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25 years in, Amazon's ad business is shaping up but clients are still wary of it
Amazon may have started its life as a humble online bookstore, but fast-forward 25 years and there doesn’t seem like there is a single industry that the tech giant doesn’t have a play in.
The company clearly aspires to be the go-to brand for not only consumers’, but also businesses’ every want and need. Not content with stocking a sizeable range of products from brands, the eCommerce giant has also launched its own technologies, built its own products, and developed its own banking, healthcare, and home and business services offerings.
Yet for many in the media and advertising industry, it’s far more than this.
Amazon has an incredible wealth of customer data gleaned from billions of online transactions, which means it can advertise to consumers with a far greater reach and accuracy. And it’s already reaping the rewards; generating more than $10bn from its ad business last year. In fact, Amazon is slated to take up the mantle as the third largest ad platform, behind Facebook and Google, by 2020.
Although it’s highly unlikely that we’ll see Amazon unseat Google from the top of the digital advertising table anytime soon, it’s certainly solidifying its offering – acquiring new digital ad tools to improve its ad serving capabilities and ensure it’s making the most of its rich bank of customer data. And while most of the tech giants would claim that their USP is data – Google and Facebook both succeed as ad platforms thanks to their access to user data – Amazon’s data set is different, and it’s that difference that gives it a competitive advantage.
Facebook and Google’s data provides insight into users’ personal lives, based on likes, searches and interests; which inform the customer profiles that guide advertising. However, what this data can’t do is target customers based on their intent to purchase items. That is Amazon’s strongest advantage in the ad industry.
Amazon’s data on customer purchase history is far more valuable to an advertiser than just understanding the things they like or have searched for. And tying this up with social data, internet searches and finally purchase data means brands can chart a consumer’s complete journey, building a comprehensive picture of how they behave.
Yet based on the conversations we are having with clients, we’re seeing a sizeable shift in how they view the tech giant.
Don’t get me wrong, they recognise the real advantages of Amazon’s platform and large customer-base. But they are also wary of the risk that it poses to their business.
There is a concern that Amazon won’t be willing to share the full value of its customer data for competing products and services. The tech giant might be the gateway to sales growth, but as it continues to introduce – and prioritise – its own branded products, it’s increasingly positioning itself as a competitor.
Essentially, brands are understandably struggling to find the balance between seeing Amazon as a friend or a foe.
With its access to what consumers are talking about, engaging with, shopping for and, ultimately, purchasing, the tech giant is edging into brands’ territory.
If Amazon continues on this path, it will need to find clarity around its ad offering if it is to win businesses over and truly take a chunk out of Facebook and Google’s dominance in the market.
Luke Bozeat is chief operating officer at MediaCom UK
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