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Should advertisers be looking to Amazon during the pandemic?

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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.

In recent years Amazon has increasingly developed its advertising platform such that it is the third-largest such platform globally behind Google and Facebook and the fastest growing. So does its recent surge in users and revenue indicate a time when Brands should engage or indeed engage further with Amazon advertising than they have in the past? To answer this we need to consider the advertising options that Amazon offers.

Advertising with Amazon: the advantages

This section explains the options of running on Amazon. Those familiar with this who just wish to look at the recommended strategy can skip this section.

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

  • Product data. Amazon has huge data on which users are searching for and buying which products which it can make available for advertisers within the Amazon marketing ecosystem. Amazon can model for large customers which segments are likely to work best.
  • Inferred data. Outside the products that Amazon knows users are looking for, they can also use behaviour on Amazon.com to infer lifestyle and interest groups. Amazon can model for large customers which segments are likely to work best.
  • Quality inventory on amazon.com, Amazon apps, Fire wake screens and other owned properties like IMDB. These advertising spots are high quality and have high reach. However they are not open for all advertisers as the section below explains.

Advertising with Amazon: types of advertising

Amazon advertising has broadly five different dimensions to consider when looking at how to advertise. As you will see there are different options and considerations for advertisers. Those familiar with this who just wish to look at the recommended strategy can skip this section.

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.

In general companies that are fully competitive with Amazon cannot take part in Amazon services. For example other large ecommerce brands that don't use Amazon for any of their own goods or video platforms competitive to Prime video.

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.

Other brands are closely aligned with Amazon or work in a completely different sector and so have access to all relevant advertising products. Eg product companies that use Amazon as a major route to sales or companies in sectors like Finance or Automotive.

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

Amazon allows brands that are closely aligned with its business to buy advertising on Amazon.com. This can be in the form of search ads (text ads) or display ads (images and animation). As well as Amazon-owned properties like IMDB.

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.

Advertising linking in to Amazon shopping pages v. linking out to brands' own sites

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.

Brands non-competitive to Amazon running on Amazon.com or third party sites can link to their own sites as a landing page. Eg finance and automotive companies.

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.

Advertising with Amazon: channels

  • 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

Advertising with Amazon: managed or self serve

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

Amazon also offers a self service DSP offering. Usage of the DSP will be familiar to anyone who uses other leading DSP options.

Advertising with Amazon: disadvantages and concerns

As well as the amazing advantages that Amazon has there are some significant negatives that advertisers need to be aware of.

  • 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

The net result of all the above is that when Amazon's own data is not being used, there are better DSP options available.

So what's the strategy?

So where does that leave us? Should advertisers be looking to Amazon during and indeed after the pandemic? The answer will depend on the sector the advertiser works in and their feelings and relationship with Amazon.

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.

A secondary consideration being how valuable the Amazon inventory is. We would expect such Brands to have significantly higher spends with Google and Facebook and may not even be their major DSP. However, the Amazon platform will make up a significant and growing part of their media portfolio.

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

For others who either are not prepared to go all-in, have lower sales volume (and so cant make use of Amazons segment forecasting), or who don’t work in a sphere where Amazon's data is as relevant Amazon is unlikely to be the solution at this time.

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.

For the answer looking at the advertising powered businesses of Alphabet (Google) and Facebook that join them in the top five companies by value in the world. If they can take on their rivals on their turf and win that will only enhance their position at the top of the tree (for the same reason we can expect Apple to try again to become an advertising powerhouse). Brands can expect to have many more meetings with Amazon advertising in the years to come.

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

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