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Should advertisers be looking to Amazon during the pandemic?

The Drum 14 May 2020 02:01
By Robert Webster-14 May 2020 15:01pm

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James Turnbull joins Rob Webster, co-founder of Canton Marketing Solutions to examine how brands should look to Amazon to further their marketing aims.

Amazon has been arguably the largest of the lucky companies to actually have increased their value during the pandemic so far. Peak sales recently hit $11,000 a second (£8,800), a volume normally associated with the peak season of Black Friday and Christmas. This has resulted in Amazon's share price surging to a new record as we can see below. Some of these changes in behaviour may be temporary for the pandemic but may also be part of a wider shift as consumers increasingly buy their goods online and not on the high street.

Advertising with Amazon: the advantages

When it works well (more on this later) Amazon has three huge advantages that it can offer the advertiser.

Advertising with Amazon: types of advertising

Advertisers who are also ecommerce providers vs those that offer goods and services in different sectors. Depending on whether you are an Ecommerce company and perhaps broadly competitive with Amazon will impact which of the below options are open to you.

Companies that are only somewhat competitive to Amazon can use more services, particularly if they use Amazon for some of their products and/or fulfilment. For example many retailers that have their own online stores also list their products on Amazon and/or use them for fulfilment or getting rid of old stock. If you are an ecommerce company and engage with Amazon in any way you probably qualify here.

Advertising on Amazon.com v using Amazon technology to advertise offsite

Amazon allows all brands that use its service (so all but the most competitive) to use its data to advertise on third party websites. So, for example, buying users who have shown an interest in watches on Amazon on leading websites like the guardian, financial times.

Most product ads advertised on Amazon.com or owned properties need to link to an Amazon page for purchase. This works well for retailers who sell their goods through Amazon.

Retailers who don't wish to link to amazon.com for purchase can link to their own sites but only for ads purchased that run off amazon's own sites.

  • Search advertising. Sponsored product and Sponsored Brands. On a cost per click basis having ads appear in Amazon search results.
  • Display ads. Display ads appearing on spots in Amazon (see above screengrab) or on other leading publishers.
  • Video Ads. Appearing on Amazon websites, apps and Fire wake screens

Amazon offers a managed service offering with high minimum spend limits.

Advertising with Amazon: disadvantages and concerns

  • Gaps in DSP Technology. Whilst the Amazon DSP is a solid DSP that will be instantly familiar to regular DSP users. It does have several disadvantages compared with contemporary DSPs - particularly outside the US
  • Less integrations in inventory and data
  • A notable gap in GEO location data at a city level and below outside the US
  • Limited creative building and hosting options
  • DSP users liken using Amazon to using other DSPs 5 or 6 years ago.
  • Limited service. Amazon is still building out its service proposition
  • Additionally unlike Google it does not have other companies supporting them in the same way
  • The technology and service is geared for the US market where volumes are much larger. Key features such as audience discovery do not work below a certain volume and will not be available to many UK and European firms

So what's the strategy?

For large advertisers with sizable budgets that are not competitive to Amazon, it makes sense that Amazon is part of their media mix. We recommend this lot utilise the Amazon DSP either in-house or via an agency in order to gain non partisan insights and experience of the platform. How much spend goes through the platform will then depend on performance which will have everything to do with how much Amazon data is able to predict a user's chance of converting.

For mid-sized brands, a lot will depend on their attitude to Amazon. For those that are looking to Amazon as a major channel for selling their goods and services Amazon with the power of its data can be a significant channel. However, to get the most out of it you really need to go all in to use Amazon as an extra storefront. Do that and the power of Amazon’s data and user base can deliver excellent results

So where does this leave us? Amazon is now established as one of the top 3 companies in the world, primarily for its e-commerce and video business, which is also an advertising platform powerhouse. It's not for everyone, but those that can get the most out of it will get excellent results and we can expect Amazon advertising offering to only get more powerful in years to come as it integrates new technologies (they purchased Sizmek in 2019) and invest in a sector they clearly view as a priority. Some may ask why Amazon is investing in being a marketing platform when they have such great businesses as the world's storefront and in video.

Robert Webster, co-founder of Canton Marketing Solution and James Turnbull, brand side chief digital officer, Canton Marketing Solution

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