Amazon is increasing its shares of ad spending more and more
Industry experts see massive shift in advertising budgets in the months ahead.
According to recent information from CNBC and the Wall Street Journal, more and more companies are planning to transfer their advertising budgets from Google to Amazon. In the future, insiders say, more than 50 percent of global spending is set to run in the advertising network of the American retail giant. Brands are particularly active, according to this information. “That comes as no surprise. The new information confirms our expectations: profit-driven companies use channels that measurably lead to more revenue,” Marcel Pirlich, founder and CEO of Adspert and an AI expert, explains in the Programmatic Focus Group of the German Association for the Digital Economy (BVDW).
Shorter purchase process = reduced bounce rate
In his experience, Amazon has taken the right steps in recent years to increasingly evolve from an eCommerce platform into an advertising platform. The renaming of three previous brands – Amazon Media Group, Amazon Marketing Services and Amazon Advertising Platform – to Amazon Advertising in early September will help clarify this new priority more on the product side as well, Pirlich pointed out. He continued: “Amazon offers a very appealing end-user experience by connecting with the right product at the right time, just when the user is looking for it, along with a very simple purchase process. For a long time, the rule of thumb was that every additional click in the purchase process led to a 30 percent bounce rate – and Amazon is unbeatable in this respect, thanks to the large number of users registered with Prime, the familiar purchase process and, not least, the complete settlement process they’ve established, which also includes the option for returns.” Meanwhile, as is more and more widely known and is now confirmed by the market research firm Survata with hard facts: some 49 percent of product searches begin at Amazon.
Measurability is decisive
With Amazon’s massive entry into the market, complexity is increasing as well. “We are experiencing an acute need for action from our customers. Of course, they, too, are aware of the profound change in the market,” Pirlich remarks. His company, Adspert, assists manufacturers, retailers and brands with an AI solution for advertising at Amazon, Google et al. The Berlin-based company has set itself the task of using its system to achieve significantly better advertising use, increasing profits along the way. This is precisely where Marcel Pirlich sees the decisive lever for the comparatively young offer from Amazon: “Measurability is decisive: what profit can I generate with the advertising budget applied? This is where Amazon has a particularly impressive opportunity to offer, particularly for manufacturers, e.g. including for retail marketing. This is one place where brands can be directly present during the customer’s decision-making process.”
Algorithms and AI make the difference
Anyone who wants to approach this efficiently and successfully cannot ignore programmatic solutions, says Pirlich. He uses Adspert to provide continuous analysis of ad performance, market environment and profitability. Bids on hundreds and even thousands of keywords or placements of display ads are recalculated based on their strategic potential and independently adjusted. It is even possible to automatically recognize new keywords, assess these in the context of the task at hand, and deploy them. The potential for improving upon processes for pinpointing target groups (times, locations, devices used, etc.) is calculated several times a day and performed independently. This would not be possible if done manually.
Competition enlivens online budgets
Pirlich is not worried about what to date has been the “top dog.” “Google remains a very important player, and yet the opportunities for advertisers are diversifying. And competition among the big platforms can only be an advantage here.
There is certainly no need to worry that Google could be getting into trouble now, but harder-to-measure channels such as print and TV now have another heavyweight opponent.”
Meanwhile, the industry is discussing the further changes in the market for digital advertising. AI is currently a hot topic for the BVDW. The focus group in which Pirlich is an active participant deals with the topics of performance, automation, transparency, regulation and ethics. These are connected to the current discussion surrounding AI. In the first four obvious topics, the main matter is to discuss and tap the opportunities for the success of the products and services for the customer. But topics around changes in the missions and roles of employees are particularly important. Pirlich continues: “We are at the forefront in digitalization, and traditionally our challenge has been one of finding suitable employees. The ever-changing environment makes it interesting for existing employees, but when it comes to recruiting new employees, it also involves the challenge of having no standardized training.”
Anyone who has not yet looked into the advertising opportunities available on Amazon is urgently advised to do so now. And anyway, as Marcel Pirlich recommends: Retailers who sell via the retail platform should also exhaust the advertising opportunities available there and plan their budgets accordingly.