Amazon’s Next Frontier: Local Advertising

Amazon’s Next Frontier: Local Advertising

Amazon

Amazon recently announced for the first time just how big Amazon Ads has become. And the number is very big. As in $31.2 billion. Amazon said in its in 2021 earnings announcement that Amazon Ads had achieved 32 percent year-over-year growth, which includes sales of advertising services to sellers, vendors, publishers, authors, and others, through programs such as sponsored ads, display, and video advertising.

$31.2 billion is not quite the size of Meta’s and Google’s ad businesses. By comparison, Google achieved $209.5 billion in ad revenue for its most recent fiscal year, and Meta achieved roughly $115 billion for the same time period. But Amazon Ads eclipses Microsoft, Pinterest, and Snap, and the company has earned a place alongside Google and Meta as one of the big three online advertising platforms.

And now, it looks like Amazon plans to get bigger in an untapped market: location-based advertising. Business Insider reported recently that Amazon is building a local ad business by advertising positions for a Local Ads team in major cities such as Chicago and New York. Apparently Amazon Ads will offer a slate of ad units, including streaming TV ads and a demand-side platform that sells ads off Amazon’s website. (Note that Amazon generates the lion’s share of its ad revenue from search ads that appear on the Amazon website; but Amazon has invested more in ad tech to get bigger ad budgets from advertisers.)

This is an intriguing development, to say the least. Location-based advertising capitalizes on the fact that local searches by consumers are wildly popular. This is a big reason why hyper local sites such as Nextdoor have achieved strong growth: people typically look for things to buy at stores close to their homes. So, businesses have a strong motivation to rank well in those “near me” searches, and of course advertising can amplify their presence. Meta and Google both offer strong location-based ad services, but lately Meta has taken a financial hit because of the impact of Apple’s Application Tracking Transparency privacy controls, which limit the effectiveness of ad targeting, including location-based ad targeting.

According to a Deutsche Bank report from 2021, 75-percent of Meta’s advertising revenue came from small businesses. Meta could be vulnerable if Amazon’s plans are rolled out. And Amazon doesn’t have to worry about Apple’s privacy controls. The company can sell ads based on first-party data, or data that people on Amazon share when they search and purchase (Apple’s privacy controls do not affect first-party data). Now, consider the fact that Amazon operates brick-and-mortar businesses such as Whole Foods and Amazon Fresh, which rely on location-based advertising. An Amazon location-based ad service could benefit the company’s own stores.

But that’s not all. Just as Amazon sells online ads to merchants, the company is apparently banking on the ability to do that for retailers, automotive dealers, restaurants, and other merchants that need to be present in local search results.

For now, Amazon will continue to grow its ad business mostly through Amazon.com, where companies pay to be listed as a “sponsored product” high up in the search results. Amazon also offers video commercials and ads on Amazon’s FireTV device. Amazon Ads also helps brands with online advertising on sites that it does not own. And Amazon has developed advertising in devices and platforms such as Twitch.

It will be interesting to see how this development plays out especially with Walmart leveraging its own small but growing ad business that capitalizes on the company’s online/offline presence. Walmart could be a strong alternative to Amazon.

We recommend that advertisers manage the online ad solutions that are most relevant to their own customers’ journeys from awareness to purchase. Keep an eye on Amazon. The company has built incredible momentum, and an increasingly privacy-centric landscape favors the growth of its ad business.

Contact True Interactive

At True Interactive, we monitor new ad products all the time and help our clients prosper amid the evolving landscape. Contact us to learn how we can help you. Learn more about our Amazon Ads services here.

Why TikTok Influencer Marketing Is Heating Up

Why TikTok Influencer Marketing Is Heating Up

TikTok

TikTok recently created a relationship with software firm CreatorIQ to help brands find the right influencers on TikTok. This news illustrates the growing importance of influencer marketing, a type of social media marketing that involves endorsements and product placements from influencers.

What Did TikTok Announce?

TikTok is adding software platform CreatorIQ as a new influencer marketing partner. The relationship will allow CreatorIQ’s clients to plan and execute TikTok creator marketing campaigns. CreatorIQ customers will use a dashboard to see creator and content metrics from the TikTok Creator Marketplace, which helps brands collaborate with creators based on their industry, budget, and business goals.

Why Is This News Significant?

The news underscores how sophisticated and measurable influencer marketing is becoming. Influencer marketing is a fast-growing $14 billion industry. With influencer marketing, a brand collaborates with someone deemed to have a desirable following among the brand’s customer base. Many casual watchers of this space associate influencer marketing with mega celebrities such as the Kardashian family, whom brands pay to promote their products via their high-profile social media followings. But few businesses have the budget to collaborate with celebrity influencers. Most brands work with micro-influencers, who possess followers based on shared interests and geographic locations.

Micro-influencers are big on TikTok. They build street cred by mastering TikTok’s viral short-form video format. Because their popularity is based on their TikTok videos, they are considered to be creator influencers – or people who create content. In fact, creators are so popular that brands are seeking them out to create TikToks for them. For example, TikTok influencer Bella Poarch has been tapped as an HP HyperX ambassador. Influencers are credited with spurring the rise of TikTok as a social commerce platform where people buy products. According to The New York Times, two-thirds of TikTok users have been inspired to shop, even if that wasn’t their original intent when accessing the app in the first place. The phenomenon has gained enough attention that it even has a hashtag: #TikTokMadeMeBuyIt has garnered more than 8 billion views on the app.

Brands are getting more sophisticated about finding influencers that work best for their own needs. Not every TikTok superstar is the right fit for every brand. In some ways they are like any other kind of product “endorser” – a brand needs to feel comfortable that their personalities and style are a good fit for the brand’s own image, and they need to understand each influencer’s audience. In Chicago alone, there are many influencers who may or may not be a great fit depending on a brand’s needs and audience (here are some of them).

TikTok understands that for the app to become Influencer Central, TikTok needs to make influencer marketing more of a measurable science. Few brands will dive into any marketing/advertising campaign without understanding return on ad spend. That’s why TikTok launched the Creator Marketplace and is partnering with businesses such as CreatorIQ to make the process of launching and measuring an influencer outreach campaign a measurable process.

Creator Influencers Are Having a Moment

The rise of creators on TikTok is part of a bigger trend toward brands and creator influencers collaborating. In our 2022 advertising and marketing predictions, we predicted that creator influencers will have a huge year, and not just because of TikTok. Another factor: collaboration networks are proliferating. These networks give creators an all-in-one platform to create communities and build influence. In addition, gaming sites such as Roblox and Twitch offer creators opportunities to monetize their work with potential partnerships with brands, and crypto currency sites such as Rally.io make it possible for creators to mint their own currency. The big social networks such as Meta are responding by making themselves more attractive to creators. More businesses will tap into niche networks to partner with emerging creators who are lesser-known but possess tremendous street cred. Big-name partnerships with stars will still thrive, but the social media icons will need to make room for the new kids in town.

What Brands Should Do

Does collaborating with an influencer on TikTok make sense for your brand? Some thoughts before you proceed:

  • Make sure you already have a strong TikTok following. Brand ambassadors won’t stick around if they don’t have an audience. Alternatively, partner with a personality that comes with their own built-in following.
  • Mix it up. A strong creator class is made up of diverse voices. Putting together an influencer team that looks at your brand from different angles can help you reach a new, wider audience.
  • Choose creators aligned with your brand. Passion for your company will translate into authentic messaging. Take time to understand who a creator is — and whether they are the right fit — before bringing them on board.

 Contact True Interactive

Hoping to explore what TikTok and other social platforms have to offer? Contact us. We can help.