From Duopoly To Trilogy — Why Is Amazon Not Taken More Seriously?





  • From Duopoly To Trilogy — Why Is Amazon Not Taken More Seriously?




    by , Staff Writer, April 26, 2019
    There seem to be a lot of headlines saying that although Amazon is coming, the duopoly have nothing much to worry about. I’m not so sure.


    For me, there is plenty for it to be concerned about. Ultimately, however, there is a lot more for the middlemen in adland to be concerned about.

    There is one very simple reason for this — data. There is one one noun too — history. While Facebook has its massive reach and Google has what must be the world’s largest resources showing customer intent, Amazon knows what people are searching for and what they actually bought. That has to be dynamite for any media planner, surely.


    As a reminder, today we have The Drum usefully pointing out that Amazon’s advertising revenues only grew at 34% in the past quarter, rather than 60% in previous quarters. This was, of course, all part of Amazon’s third record set of profitability figures in a row.


    So we have a company growing at record pace — with the one caveat that its advertising business is only growing at 30%. One can assume there are worse problems to have.


    Even The Times, however, is in on the gloomy headline act. It points out that growth for the next quarter is likely to dip below expectations. That equates to a prediction of making around $3bn profit in the second quarter, rather than the $4bn that Wall Street was anticipating. 


    Back to the advertising part of the business, specifically. One has to remember it is a little like its cloud services business, which was a bit of a side hustle for a while until it took off.


    Advertising is not what Amazon was set up to do, but the company is beginning to move into it for the very obvious reason that it is where people go to buy stuff, so it’s a very useful place for advertisers to be seen.


    There are two options. There is the search promotion feature, very similar to PPC in Google, to get your goods to the top of the pile — and there is a display network that uses Amazon’s data to reach an advertiser’s target audience on the site and beyond.


    From the conversations I’ve been having, most money is headed for search, but that could soon begin to change. 


    Also, from what I’m hearing, advertisers are beginning to think this duopoly becoming a trilogy (is that the right word?) could be good news because it gives extra choice and Amazon is a much safer place to advertise on than social media or Google’s YouTube. The feeling is that Amazon is tighter with its data as well. So it is less likely to be cause for concern on privacy on an ecommerce site than a social giant, such as Facebook.


    So, Google and Facebook, in my opinion, are much more challenged by Amazon than the headlines would suggest. Sure, Amazon is only around 8% of the US digital advertising market right now, making it a little less half the size of Facebook and a less than a quarter of the size of Google. But that’s a considerable chunk of the market that is not going to the duopoly, and it’s set to keep on growing.


    As there is growth to go around, it probably isn’t cataclysmic for the duopoly to make room for a third player. However, one could see that as advertisers seek ease and convenience, they might choose to go direct to new “trilogy” and far less to middlemen. That can’t be great news for a number of platforms and exchanges out there. Perhaps, then, it is the latter that will have the most to lose.


    Ultimately, there is something about Amazon knowing what a customer bought and not just what their intent was that, for me, means it will be a huge player in digital advertising.


    Its impact is being played down in the headlines, but Facebook and Google would do well to ignore those soothing stories and be prepared to go from a duopoly to a trilogy. 

    MediaPost.com: Search Marketing Daily

    (9)

    Leave a Reply

    This site uses Akismet to reduce spam. Learn how your comment data is processed.