In the last five years, Amazon’s advertising business has boomed. It now has a DSP footprint that matches Google’s, and its SSP is the second most popular. In just the last year, the online retailer made more than $22 billion in ad income. Even for advertisers who spend a lot of money on the tech giant, Amazon’s advertising strategy and business remain inexplicable. 

If we just take the case of Amazon’s video advertising, it is notable that the company built Fire TV, its most ambitious video project, and also controls Twitch, which began testing direct programmatic partnerships last year; and also owns IMDb TV, a free streaming platform. The Amazon DSP provides programmatic video advertising across the web, and in-feed video spots appear in Amazon searches to evaluate or explain products.

Video isn’t the only kind of advertising that’s growing in popularity. A rising number of brands use the DSP even though they don’t sell on Amazon or even have an e-commerce presence. They simply want to use Amazon shopping data to target customers throughout the web.

If you pick instances from your life, you will notice that Amazon knows about everything you shop for, the brand you use, your spending bracket, and which products are you most likely to use. Advertisers use this information tactfully to get you to buy their product.

Amazon has grown to become the third-largest digital ad market in the United States, and a rising competitor to challenge Google and Facebook’s digital ad duopoly.

While it is a bit perplexing to untangle Amazon’s colossal advertising business, we have to go in-depth into its fabric to comprehend its adtech behavior. Keep reading below to get a bird’s eye view of Amazon’s advertising business model!

How Big Is Amazon’s Advertising Business? 

 

From Amazon DSP to Sponsored Display, there is an eclectic range of advertising solutions that Amazon offers to people. Want to know how far spread is Amazon’s ad business? Check these out: 

• Amazon Live – Allowing real-time brand interaction, Amazon Live offers the opportunity of contacting shoppers in real-time and engage in interactive shopping experiences.
• Amazon Attribution (Beta) – This solution provides marketers with an understanding of how their non-Amazon marketing portals impact shopping and sales activities on Amazon through search, social services, video, display and e-mails.
• Amazon DSP – Amazon’s demand-side platform (DSP) allows users to reach customers throughout the web, including on Amazon sites and applications, as well as through publishing partners and third-party exchanges.
• Sponsored Display – Amazon advertising platform offers this solution to help you target the perfect audience for your business both on and off Amazon with display ads that you can develop in no time.
• Sizmek Ad Suite – From creation to distribution, this ad server on Amazon will help you disseminate your campaign across a variety of screens.
• Sponsored Brands – With personalized ads that display in Amazon shopping results, you can increase brand recognition and product discovery for your brand and product portfolio.

• Post (Beta) – Posts in beta tell your brand’s narrative to relevant Amazon shoppers as they browse your categories. Shoppers may explore your brand’s feed by clicking through Posts and discovering product pages directly from your feed
• Custom Advertising Solutions – If you want to increase your brand awareness and conversation, Amazon’s Custom Advertising team will collaborate to create campaigns that engage customers at all phases of the marketing funnel.
• Audio Ads – Extend your brand’s reach beyond the screen with audio adverts. These ads are seen during commercial breaks while listening to Amazon Music’s free tier on Alexa-enabled devices, such as Echo and Fire TV, as well as on mobile and desktop.
• Stores – With a self-service store, you can create and design a unique brand destination on Amazon for no extra charge.
• OTT ( Over-The-Top) And Online Video Ads – This solution helps you reach a wider audience and engage them on Amazon-affiliated sites like IMDb.com and Twitch, as well as devices like the Fire TV and the web.
• Sponsored Products – With advertising that appears in shopping results and on product pages, you can help people discover and buy the things you sell on Amazon. There is no requirement for prior advertising experience.

Amazon Ad Business Growth

During the pandemic, ad spending saw a significant cut by marketers and we saw the rise of e-commerce advertising. As more and more people shopped from home, Amazon embraced this e-commerce advertising like no other company. 

According to EMarketer, Amazon controlled 10.3 per cent of the US digital ad market in 2020, up from 7.8 per cent in 2019, putting it in direct competition with Google and Facebook for ad dollars. Walmart, Instacart, Walgreens, and other businesses have also joined Amazon. 

Amazon made $21.5 billion in advertising revenue in 2020, up from $9.3 billion the previous year. While advertising accounts for a small portion of Amazon’s revenue from retail sales and Amazon Web Services, the company’s cloud division, it is one of the company’s fastest-growing segments. Advertisers’ search spending, which is primarily directed to Google, are continuing to be slashed by the internet giant.

All of Amazon’s advertising strategy is well thought out and will contribute to a booming ad business growth in 2021 as well. 

What Is Amazon Advertising Business

Advertisers and sellers frequently cite a lack of data and tools as obstacles to advertising on Amazon, which has spawned a cottage industry of companies dedicated to assisting marketing on the platform. Meanwhile, Amazon’s OTT division, which sells adverts in select Amazon Fire TV apps, has pushed further into programmatic advertising.

