Amazon revamped strategy to conquer branding ads budget -Part I
The e-commerce giant wants to enable brands, whether or not they sell in its stores, to increase their notoriety thanks to its data. Amazon generated $14.1 billion in advertising revenue in 2019, and the e-commerce giant wants to increase this source of income sharply. To achieve this, Amazon wants to expand its advertising offering. Amazon's main success is its Sponsored Posts in search results, where retailers bid to display their products. In the United States, 80% of Amazon's advertising revenue comes from sponsored links, according to eMarketer. It is a performance-oriented format, but it's not a way to build a brand. Above all, it is a format that is already very saturated and therefore has limited growth potential.
The branding market appears in these conditions as a target of choice. Dollars are pouring in at the same time as historical advertisers are shifting part of their TV investments to digital. Especially since offering brands solutions that allow them to work on their notoriety or consideration has another advantage. It makes Amazon's advertising offer compatible with all advertisers, whether they sell on its platform or not. An obsession for the e-merchant. Amazon is getting closer to advertisers of all kinds - fashion, luxury, cosmetics, and telephony. Even automotive advertisers who rarely sell online are concerned. Ford, for example, launched a co-branding operation with Amazon in 2019 to encourage Internet users to test-drive vehicles. Prime Now subscribers could request a test drive at home within two hours.
Mastering the branding aspect also means being able to manage the entire conversion funnel, from awareness to sales. Amazon's strategy is inspired by Google's approach, which started with search and managed to move up to a classic display, by getting its hands on the DoubleClick ad server and the YouTube video platform. Tech giants want to offer solutions to accompany the consumer from end to end.
Amazon is not starting from scratch in its new advertising ambitions. The platform has made some moves into branding. "We are already enabling brands to build a relationship with their consumers", one of Amazon's spokespersons told AdTech News. The Sponsored Brands format allows a brand to be promoted via a dedicated mini-site on which the Internet user lands after clicking on the ad.
Advertisers always bid to appear at the top of search results, but they do so on keywords that are much more generic than those associated with their Sponsored Posts. Although still at the bottom of the conversion funnel, their intention is more towards showcasing the brand to a broad audience, than generating purchases via specific queries. This format has also been initiated to the video in tests conducted by Amazon in the United States. It is a response to the dominant usage of mobile phones, a device on which display ads are less effective because they are harder to decipher. Also in beta in the United States, the Amazon Posts format allows displaying a carousel of shoppable products in the users' feed. It is a format similar to what is found on Pinterest or Instagram, in term of curation and product promotion.
But from e-commerce site to a full advertising platform, there is a gap that Amazon will hardly be able to fill. With an environment already full of product links, the e-commerce site is indeed the best playground to help a brand stand out from the crowd. The offer pushed via advertising must be hyper attractive to divert the Internet user from his initial intention. Hence more disappointing display performances. Click rates are generally lower than on a classic media site.