Amazon was originally called Cadabra and when a lawyer mistakenly heard it as “cadaver,” Jeff Bezos felt compelled to change his company’s name to something that isn’t synonymous with “corpse.” Inspired by the world’s largest river, Bezos chose Amazon with a goal of creating the world’s largest store.
Twenty-three years later, Amazon is “only” the world’s third-largest retailer after Walmart and CVS, but it is the world’s largest online retailer, accounting for 5% of all retail spending in the U.S. And as consumers spend more money on Amazon, so must marketers. However, many of them don’t even realize that’s an option.
In partnership with Catalyst, part of GroupM, ClickZ Intelligence surveyed 250 B2C marketers and 1,600 consumers in the U.S. to get deeper insights into how people use Amazon. In The Age of Amazon: Maximizing the B2C Marketing Opportunity, we found that despite the company’s dominance, only 17% of our respondents have a clearly-defined Amazon strategy. Of those marketers who aren’t spending any of their advertising budget on Amazon, a third aren’t even aware of the opportunity.
According to one Amazon leader we spoke with, “We try to make brands rationalize why Amazon is relevant for them, and make sure they are mindful of Amazon when they are thinking about their integrated communications and brand strategy.”
If there’s one thing Amazon knows how to do, it’s evolve, and the same qualities that allowed the company to transition from an online bookseller to a retail juggernaut will likely make Amazon an increasingly important player in advertising.
Not every marketer has a clear plan, but many of them recognize the need for one. Of the business leaders we spoke to, 63% plan to increase their Amazon budget in the next year—even if they don’t know exactly how.
It’s a (Read more...) move, given that BMO Capital Markets estimates that Amazon will generate around $3.5 billion in ad revenue this year. That number may sound paltry compared with Google’s $223.7 billion (which happens to be one-third of the planet’s digital ad revenue) but Amazon’s revenue is also expected to grow by 63% next year. Sir Martin Sorrell, CEO of WPP, the world’s largest advertising group, has even famouslydescribed Amazon as the one thing that keeps him awake at night.
It’s likely that Amazon is also the one thing that keeps Google awake, as it overtook the search giant as the top destination for U.S. online shoppers five years ago. The company also has an advantage when it comes to one key data set.
“Amazon has transactional data. It knows who you are and what you are purchasing,” says Chris Humber, Head of Search at GroupM/Catalyst. “It’s the Holy Grail, and what Google would like to have, the missing piece that allows Amazon to move from predictive to prescriptive search, so they can recommend proactively.”
As Amazon becomes more formidable in search marketing, it makes sense that the company offers Headline Search Ads, utilized by 65% of Amazon Marketing Services (AMS) users. They’re keyword-targeted cost-per-click (CPC) ads which appear at the top of the page and allow vendors to promote at least three products and drive traffic to either a brand page or custom landing page on Amazon.
AMS’ other offerings, representing all levels of the sales funnel, include Sponsored Products and Product Display Ads, CPC ads that appear alongside search results and on select product pages, respectively. Sponsored Products are the most popular offering, used by 82% of our survey respondents.
The advertisers we spoke to are generally happy with AMS, though there are still some growing pains. The solution only launched five years ago, initially built for small and independent sellers, rather than large brands and agencies.
However, our source at Amazon assures us that they’re working on improving the platform’s user interface, data visualization, and reporting and keyword tools.
“We have an aggressive roadmap to develop better tools for Amazon Marketing Services, and to bring parity globally,” he says. “We are also working on metrics like share of voice, how display influences search and vice-versa. A lot of innovation is happening.”
Jeff Bezos has certainly achieved his goal of creating an “everything store” and Amazon is even selling services—Amazon’s media services accounted for $945 million in revenue during this year’s second quarter—to the sellers.
Based on the company’s history, it’s a safe bet that Amazon’s marketing star will continue to rise meteorically. And since only 1% of our survey respondents plan to decrease their Amazon budget for the next year, we think you believe so, too.
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