The four key areas where Amazon’s advertising business model skyrockets include video, non-endemic advertisers, conquesting, and polished targeting and measurement. Let’s have a look at these areas: 

Video

Amazon’s advertising business is not just about Prime Video, but also Fire TV, where Amazon sells around a third of the inventory. Fire TV has a footprint of around 50 million US households and is the only platform where TV-style video commercials may be directly linked to sales. 

The only way one can get their hands on the Fire TV inventory is the Amazon DSP. Advertisers can still get on Fire TV without having to go via Amazon because programmers keep 70% of the inventory to sell themselves. However, only the Amazon DSP can use logged-in Amazon data to boost those purchases or attribute ads to online sales.

Although adding video to static sponsored product listings can be costly, Amazon finds it easier to sell because those units are offered per click, exactly like sponsored search. 

In comparison to the programmatic video, where companies pay per impression and views are counted at the second mark, the pay-per-click approach can appear to be a good deal.

Because Amazon is selective with its sponsored videos, only showing in-depth product videos on highly relevant searches and for reputable brands, sponsored video listings are becoming a key signal of brand reputation. 

Conquesting

Conquesting is actually a really intelligent way for the Amazon advertising platform to accommodate sponsored ads. When you do a product search on Amazon, there are sponsored products that show up. Here, advertisers bid on certain terms, and advertisements with greater bids have a better chance of being seen.

What happens on Amazon is that, because of this bidding, when you search for a product by a specific company, the products of a rival brand pops up first. This is what advertisers call, conquesting, or the buying of terms against search terms for rival products. 

Advertisers can also purchase “sponsored brands” listings, which display in search results to assist consumers in finding a specific brand.

Furthermore, because Amazon’s purchasing data is so thorough, marketers may save money by not advertising to consumers who have just purchased a product and will not be purchasing it again very soon.

Non-Endemic Business

Beyond its base of e-commerce marketers, Amazon is also looking for expansion. The Amazon DSP created a dedicated ad sales team for non-endemic brands. What this means is that hotels or resorts can use Amazon to target audiences on search terms such as “ travel stationery” or “ mini travel kits”. 

Targeting And Measurement

With a cloud-based data clean room in beta, Amazon is fine-tuning its targeting and measurement. Amazon’s cleanroom expands the possibilities for leveraging Amazon’s buying data.

The Amazon DSP, for example, has a 14-day attribution window. Advertisers can test longer attribution windows using Amazon’s marketing cloud.

Amazon has a plethora of data about how consumers shop and has made additional information available to advertising to help them buy and target adverts. Advertisers, on the other hand, claim that Amazon’s data is restricted and that they are constantly looking for new ways to measure ads. 

Amazon Ad Business Revenue

According to Loop Capital, Amazon’s advertising unit currently contributes 2.4 times as much revenue as Snap, Roku, Twitter and Pinterest combined, and it is growing at 1.7 times the rate.

According to Amazon, in the first quarter of 2021, its unit which is mostly made up of advertising but also includes sales connected to other service offerings, increased revenue by 77 per cent year over year to more than $6.9 billion. 

According to Loop, Amazon made $22.4 billion in ad income in the last 12 months, growing 65 per cent year over year. That was 2.4 times the combined income of middle-cap ad platforms Snap, Twitter, Roku, and Pinterest, which increased by 38% over the same time period to $9.3 billion.

Amazon Business Marketing Strategy

When it comes to Amazon advertising strategy for 2021, it is evident that the company has well thought of all the challenges and advantages of the same. Here are 4 such strategies: 

Optimized SEO

When buyers search for relevant search terms, optimizing your products for Amazon SEO will help them find them. Well-described product searches are prioritized by Amazon’s search engine and pinned to the top of the recommended searches. 

PPC Advertising

Your business will receive more visitors to your product listings if you use Amazon advertisements. You can ensure that these ads create sales by delivering them to the most appropriate shoppers, thanks to Amazon’s extensive targeting choices.

If you decide to use PPC (Pay-Per-Click) in your Amazon marketing strategy, you’ll be able to choose from a variety of ad types such as Sponsored Brands, Sponsored Products, and Sponsored Display.

Third-Party Advertising

Even if you sell on Amazon, your advertising doesn’t have to be limited to the platform. Increased clickthrough and conversion rates can be aided by third-party advertising. Make sure you use data to optimize your advertising at all times. This is greatly aided by automated data reporting.

Affiliate Marketing

Amazon has an affiliate programme that allows website owners to promote Amazon products on their own sites. A commission is earned when users click on these links and purchase a product. This is an effective Amazon marketing tactic because it brings in new customers to your Amazon website. Putting your products on other websites can bring in a whole new set of customers that you wouldn’t have gotten otherwise.

Advertising: Amazon Vs Google Vs Facebook

When it comes to paid search advertising, Google Ads has been the standard for years. However, as its advertising powers develop, Amazon and Facebook are swiftly becoming a formidable force within their own right.

If you’re a digital marketer, marketing manager, or business owner, you’ll almost certainly be using Google for advertising or all of these platforms at some time in your career. But each time, there will be an inextinguishable dilemma as to which one suits your needs the best. So, we have curated something that will help you decide – keep reading! 

