the consumer experience, and prevent brands from going all in.”
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Brand experience and content challenges. Biboud-Lubeck said that Amazon will likely remain complementary to other advertising platforms like Google or Facebook, for a number of reasons.
“The content experience on Google and Facebook is still best in class, and [Amazon has] a heavy share of mobile traffic. But brands who need to tell a highly visual story, with premium video inventory, are going to need to keep playing across inventory … It will take work for Amazon to flip this investment paradigm to take dominant share,” Biboud-Lubeck said.
Collin Holmes, CEO at reputation manager Chatmeter, said that the lack of local content offerings leaves a hole for Amazon.
“Consumers remain hungry for instant gratification, ultimate convenience and real-life experiences, which is where platforms like Google and Facebook prevail with local ads and business listings and a low-touch way to call, get directions to or visit the website for a nearby location,” Holmes said. “The majority of consumer purchases still occur in-store (about 90 percent based on recent data), which means a focus is needed on local shopping as well.”
SMBs will be key to the Amazon’s ad growth. Chatmeter’s Holmes said that as Amazon continues to add support for SMBs, it will compete better with Facebook and Google.
“With [Amazon’s] recent announcements in supporting more SMBs to sell through Amazon, that could change completely. They could be in a unique position to assist SMBs with a full omni-channel shopping experience with customers, something that has only been available to large brands with sizeable marketing and distribution budgets,” said Holmes. “The shopping experience is evolving every day, which means Amazon has a big opportunity to take market share if they make the right product and market positioning decisions.”
In our survey, small businesses (35 percent) were more likely to say getting support from Amazon client services presents an advertising challenge than those working at larger businesses (29 percent).
SMBs are also more likely to shift budget from other channels including search, display or paid social to Amazon advertising than larger businesses, who are more likely to tap incremental funding sources. That means other channels, namely Google and Facebook, could feel the affect of Amazon’s ad growth from SMBs first. In September, Amazon launched Storefronts, a dedicated section for small businesses that features more than a million products from over 20,000 U.S. SMBs.
Monetizing beyond the marketplace. Todd Bowman, senior director of Amazon and eRetail at Merkle, said that the “Amazon advertising platform presents a lot of growth opportunity in 2019 as advertiser confidence in the space continues to grow.”
“Now that Amazon is the #3 ad revenue platform, the only way to continue growing market share is to take away from Google and Facebook. Initially, they will probably take share away from Facebook as the ad opportunities on the channel are not as endless like Amazon with Fire TV and Google with YouTube TV.” Bowman said. “Overall, Amazon is a platform that all marketers need to keep on their radar, even if they don’t have plans to sell in the marketplace.”
The Amazon Advertising Forecast 2019 (free with registration) looks at how Amazon ad budgets are changing, how they are being allocated across Amazon’s suite of ad products, who is managing Amazon advertising campaigns and whether they’re planning to use tools to help automate management.
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