Amazon’s ad business is surging — and it’s starting to get a crack at bigger brand budgets

Jeff
Bezos, chief executive officer of Amazon, arrives for the third
day of the annual Allen & Company Sun Valley Conference, July
13, 2017 in Sun Valley, Idaho.
Drew
Angerer/Getty Images

• Amazon made $2.2 billion in “other” revenue during the
  second-quarter of 2018, up from $2 billion from the previous
  quarter. “Other” is primarily made up of Amazon’s ad
  business.
• The e-commerce giant continues to make inroads in
  advertising. And agencies say they’re getting access to more
  sophisticated ad-buying tools.
• Interestingly, Eric Heller, CEO of Amazon-focused
  and WPP-owned Marketplace Ignition, said that the agency is
  seeing a boom in branding dollars shifting to the
  platform.

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Amazon’s ad business continues to surge, raking in $2.2 billion
during the second quarter, the company revealed during
second-quarter earnings. Amazon buckets the revenue into a line
item called “other” that primarily comes from advertising.

Amazon reported $52.9 billion in revenue during the quarter, down
slightly from analysts’ expectations. “Other” income jumped 129
percent year-over-year. The company
reported $2 billion in “other” revenue during the first
quarter.

Amazon is clearly cozying up to advertisers — and not just ones
that sell stuff

Amazon continues to intrigue advertisers, but the platform is
already nabbing bigger budgets, according to Eric Heller,
CEO of Amazon-focused and WPP-owned Marketplace Ignition.

The e-commerce juggernaut is well-known for focusing on retailers
and consumer-packaged-goods brands that are fixated on
direct-response advertising.

But that’s changing, according to Heller. He said marketers are
increasingly shifting brand marketing dollars over to Amazon,
indicating that brands are eyeing Amazon for more than
experimentation advertising budgets.

Specifically, Heller cited billboards and out-of-home advertising
as examples of where brands are cutting their spend and moving it
to Amazon.

“We’re seeing dollars move to Amazon and I think the reason why
is because they’re closer to a shopping cart,” he said.

“Even a year ago, Amazon was this direct media platform and I
would tell you over the last three to six months, we got access
to brand dollars because everyone realized, ‘Why are we trying to
win billboards on highways when we’re losing when someone
searches for our brand name on Amazon?'”

In terms of where marketers are spending those brand dollars,
advertisers are specifically savvy at buying headline search ads,
which is a valuable placement that appears at the top of search
results on pages.

According to the agency’s research, 68% of online shopping
searches in the US start on Amazon. When looking at both the US
and the UK, 80% of shoppers use Amazon’s ratings and reviews when
deciding to make a purchase.

It’s getting easier to buy Amazon ads at scale

Additionally, Amazon’s ad-buying tools have improved over the
past year, he said. For example, six months ago, Heller’s team
managed campaign budgets through Excel spreadsheets. Now he’s
able to bill clients through purchase orders that don’t require
tying a credit card to individual campaigns.

Rolling out more sophisticated tools mimics how other platforms
including Facebook, Google and Twitter built their
advertising fortunes. Amazon’s ad-buying platform is likely not
nearly as slick as Facebook, Google or Twitter’s software, but
it’s clear that Amazon is gaining steam and marketers are
starting to see results, Heller said.

“We’re starting to get API access and Amazon is focused on making
it easier to spend the money that you should be spending,” he
said.