Google Ads

Retailers who sell a wide variety of products prefer Google Ads. The greater the number of products you have, the wider the net you can throw in Google. That’s a roundabout way of suggesting that you may bid low on a variety of keywords and yet get a lot of traffic.

Amazon Ads

Unlike the other shops, Amazon has made its platform available to third-party resellers, which means you won’t have to wait for a Target (or Amazon) customer to locate you. All you have to do is upload your products to Amazon and you’re set to go.

Facebook Ads

The Facebook Ads algorithm is fantastic at displaying the correct ads to the right individuals. This makes Facebook Ads ideal for startups with a specific product. It’s almost as if the fewer products you have, the better. 

Another significant benefit of Facebook Ads is the level of inventiveness available. 15–30 second videos, media-rich photos, comments, text, and more are all included. 

Is Google Advertising Worth It? 

Google advertisements, which are paid for by businesses, can be an exceptionally successful means of sending relevant, qualified visitors to your website at precisely the right time when people are searching for the items or services your company provides.

If you are using Google for advertising, then you can use various types of ads such as Search Ads, Shopping Ads, Display Ads, And Video Ads (YouTube). 

There are a plethora of Google advertising benefits for small businesses such as the ability to reach motivated and targeted audiences, as well as a pay-for-performance pricing mechanism and an easy-to-follow ROI. 

If your budget is an issue, you can dodge contending larger organizations by utilizing more longtail and local keywords, which will lower the cost of bidding on keywords that everyone wants. These keywords may not be as popular as the others, but they will still help you drive more high-converting traffic to your website. 

While talking about the Google advertising business model, it is also important to talk about the cost. 

Google Advertising costs vary depending on a variety of criteria, including the competitiveness of your keywords and industry, your geographic region, the quality of your advertising campaigns, and more. The average cost per click for Google search advertisements in the United States is $2.32 across all industries. The average cost of Google Ads in other countries is frequently substantially lower.

Facebook Advertising: Policies And Strategies

Facebook advertising is available in a variety of formats. You can advertise your Page, its content, user behaviors, or your website as a whole. Despite Facebook’s increased focus on native ads and keeping customers on the platform, you may still drive traffic to your website.

Facebook advertisements used to be more like display ads than search ads, but newer versions, such as product ads, allow advertisers to sell things directly to users. 

One of the major Facebook advertising benefits is that you can directly target users by using these components – location, age, gender, interests, connections, relationship status, languages, education, and workplace. 

Facebook also allows for detailed interest targeting. Users can be targeted using Detailed Interest Targeting based on information in their profile, such as “listed likes and interests, Pages they like, apps they use, and other profile (timeline) content they’ve provided” (according to Facebook). With Detailed Interest Targeting, you’ll get the best return on your investment.

Is Facebook Advertising Better Than Google? 

To answer this age-old question, we have to assess the strengths of both Google and Facebook advertising. Let’s get started. 

Advantages Of Google Ads

1. A wider audience – One of the biggest benefits of using Google as a platform for advertising is its massive reach. Google processes around 40,000 search requests each second, for a total of over 1.2 trillion web searches per year. It’s simple to see why AdWords is the most popular and frequently utilized PPC platform in the world, thanks to Google’s more accurate search results.

 

2. A vast range of ad formats – Advertisers can employ ad extensions, site links, social proofing like user reviews, location targeting, Shopping advertisements, and a variety of other capabilities, giving them an unrivalled level of personalization and control. Google has even created ad formats that are suited to the specific demands of different types of businesses.

Advantages Of Facebook Ads

1. A powerful visual medium – The greatest Facebook advertisements mix in perfectly with the videos, photographs, and other visual content in users’ News Feeds, allowing advertisers to take advantage of not only the visual ads’ strong persuasive capabilities but also the aspirational language that makes high-quality ads so appealing. 

 

2. Unmatched ROI – One aspect of Facebook Ads that frequently surprises newcomers is the potential return on investment that advertising on the network provides, as well as how far skilled advertisers can stretch a small ad spend.

So, to answer the question of which is better – Facebook or Google – the answer is both. Both the platforms serve differently to different businesses. 

Furthermore, many businesses are combining the benefits of Google Ads and Facebook Ads to gain maximum visibility, improve leads and sales, and attract new consumers, using diverse techniques that align with the functionality of each platform and generating impressive returns on their advertising expenditure. 

Conclusion

Having seen a panoramic perspective on Amazon’s advertising business along with Google Ads and Facebook Ads, it is safe to say that Amazon is right in leading the other two in this area. Here’s how – 

• Amazon is distinct from Google and Facebook in that it is primarily focused on a bottom-of-funnel audience, whereas Facebook and Google are more directed toward the top
• Amazon advertising has a higher CPC, conversion rate, and average rate of return than Google or Facebook advertising. Amazon is your greatest option if you want to maximize your Return on Ad Spend (ROAS)

With Amazon’s growing popularity, it is likely that it will shine as the best advertising business platform soon.