Can Amazon become the number one digital advertising player?
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Can Amazon become the number one digital advertising player?

When you talk about digital advertising, beyond the agencies that specialize in such things, two big names dominate the conversation: Google and Facebook. But a third player has recently entered the digital advertising scene, and it could be poised to disrupt the status quo: Amazon. For the first time this year, Amazon joined Google and Facebook at the annual Cannes Lions advertising conference as a ‘need to meet’ participant. The company booked a seventh-floor suite to host promotions for its youthful advertising business, and although it still lags far behind the likes of Google, all that could change.

Amazon’s share price is up 30% so far this year

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SOURCE: Yahoo Finance

Amazon has done very little to embrace advertising on its multitude of sites and pages. But as the enormous amount of consumer data the company has access to continues to grow, that’s changing. Jason Heller, head of digital marketing operations at McKinsey, says that: “they’re sitting on a goldmine of valuable data.”

This goldmine is the same data and algorithms that let Amazon make book suggestions. It knows what you’ve bought, if you’ve bought it on Kindle, it also knows whether you’ve read it, and it knows how many stars you have given it in review. It collates all this data across millions of users and recommends books that it thinks you will like. The company has a great track record of getting it right.

And now, Amazon is a million miles away from the bookseller it used to be. You can get almost everything on Amazon, meaning that it has access to perhaps the largest, most in-depth, and most accurate store of consumer data on the planet.  This is any advertiser’s dream find.

The company is fast evolving to make use of this in the familiar manner. Gone are the days of a few banner ads here and there. Now, Amazon offers advertisers coupons, embedded buttons, offers of standing monthly orders, space on shipping boxes, and a network that delivers adverts to other sites. The benefit of extremely well targeted adverts on a platform where – by definition – their viewers will be primed to make a purchase, is huge.

Amazon doesn’t break down its advertising revenue yet, but researcher Emarketer claims that they will “reach $2.4 billion by 2019”.  Whatever the actual figure is today, there is little doubt that it is growing fast, and – as the CEO of the world’s largest advertising agency, Sir Martin Sorrell, has said: “they’re going to be a force”.

Disclosure

Dominion holds Amazon, as well as Facebook and Google, in its Global Trends Ecommerce Fund.


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