Amazon is well known for its ability to disrupt market after market. Its next target? The advertising industry. To break into an industry dominated by Google and Facebook, the company will spend the next year expanding its infrastructure with hopes of attracting more brands to buy its ad space.
In addition to building out its infrastructure to attract more advertisers, Amazon is working with ad-tech companies, agencies, and media companies to create a new advertisement purchasing system that is streamlined and efficient. The end result will allow advertisers to purchase ad space on Amazon as easily as any other kind of online checkout.
Surprisingly, Google is also involved in the building of Amazon’s ad platform. This online giant has a doubleclick system that supports buying search ads on Yahoo and Microsoft Bing, and now it is developing a similar capability for Amazon.
Despite these plans, Facebook and Google are not likely to suffer due to Amazon’s changes. However, Amazon’s share is expected to grow to 4.5% from 2.7% this year. While eMarketer has predicted that Amazon is likely to generate more than $3 billion in its worldwide ad revenue, it’s looking like they will end up exceeding expectations. According to Amazon’s latest earnings report, in the first quarter alone they’ve already surpassed $2 billion.
According to Amazon’s CFO Brian Olsavsky, advertising is definitely a bright spot both for the company and for clients. So far, Amazon controls more than 40% of the e-commerce business, while Facebook and Google are nowhere near there. There is a great article by Ad Age on News Cred on how the new direction is expected to help grow Amazon’s business.
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