As consumers increasingly shop online, Amazon’s app is a popular go-to destination, and the company is clearly paying heed. Recent Mobile Marketer and Bloomberg articles underscore Amazon’s sensitivity to consumer habits and the way the company is responding to what it sees: for example, by testing video ads in the Apple iOS version of Amazon’s shopping app. The move makes Amazon a stronger advertising alternative to Google and Facebook, and signals not only the e-commerce giant’s increased focus on advertising, but also its recognition of the public’s hunger for mobile ads.
Savvy and Lucrative
Incorporating video ads on the Amazon app is a savvy move. As an intent-based app, Amazon tends to draw consumers who already possess a desire to buy. The video spots, which pop up in response to users’ search results in Amazon’s shopping app, are meant to capitalize on this intention. It’s also a lucrative move for the company: though prices range depending on the ad category and not everyone pays a fixed rate, Amazon is charging roughly a $35,000 ad budget to run the spots at five cents per view for 60 days. The plan is to start with iOS, then expand to Google’s Android mobile operating system later this year.
Growing Along with Digital Advertising
As we’ve been discussing at True Interactive, the news is a sign of Amazon’s continued growth as a platform for businesses to advertise on—not just sell products on. And although Amazon’s April 25th first quarter earnings announcement reports a slowdown in that growth, the announcement also makes it clear: Amazon’s advertising business remains strong and highly profitable.
Furthermore, Amazon is making inroads into others’ share of the spoils. eMarketer reports that Amazon’s advertising business will capture 8.8 percent of U.S. digital ad spending in 2019, eating into the percentage enjoyed by the duopoly of Google and Facebook (Google, while still enjoying the lion’s share of digital ad spending, is projected to drop by one point in 2019). And Amazon, though still trailing behind Facebook and Google in advertising spend share, seems uniquely positioned to step up. As eMarketer forecasting director Monica Peart notes, “Amazon offers a major benefit to advertisers, especially CPG and direct-to-consumer [D2C] brands. The platform is rich with shoppers’ behavioral data for targeting and provides access to purchase data in real time.”
It’s a good time for Amazon to expand in this way: as we discussed in a recent post, mobile ads are on the rise. Forrester reports that between 2017 and 2022, mobile will drive 86 percent of growth in U.S. digital ad spending. The digital dollars are being siphoned from other, more traditional ad spending shares, according to eMarketer: directories like the Yellow Pages, for example, and traditional print resources like newspapers and magazines. “The steady shift of consumer attention to digital platforms has hit an inflection point with advertisers, forcing them to now turn to digital to seek the incremental gains in reach and revenues which are disappearing in traditional media advertising,” Peart said.
What You Can Do
Whether or not you advertise on Amazon, the news offers a compelling reason to have a mobile ad strategy. We recommend that you:
- Remember that mobile is its own beast. Take a page from Amazon’s book: listen to the signals of consumer behavior and shape your mobile advertising accordingly.
- Watch for Facebook and Google to respond with more mobile ad products, and see how they do it. Watching these giants maneuver and attempt to one-up one another can be a great way to learn what works.
- Consider how video plays into your advertising mix. Video has its own set of requirements for production and creative concepting: what does that mean for your business and the resources you have at hand?
True Interactive works with businesses all the time to develop their video advertising campaigns Call us, and see our recently published case study with Snapfish, to get an idea of the kind of work we do.