Why is Amazon the new king of online advertising ?

As predicted sometime last year, Amazon has just dethroned Facebook and Google. No, the world’s leading retailer hasn’t launched a social media app or a browsing engine. Amazon’s win is much more true to form, and therefore both simple and elegant. All hail the new king of online ads !

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But why wouldn’t a retail giant be an ad wiz at the same time?

Successful online retailers have been avoiding this enormous opportunity for decades out of fear that showing one to many adds on their site might distract visitors from their key objective.

Because shiny advertisements alone can apparently quench our shopping thirst.

Although this kind of thinking used to make some sense back in the day, now it’s simply outdated. We’re surrounded by ads, full stop. They’re literally jumping out of our freezers. Seriously.

So someone in Amazon made the right call.

One Billion at a Time

Amazon’s advertising business is currently growing faster than its net retail sales.

In July this year, it was reported that this “extremely profitable and powerful division” has increased 37% throughout these last few years, making $3 billion more than expected in 2019.

Meanwhile, Google’s ad sales growth has dropped to a measly 15%.

Since the beginning of this risky initiative back in 2017, Amazon has been expeditiously adding more manpower, features, and reporting to its platform, which has ultimately resulted in a super-charged self-service training console for advertising brands, both native and foreign.

The console was an immediate success, with brands flocking from Facebook and Google to Amazon in exciting numbers. About that time, several anonymous sources have started a buzz around this shift, speaking of Google’s “concerned leadership” and the great tidal shift.

"Over 90 percent of searches for products that start on Amazon end with a purchase"

Amazon’s advertising business is currently growing faster than its net retail sales.

In July this year, it was reported that this “extremely profitable and powerful division” has increased 37% throughout these last few years, making $3 billion more than expected in 2019.

Meanwhile, Google’s ad sales growth has dropped to a measly 15%.

Since the beginning of this risky initiative back in 2017, Amazon has been expeditiously adding more manpower, features, and reporting to its platform, which has ultimately resulted in a super-charged self-service training console for advertising brands, both native and foreign.

 

The console was an immediate success, with brands flocking from Facebook and Google to Amazon in exciting numbers. About that time, several anonymous sources have started a buzz around this shift, speaking of Google’s “concerned leadership” and the great tidal shift.

A Conversion Machine

Amazon’s retail platform converts in 90% of cases:

"Over 90 percent of searches for products that start on Amazon end with a purchase, even though that user may end up on social channels," said Chris Apostle, who is the executive vice president and head of performance for North America at Havas Media, back in 2018.

Merkle’s Q2 2019 Digital Marketing Report confirms that Amazon ad formats outstrip Google Shopping in terms of conversion rate.

As a retail brand, you’d want to see your products on Amazon’s offer - just being there offers a huge prospect pool. When to that you add an exceptional conversion potential and a growing retention rate, it is as if you’re outsourcing your entire business to Amazon.

Everything about this platform is designed to sell. Amazon makes it incredibly easy for its users to search, find, and buy products they need, often at discount or bundle prices.

Why wouldn’t these brands want to place their ads there too?

In addition to enjoying an unmatched reputation in the retail world, Amazon also offers great tools and opportunities for advertisers. And then, there’s Amazon Prime too - a gigantic base of satisfied customers who will stick around for as long as Amazon exists.

 

Half Searches Start on Amazon

In 2017, Survata’s report has shown that 49% of product searches start on Amazon. This number has certainly increased since then, given this new surge of popularity that the retailer is currently enjoying. And why wouldn't they? It’s simply more convenient this way.

Why spend time researching a product on Facebook or Google when you’re going to end up buying it on Amazon anyway? This is exactly what makes Amazon so dangerous.

Four words: reduction of customer effort.

When you build a retail platform that offers a complete customer journey starting with an ad through research and concluding with a competitive price, you’re pretty much done.

But there’s another benefit here for Amazon natives - brands that already sell their products here. Call it trackability, visibility, or transparency, the opportunity to stay on top of the entire customer journey from lead gen to retention using only one platform is very attractive.

 

A treasure bag full of Data

Still, the most exciting part of advertising on Amazon is yet to come. If you know that this retail giant offers a one-in-all selling service while penetrating all niches and shipping throughout the world, just try to imagine the kind of database it keeps on modern-day purchasing behavior.

Customer data may be Amazon’s biggest selling point.

Facebook and Google can help you create targeted ad campaigns too, but they base these on data that’s not strictly purchasing behavior. Judging only by the volume of purchasing data, Amazon simply can go deeper into customers’ wants, needs, preferences, and pain points.

Besides, people come to Amazon to shop.

It’s not fun seeing a dietary product ad while casually scrolling down your Facebook feed. You don’t need a reminder of all the holiday weight you’ve piled up, at least not at your moment of leisure. If you’ve come to Amazon to spend money, you’re already a click away from conversion.

And whether we like them or not, ads are here to stay.

It seems as the entire internet is capitalizing on free ad space at the moment, and there’s probably a good reason why. 

The reality is, Amazon currently has the biggest and most prominent billboard in the neighborhood. Whatever they’re selling, the world’s obviously buying it.