Amazon’s Expanding Ad Business Is Challenging Meta, Google
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Amazon’s Expanding Ad Business Is Challenging Meta, Google

Amazon’s push to grow its $47 billion ad business beyond its core search ads is starting to gain steam with advertisers.

About 70% to 80% of advertisers’ Amazon budgets go to search ads that drive sales, said Laura Meyer, founder and CEO of Amazon agency Envision Horizons. But Amazon is increasingly investing in adtech to grow its ad business beyond search placements and better compete with giants like Meta and Google.

Over the past couple of months, Amazon has added new features to its “demand-side platform” that buys targeted programmatic ads — like the ability to manage campaigns in bulk and a feature that allows advertisers to quickly vet creative to make sure that it doesn’t violate any policies to better compete with other DSPs like Google and The Trade Desk. Advertisers said Amazon is also pitching the DSP as a key way of buying Prime Video ads.

Patrick Miller, cofounder of ad agency Flywheel Digital, said that Amazon’s data is better than The Trade Desk and Google because Amazon’s data comes directly from shoppers and is indicative of what products people are interested in.

Separately, ad buyers said Amazon is heavily pitching its so-called data clean room that solves for the impending death of third-party cookies. Advertisers use the clean room to find audiences to target ads based on Amazon’s first-party data about its shoppers.

And Amazon recently posted a job working on an internal team called ID++. ID++ creates cookieless ad products like modeled and contextual solutions, Ad Age reported. Amazon later deleted the job posting.

These new features are effectively stealing ad budgets from Meta and Google, said Mark Power, CEO of Amazon consultancy Podean.

“We’ve seen brands double Amazon spend, and some of that budget is coming from other parts of their business — coming at the cost of brand budget or performance budgets that would have gone to Meta and Google,” Power said.

Power said that brands often spend 8% of Amazon sales on ads — mostly search ads that drive sales. He said clients are now increasing budgets to represent 12% to 15% of Amazon sales, with the incremental dollars going toward Amazon’s adtech formats.

Amazon is gunning for big brand budgets

The goal of Amazon’s adtech products is to help convince brands that Amazon ads can grow brand awareness, as well as drive sales, using Amazon’s shopper data without third-party cookies. 

One advantage Amazon has over Meta and Google is using its shopper data to acquire new customers. Envision Horizon’s Meyer said it’s increasingly getting more expensive and difficult for advertisers to find new customers on Meta.

“A lot of marketers right now are just trying to find the best return for the next ad dollar,” she said. “They need to continue to push boundaries and make sure that when they hit a point of diminishing return on one channel that they’re seeking out new channels that they can invest in.”

Amazon has long pitched advertisers that its tools can do more than drive sales, and that they can also grow brand awareness and affinity — two metrics big advertisers that don’t sell items on Amazon, like insurance and financial companies, use to vet the platform.

Ross Walker, retail media team lead at ad agency Acadia, said Amazon is finally delivering on those ambitions because of more advanced ad tools and sales reps better versed in helping advertisers grow brand awareness.

“They’ve started to build it out to the point where they can now advertise it more actively,” he said. “Before it was super bespoke and probably a very small team or cohort within Amazon.”