June 2, 2021
Given the recent and drastic escalation of Amazon’s advertising revenue, other tech giants such as Google and Facebook are left wondering what the future of tech and advertising will look like. As of now, Amazon accounts for about 40% of all e-commerce in the United States, and in specific categories it exceeds 90%.
In fact, Amazon’s ad revenue is now more than double the amount of Snapchat, Twitter, Roku, and Pinterest combined; and it’s expected to quadruple by 2023.
Amazon, which doesn’t rely on digital or traditional advertising, could potentially change the industry forever.
Sponsored Products on Amazon
Every sale for an item listed as a Sponsored Product, Amazon is essentially getting paid twice – once for running the ad and again for managing the sale of the product. These ads are cheap because Amazon has a vested interest in driving more sales.
Sponsored Products, not to be confused by Amazon’s Choice, are products that appear first in search rankings because sellers pay to have their products listed and advertised this way; while Amazon’s Choice products are flagged for being “highly rated and well-priced.”
Given Amazon’s history of consuming entire industries, if the advertising program continues to thrive, we will see a massive impact on the tech world.
Apple & Amazon Advertising
Apple’s recent software changes have influenced the industry as well. The iOS 14.5 update includes a new privacy tool called App Tracking Transparency. This notifies Apple users when an app asks permission to monitor their activities and gives people the option to say no.
Companies like Facebook have spoken out against this new policy because if users cannot be monitored, it will be harder for brands to target ads to the public.
This privacy change is significant because it will continue to fuel Amazon’s growth, while potentially jeopardizing platforms like Facebook, which rely on this type of tracking.
“TikTok Made Me Buy It”
Another way that Amazon’s sales have been heavily influenced is through the increasingly popular platform, TikTok. Trending hashtag challenges such as #TikTokMadeMeBuyIt and #AmazonFinds have driven sales through the roof. This has also created room for more opportunity.
Influencers on TikTok have collaborated with Amazon by posting frequently about their favorite products. This was especially profitable during the peak of the COVID-19 pandemic when consumers had no choice but to shop online.
What Does Amazon’s Spike in Advertising Mean For Your Business?
With Amazon dominating the advertising industry, it could soon be able to compete with Google and Facebook in the near future. That coupled with the recent shift from in-store retail to digital fulfillment and from television advertising to digital advertising presents a unique opportunity for e-commerce businesses.
With the advertising industry rapidly changing, Wizard Digital ensures our clients remain relevant in a world where industries can change overnight. We are equipped to develop the correct formula for success specifically for you and your business. Call today for a free consultation to discuss how your business can take advantage of Amazon Advertising.