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Customer-obsessed marketing

Amazon Has Officially Invaded The Advertising Industry

Collin Colburn
Collin Colburn
Analyst
February 28, 2018

Amazon is seemingly part of every sector of the economy – and that now includes advertising.

We fielded many questions from clients about Amazon ads during 2017 and by year’s end, we were curious about how significant its advertising business had become. Since Amazon doesn’t break out its revenues from advertising (although it’s been estimated to be over $1 billion), we thought: why not see how its advertising business performed during the crucial holiday season?

So, we spoke with several agencies, vendors, and marketers that leveraged ads on Amazon during the 2017 holiday season and found in our latest piece of research that:

  • Amazon search ads are a foot in the door… Amazon Marketing Services (AMS) is Amazon’s search ad buying tool, and it has been around for some time. But with increasingly more consumers using Amazon like a search engine, it makes sense that more marketers are buying AMS search ads. In fact, we spoke with several CPG marketers that spent anywhere between 10-30% of their search advertising budget that was earmarked for the holiday season on Amazon.
  • But Amazon has broader ambitions for its ads business. Now, you may be thinking Amazon is eating away at Google’s search ad revenue. But that isn’t necessarily the case. In fact, the majority of marketers we spoke with said their AMS search ad dollars were incremental or were coming from traditional ad channels. Either way, Amazon probably doesn’t care much about stealing share away from Google right now. Amazon’s long term play in the advertising space will be selling ads on and off of its owned properties – and expanding beyond the CPG industry. As one of our interviewees put it, “Amazon wants CPG ad dollars in the short term, but the real objective is to get a brand like BMW to start using its ad platform (AAP) to buy better targeted advertising across the web.”

We will be following Amazon’s advertising business closely over the months to come. You can read our report here to get our take on how Amazon’s ad business will peak up steam this year.

Questions? Comments? Shoot me a note: ccolburn@forrester.com

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