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Amazon testing new ad tech tools to get closer to consumers

Amrita Nair-Ghaswalla Mumbai | Updated on May 22, 2018 Published on May 22, 2018

To compete with Google and Facebook for advertising spends

Google and Facebook, the giants in the ad tech ecosystem, and their duopoly is leading to frantic calls for regulation from advertisers, marketers and corporates.

Given that these two players own the lion’s share of advertising money, both on the mobile as well as online, a new entrant has come into the fray.

Enter Amazon. The e-commerce giant is reportedly testing new ad tech tools that will allow it to track shoppers’ buying pattern and lure them back to the website to make a purchase.

It is also looking to enable merchants using its online marketplace to retarget consumers. Recently, in an abrupt decision, Amazon stopped buying Google shopping ads.

“The duopoly of Facebook and Google in the ad tech ecosystem has effectively led to them siphoning users’ attention to an area where it can be sold to advertisers,” Ashik Ashokan, Digital Planner at VML, a marketing and ad agency, told BusinessLine.

“Attention stems from time,” he points out, “a scarce resource that begets value”.

Ad revenue

Amazon tends to generate most of its advertising revenue by selling product search results, allowing sellers to buy slots for sponsored products. Its advertising power has been slowly gaining strength. In the fourth quarter of 2017, the company's ad business grew to about $1.7 billion, up about 60 per cent year-on-year. In its recent Q1 2018 filing, “other” revenue reported by the company, which “primarily includes sales of advertising services" grew 132 per cent year-on-year to reach $2 billion.

Advertisers point out that the company had spent the past quarter making improvements to its advertising offering and insist that Amazon has been aggressively building its own search and display advertising programmes “even in India and especially since Jeff Bezos has made his commitment to India clear, by pledging to invest at least $5 billion in Amazon’s India business. The company has already funnelled more than $3 billion into its main Indian subsidiary," said an advertising chief honcho about the e-tailer's aspirations. The ad chief refused to be identified citing confidentiality clauses.

Developing targeted technology is a big leap forward for Amazon's ad business, state advertisers. While Amazon Media Group (AMG) handles big ticket brand integration, Amazon Marketing Services is an auction-based, search type model and offers targeted cost-per-click advertising solutions to help sellers reach new customers as well as drive sales on the Amazon website. AMG is a premium advertising offer within Amazon's vendor services, and is accessible via Amazon Marketing Services.

Helpful to vendors

Moreover, sellers eager to understand the performance of their sponsored products campaign, can also take the help of an interactive performance dashboard that helps in visualising how their advertising campaign has fared with consumers, and with the help of relevant data, vendors can make changes to optimise their ad campaigns.

This is especially helpful for vendors who have products listed on Amazon India and are selling through other parties and want to manage the ad campaigns themselves.

Though Amazon's ad business is still tiny compared to Google and Facebook, the e-commerce giant is on track to become the third largest ad player by 2020, according to a report from eMarketer.

Published on May 22, 2018
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