Amazon started as online book store and has grown to be the worlds largest online retailer.
Amazon Advertising increasingly important & 3x effective as Google
Amazon sales in the past quarter were $52.886 billion and $2.194 billion of that come from advertising (‘Primarily includes sales of advertising services, as well as sales related to our other service offerings’). Amazon only started breaking out advertising in Q1 2016 when the number was just over half a billion dollars for the quarter so in two years sales have quadrupled.
“It is now a multibillion dollar business, and we’re seeing strong adoption across Amazon vendors, sellers, authors and third party advertisers”
– Brian Olsavsky, Chief Financial Officer, Amazon Q2 2018 Earnings Call
Amazon Advertising is also remarkably effective, with a Q2 2018 Digital Marketing Report out from Merkle suggesting that Amazon Sponsored Products and Headline Search Ads have a conversion rate three to three and a half times that of Google Shopping Ads. It’s possible that advertisers will find conversion rates better through Amazon as consumers are there specifically to shop rather than innocently browsing the web and having shopping ads foisted on them.
Typically we have seen in the past that Amazon Ad revenue peaks in Q4 as you’d expect with the extended Black Friday week and busy Christmas period, but even conservatively based on the past two quarters Amazon’s ad revenue could easily top $8 billion over the course of 2018 – they’ve already done some $4.225 billion over the course of Q1 and Q2.
Amazon’s next step with Ads will be to launch them on non-Amazon platforms and enable brands to run adverts across the Internet and not just on Amazon sites.
Expect to see Amazon dramatically increase the exposure of Sponsored Product Ads on the Amazon marketplace and if you’re not already using Amazon Sponsored Products or Headline Ads then it’s time to take a serious look at them for the second half of 2018. If you’re not buying Amazon Sponsored Product Ads then it’s very likely your top competitors are and they’ll be winning sales that otherwise would come your way.
Watch the recent Tamebay webinar for an overview and tips on using Amazon Sponsored Products: