On Friday 5 April, Amazon Advertising launched in Australia, giving businesses unprecedented access to the audience of Amazon.com.au, which draws millions of unique visitors every month. Amazon Advertising offers display and video ads and a programmable ad-buying tool called Amazon DSP. All of these services are available to agencies and advertisers whether or not they sell on Amazon, enabling them to reach users of Amazon-owned sites and apps as well publisher sites via Amazon Publisher Services inventory.
Advertising falls under Amazon’s “other” category, which was actually its fastest-growing business segment in 2018. Revenue grew 115 per cent last year, to US$10.1 billion. Of that figure, advertising accounted for an estimated US$6 billion.
Giving Google a Run for Its Money
The surge in growth is attributable to the company’s overhaul of its advertising business. In 2017, the same year that Amazon.com.au launched, the company opened a New York City office and added 2,000 jobs, mostly in advertising. It also started providing deeper insights into its customer database and introduced self-service buying tools.
According to the Wall Street Journal, most of Amazon’s advertising growth has come at the expense of rival Google Ads, currently the leader, followed by Facebook. WSJ reported that WPP PLC, the world’s largest ad buyer, spent US$300 million on Amazon search ads in 2018, about twice as much as in 2017. About 75 percent of that sum was diverted from its Google search spend.
The Point of Purchase Advantage
Although currently in third place, Amazon appeals to advertisers because it allows businesses to reach customers much closer to the point of purchase than Google or Facebook, who are primarily positioned at the discovery phase of the shopping journey. In the United States, a staggering 55 percent of online shoppers start their journey by searching on Amazon. The hope is that Amazon Advertising will be a major step toward maturing the Australian market. But to gain a monopoly over the hearts and minds of Australian consumers as in the US, Amazon will have to attract more domestic sellers to drive prices down and increase choice first.
Given that there is no one-stop eCommerce shop in Australia with such a direct customer relationship, Amazon seems uniquely qualified to occupy that space. Brands in a position to drive volume would do well to get in early with this new player. Are you a growing brand whose business needs are ballooning faster than your current POS system can handle? Cin7 is an end-to-end inventory management solution that integrates with all things Amazon, unifying your Amazon channels and fulfillment in one system: Amazon Vendor, Seller Central for Amazon Marketplace, dropship and FBA (Fulfilment by Amazon).
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