Daily Insights

Amazon’s New Avenues

By: Lakshmi Kalluri | Jan 24, 2019

Amazon is a company in transition. Despite slowing year over year growth in retail, the digital giant is targeting other sources for revenue—particularly advertising.

In 2018, Amazon’s advertising business registered unprecedented triple-digit growth year over year in every quarter, easily exceeding the predicted estimate of $4.5 billion by the ending year with an $11 billion advertising revenue according to Gartner L2’s Amazon intelligence report. The company has already outperformed Instagram and Twitter, and is predicted to grow its advertising business further to $18 billion in 2019, establishing a three-horse race with Google and Facebook for the digital marketing throne.

To widen its appeal, Amazon streamlined its advertising offerings and expanded the number of ad placements on search results pages in 2018, allowing brands to establish sophisticated marketing strategies on the platform. Heavy hitters like adidas, Calvin Klein, Levi’s and Under Armor are buying into these strategies and focusing on more expensive Sponsored Product ads, instead of Display ads, to drive conversion.

As Amazon looks to bolster its advertising workforce, the enterprise’s future New York office could be its marketing headquarters. Amazon’s ability to link marketing campaigns to customer purchases will prove to be an advantage for consumer brands looking to increase their advertising return on investments. All signs point to brands doubling down on performance-driven marketing on the platform in 2019, with Amazon and Google engaging in a showdown for search.

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