Is a sleeping giant awakening in the online ad industry? Amazon’s ad sales remain a tiny portion of its overall revenues, but this looks set to change, with the retailer announcing ambitions to ramp up targeting and bring in $800m in ad revenue this year, overtaking Twitter in the process.
Amazon is often considered a ‘sleeping giant’ in the ad industry, due to its rich consumer data but relatively small advertising efforts.
Now, the ecommerce giant is aiming to utilise its vast amount of consumer data to tailor messages to individuals.
The move to a more sophisticated form of advertising follows similar efforts from the likes of Google and Facebook who are engaged in a fierce battle for the lucrative market.
The majority of Amazon’s ad revenue comes from ads placed in or near search results that appear when a person searches on Amazon.com for a product to buy.
It recently launched “eCommerce Ad” units, which include customer ratings and reviews, coupons and buy buttons to quickly add products into online checkout carts.
Overtaking Twitter- $835m vs $583m in ad revenues in 2013
According to new research from eMarketer, Amazon collected $610 million in 2012 ad revenues, up 46% from a year ago, rising an additional 37% to $835 million this year.
That places Amazon ahead of Twitter, which eMarketer estimated a few months ago would hit $583 million this year, despite doubling from last year.
By 2015, Amazon is predicted to bring in $1.1 billion in advertising revenue, about one-fifth of Facebook’s earnings last year.
However, advertising is still rather small part of Amazon’s total revenue picture however: The company reported $61.1 billion in net income last year.
Commenting on Amazon’s new initiative, Adrian Moxley, Co-founder and CMO at WeSEE highlighted other ways in which brands can achieve more sophisticated advertising.
“Amazon is going about online advertising in an innovative way. Typically digital advertising is all about keywords that consumers use in search, but Amazon is looking at the online ecosystem in a more holistic way, using consumer data gathered from customers via their purchasing history on the e-commerce site, not just search engine data.
“Other ways that brands and advertising agencies should consider making digital advertising more targeted and sophisticated is looking not just at text-based content that consumers use online, but also the visual content such as images and videos that appear on the site. If an advertiser can draw on keywords, visual content and other strands of information such as e-commerce data, they will be able to form a truly rounded view of a consumer’s interests and therefore target them more effectively,”Moxley concluded.
