Amazon’s growth as an ad platform has been well documented, particularly in the USA where their ad offering first launched in 2012. However in Australia, the muted launch of Amazon.com.au last year has raised questions about whether Amazon has what it takes to be a major player on the scale of Facebook and Google in this market.
The ecommerce giant’s latest earnings report showed over US$2.2bn in revenue from advertising revenue alone in Q2 2018 – greater than both Twitter and Snapchat – however this is still pocket change compared to the US$28bn in advertising revenue that Google reported for the same period.
Amazon’s core ad formats are Sponsored Products and Headline Search Ads. Sponsored products work in much the same way as Google’s Shopping Ads, with promoted products featuring ahead of the standard organic product listings. Headline Search Ads are more akin to a display banner ad, featuring a brand’s logo, headline and selected products from the seller. Both Sponsored Products and Headline Search Ads are keyword triggered, ensuring that the ads are relevant to what the user is searching for.
Shopping on the American Amazon site is a very different experience to the Australian site, providing hints of what is to come, with both ad formats present.
Sponsored Headlines – US vs Australia
Sponsored Products – US vs Australia
As well as Sponsored Products and Headline Search Ads, Amazon has been developing their ad network to expand their reach. This allows advertisers to run standard display ad formats across a host of partner sites, including Business Insider and IMDb, using Amazon’s shopping insights to target users. They have also started to develop offline advertising solutions, such as branded packaging and lockers.
The crown jewel in Amazon’s ad platform is their customer data, and the targeting possibilities that it unlocks. Unlike other publishers, Amazon are able to use first-party data about users’ purchase behaviour, which is invaluable to advertisers in the performance marketing space. Amazon also own the purchase platform, whereas Google and Facebook mostly feature in the earlier stages of the purchase funnel. All traffic from Sponsored Products and Headline Search Ads is kept within Amazon, either directing users to product detail pages or the seller’s store page, driving further revenue for Amazon.
However, while Amazon certainly have strong ad offering, they may lack the scale in Australia to become a viable challenger to Facebook and Google on marketers’ media plans. Amazon has yet to release sales figures for Australia, but their .com.au site is currently the 49th most popular site in Australia – an increase of 62% over the past 6 months. The .com site is (still) 29th, despite falling 5 places month-on-month since it was blocked in Australia.
By comparison, eBay is the 5th most popular site in Australia, behind Google, Facebook and YouTube. In the US, Amazon are the 4th most popular site, again behind Google, Facebook and YouTube, but well ahead of other e-commerce sites.
Amazon is making progress but still has a long way to grow before it can truly challenge Facebook and Google for advertising budgets in Australia. In a market as competitive as ours, brands and advertisers are understandably cautious to dedicate any significant budget to a channel that is yet to prove itself – despite the appeal of the first-mover advantage. That said, with Amazon’s advertising platform due to launch in Australia later this year, it’ll be interesting to see the uptake from advertisers.