Daily Insights

Acclimating to Amazon’s Advertising

By: Lindsey Anderson | Jul 31, 2019

Amazon’s advertising business continues to outpace market trends⁠—ad revenue grew by 36% YoY in Q1 of 2019, while competitors Facebook and Google both saw advertisement revenue fall by 2% and 16% YoY respectively. 

Brands and consumers are both well versed with Amazon’s on platform advertisement units, which could lead to an “Amazonification” of retail advertisements. Walmart and Target both feature search ad units which look and feel very similar to Amazon’s Sponsored Product and Sponsored Brand offerings. Traditional retailers, such as Target and Walmart, have chosen to compete with Amazon in the digital space by revamping their advertising platforms on their websites. Walmart has announced they are bringing their advertising team in-house in an effort to build a closer relationship between the brands store and digital ad teams.  Target, on the other hand, has introduced Roundel, a new in-house advertising agency positioned to create personalized media solutions. 

However, Amazon has a headstart when it comes to paid search placements as the platform reserves most of its paid inventory for Sponsored Products listings. Against 493 personal care keywords, 17% were Sponsored Products on Amazon, compared to 7% on Target and 4% on Walmart. Amazon has seen a 2% increase in the share of Sponsored Products from the previous year according to Gartner L2’s report on the topic. This high amount of real estate makes Amazon a more attractive option for advertisers. In this category, the number of unique brands with Sponsored Products on Amazon is double that of Walmart, and five times as much as Target. Amazon continues to monetize search results, with certain categories becoming a competitive pay-to-play field. Brands such as Walmart and Target are responding with advertising strategies that increase sophistication around organic optimization.

Additionally, with an increasing similarity in ad units and formats across retailers , marketing executives would be wise to establish holistic ad strategies across retail platforms and look to adopt winning strategies from Amazon onto other retail channels. 

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