Amazon, the online retail giant, could soon be the king of online ads, too. It has posed a serious challenge to Google and Facebook in the highly profitable area of online advertising. As the firm braces itself for getting a bigger slice of the $88-billion market, this could mean that even Amazon Prime customers who pay up to $120 a year for free shipping will likely see more ads in the future.
Amazon earns mostly from its e-commerce business as it sells almost everything under the sun. It also has its cloud computing arm which generates around 11 percent of its yearly revenue. But one potential source of income is displaying ‘sponsored products’ or display, banner, and keyword-search driven online advertisements. Amazon registered a 130-percent rise in earnings from this sector in the first quarter of 2018.
Amazon a potential challenger to Google and Facebook
While Amazon’s earnings from running online ads pale in comparison with those of Facebook and Google, the online retailer is foreseen to be a future challenger to those giants in the future.
One advantage of Amazon is that it has access to data on consumer shopping habits. Thus, it can display ads in front of people who are likely to be looking for a certain product. Those ads can be seen as ‘suggestions’ instead of intrusions.
Brands are also slowly recognizing the vast customer reach of Amazon including its more than 100 million-strong Prime subscribers. A study by search and social media marketing firm Catalyst recently showed that 63 percent of polled companies have allocated budget for Amazon advertising.
Other firms advertising on Amazon
But what’s surprising is that firms which traditionally don’t sell products or services on Amazon have also been tapping the online retail giant for this purpose. These include companies like Verizon, AT&T and Geico.
And the reason behind these companies doing so is simple: it is where the online shoppers are.
That, too, can be the reason other brands would follow suit.