Amazon’s quiet drive into advertising has been the rumbling story of 2018. With ‘Prime Video’ channels and ad revenue topping $1.7bn and $2.2bn (itself up 119%) respectively in 2018, there can be no doubt the disruptor-in-chief has serious content and advertising ambitions next year and beyond. But how ready is Amazon to boost its share of ad budgets?
Amazon’s entry to the advertising market a few years back has made things a little more complicated for marketers and agencies. For starters, it has brought a raft of new acronyms for chief marketing officers to wrestle with: AMS (Amazon Marketing Services), AMG (Amazon Media Group) and AAP (Amazon Advertising Platform). Together these propositions make up the Amazon advertising business and there is now industry-wide consensus that 2019 is the year ‘The Duopoly’ becomes ‘The Triopoly’.
But is the media industry ready for ‘The Triopoly’? How excited should advertisers and brands be feeling about the opportunity Amazon presents? And crucially, could Amazon possibly be the new standard-bearer for an industry undergoing relentless change that shows no sign of abating?
Media owners, marketers and brands clearly have much to consider, not least given the widely-reported ‘fake news’ and ‘brand safety’ issues that have plagued the media industry in recent years. The challenges for today’s marketers are ever-ballooning.
Although Amazon’s ad business is comparatively small when pitched against the core retail business, its advertising profits are estimated to surpass its cloud computing income by 2021. This expansion is not to be balked at, and places Amazon as a worthy challenger in the fight for UK advertisers’ marketing and media budgets.
Its ad proposition has been so successful because it possesses something others don’t have at the same scale: unrivalled troves of in-market data (the most valuable for brands), a strong go-to retail destination, a product search engine to rival Google (who have retaliated with more product-focused search results and listings) and much more. Amazon’s lauded tech savvy also lends credibility and has been a real success with digital marketers and agencies alike.
Maintaining the current growth trajectory rests upon developing an attractive proposition to even more brands, and bigger budgets. Amazon’s ad execs should focus on clear and compelling answers to five simple, but pertinent, questions that all marketers, brand managers and media agencies care most about:
- Is it ‘brand safe’?
- Is it transparent? (agency model aside)
- Is the advertising (relatively) effective?
- Is there opportunity for both performance/DR as well as brand investment (in the context of point three)?
- Is it easy doing business with a particular partner (advertiser and/or agency)?
In reality, the first two are staples – at least they should be. The industry has after all been under the spotlight for some time: the release of the ANA report co-authored by Ebiquity and FirmDecisions on achieving media transparency brought this to brands’ attention. But big global advertisers like Unilever’s Keith Weed and P&G’s Marc Pritchard have ensured the issue rightfully remains buoyant through 2018 and beyond.
Amazon’s clear opportunity is that it could become the darling of ‘clean online media. If it maintains its spotless track record, Amazon is the clear, ‘scaled’ frontrunner when it comes to brand safety, contextual placement, and content transparency. But the further triple-digit growth opportunity will not come from here alone.
The million-dollar question to Amazon’s sustained growth and the quest for mega (brand) budgets lies in the true effectiveness of its advertising and how it caters for not just performance and DR budgets, but brand budgets too. Amazon must offer something competitive and compelling against its online (think: Walmart) and offline competitors. More ‘brand scale’ will help catapult them into the higher media owner echelons.
Developing a proposition attractive to brand advertisers and proving effectiveness that delivers bang-for-buck should be at the core of Amazon’s UK ambitions; and serves as a great opportunity to challenge the current industry status quo, especially given the “clean slate” Amazon has in those areas. This higher degree of trust could help it attract budgets from its competitors.
Then there’s the ease of doing business with a media owner. While clients will welcome the well-known brand on their media plans, good working practices with media agencies remain a critical challenge. With Facebook and Google being largely self-serve platforms, media agencies have organised themselves to operate in such a manner. On the other hand, AAP is still a managed service, with a sales representative and internal processes to get campaigns sold in and up-and-running. I suspect we should start seeing Amazon get organised in servicing agencies similarly to how its core competitors have done so for a number of years.
Zooming out, Amazon also has the significant ‘long-game advantage’. While it is getting serious about the ad business, it has always had a ‘real side-project feel’ about it. In true Amazon-fashion, making a profit and contending with the duopoly was not a short-term goal. That may well have changed now, but Amazon is in no hurry – the pressure not to make a profit continues to facilitate the development of its offering, and with that, rapid scaling.
If Amazon focuses on these five key questions, I believe brands may well flock in droves to the e-commerce behemoth – beyond anything seen to date. And it will potentially cause the biggest shake up in the digital media landscape for some years. One that not everyone is ready for or even foreseeing. It’s all to play for in 2019.
Martin Vinter is head of media UK at Ebiquity