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Why Amazon’s Advertising Model Is Going To Crush It

There’s a lot of talk about how Amazon is going the be the third party that emerges from the primordial ooze of the interwebs to take on the evil duopoly of Google and Facebook. But little about why exactly that is, other than some random thoughts about data.

Ads That Don’t Look Like Ads

And so as not to bury the lede, the reason Amazon will crush it is that Amazon ads don’t look like ads. They look like part of the website, which is all about shopping and buying things anyway, so that something marked as “sponsored” doesn’t seem out of place. You searched for “puppy food” and there’s something that says “sponsored by Purina” on it. It’s puppy food, Purina is a brand you’ve heard of, and even if it’s not the brand you’re looking for, you figure that it would likely have turned up regardless, and so it’s not in any way annoying or even interruptive. In fact, you may well have been looking for Purina puppy food.

This is exactly why and how Google Ad Search works, only on Amazon it’s even less intrusive because you’re actually shopping and the experience is not any different than what you’d find in a bricks and mortar store where Purina may well have a big display in the pet food aisle.

Given that the primary goal of any ad in 2018 is “do not annoy the consumer,” that means every ad on Amazon is a win.

Pretty much any product or service too—they’re all available in some way, shape or form on Amazon these days. Or will be soon. Granted, I can’t buy a car from Amazon yet. Or insurance. Or even open a bank account. But give Bezos a year or two ….

In the interim, someone searching for “car stereos” or even “jumper cables” might be interested in seeing an ad for Subaru or Toyota. Or at least not surprised or annoyed by the appearance of one.

That’s because (to beat another one of our dead horses) context matters. So much more than the digital snake oil sales team would have you believe. It matters where you reach your audience. Yes, Women 18-34 in DeKalb County Georgia Who Are Married And In The Market For A New American-Made Car are online a lot and can be found on a variety of websites and apps, some of which don’t charge very much money for an ad buy.

But that doesn’t mean those car-buying married women want to hear from advertisers on those sites or that they’ll be receptive to seeing ads. The advertiser may save a few dollars per insertion by targeting less expensive sites, but if all you’re doing is annoying your target, that’s not a particularly wise use of ad dollars.

Amazon’s got page layout in its favor too: it doesn’t hurt that Amazon’s pages are laid out in a way that don’t force you to read things you’re not interested in, and like Google Ad Search, users are accustomed to scrolling around the page to find whatever it is they’re looking for. So note to Bezos: no interstitials or full-page takeovers. No matter how tempting they may be.

All That Data Too

Now in addition to not annoying the customers, Amazon ads also provide a wealth of data, especially around the customer journey—what did they do after seeing the ad, did the price point make a difference (Amazon can adjust prices to test that out) how many times did they see the ad before buying, what else do they buy, what else do they have subscriptions to … as Amazon becomes even more ubiquitous, they’ll have even more data with which to help their advertisers better target their ads.

Better still: Amazon can even use the data from Prime video to learn shopping habits, which they can pass on to advertisers. So that if, say, people who watch half hour sitcoms on Amazon Prime index highly on sales of Bounty paper towels, then Bounty knows to heavy up on sitcoms for their network TV ad buy. And NBC knows to push its sitcoms to companies selling paper towels.

Thursday Night Football gives Amazon more data still—not only do they know which games fans are watching, they know which merchandise they’re buying, what price point they’ll bite at and what days they’re more likely to buy something (e.g, game day, weekends, etc.) That’s incredibly valuable for the NFL and for other sports leagues who are contemplating giving Amazon their business.

Trust And Antitrust

One final note: while it might seem as if Amazon is unstoppable, there is a large and dark storm cloud on the horizon: the voices calling for the government to use antitrust regulation to break up Google, Amazon and Facebook are growing louder and more frequent. And while that breakup is unlikely to happen anytime in the next two years, we’d be surprised if it didn’t become an issue soon after that, and Amazon, whose business model is easiest for tech-unsavvy Congresspeople and the judges to understand, will likely be the prime target.

Pun intended.