Although Amazon has kept fairly quiet about its ad-services pitch to media buyers, analysts believe that marketing services will be a driving force in what sustains and propels the ecommerce giant in the years to come.
“Amazon has to push into new areas,” writes David Farnoush, a media analyst for Harmelin Media, in a blog post. “The retail environment it once dominated has changed. Every other retailer has finally … showed up to the game and [begun to utilize Amazon] learned tactics like price-matching and increasing online selection/availability.”
One of Amazon’s focuses is its burgeoning ad services business, which has grown significantly in recent years. In the company’s Q3 earnings update, digital ad revenues (Amazon groups ad dollars into an “Other” category, which also consists of Amazon Web Services and co-branded credit cards) hit the $960 million mark, more than double the $420 million figure recorded for the same period two years ago, indicating positive momentum.
It remains unclear, however, which Amazon ad units are most lucrative. David Selinger, cofounder and CEO of omnichannel retail personalization engine RichRelevance and former Amazon engineer, said in a recent interview that if he were to guess, “I’d say a quarter of [ad revenue] might come from audience programmatic data arbitrage. Probably two-thirds, or a little more than half, would come from traditional media sales across Amazon properties and then the final quarter or so would come from their new and emerging ad units,” such as new rich-media ecommerce ad formats enabling customers to purchase right in-ad.
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