Amazon Sets Its Sights on the $88B Online Ad Market
nytimes.com
nytimes.com
For reference, Snapchat did $290 million in the same timeframe, Twitter $660 million.
> For reference, Snapchat did $290 million in the same timeframe, Twitter $660 million.
Just goes to show how much potential Amazon has in the Ad Market. Does anyone else think Amazon could overtake one or both of Amazon's biggest competitors in the market (Facebook or Google)?
What separates Google from Amazon is that their paid ads can be displayed on any 3rd party site that they don't own, through DoubleClick. And of course the whole search engine monopoly makes that impenetrable for now.
Of course, it's all up for grabs, Amazon could go out and buy an ad network like Mediavine and go head-to-head with DoubleClick.
In many cases, turning off the Audience Network will do wonders for your CPA.
I've seen lots of money wasted on blogspam websites within GDN (non-retargeting) -- there's a need to be very hands on if you don't want to waste money across all display tactics, in my opinion
The service is about to be shutdown though at the end of this month, and their suggestion is that we apply to their larger header bidding network (Unified Ad Marketplace), but not sure we'll qualify for that.
> The analyst estimates Amazon's ad business operating income will grow to $16 billion in 2021 versus $15 billion for Amazon Web Services that year. He believes Amazon already has product search market share "well above" 50 percent. Olson noted the "Other" segment, where Amazon's ad business resides, grew sales 72 percent in the second quarter.
https://www.cnbc.com/2018/08/13/amazons-advertising-profits-...
How about AdWords; can Amazon get 50 bucks a click on a search? Nope they can't, but Google does. I don't see Amazon dethroning Google anytime soon for ad revenue. They could, but I think they'd need a high end site that caters to quality and not peeps looking to save $1.96 on a set of Tupperware.
Generally private label on Amazon has high margins but high competition, in the good niches at least. Everything eventually dies and gets commoditized. People spend 10-30% ACoS all day long, people give away hundreds or thousands of units. Typically people will buy amazon ads at breakeven or worse in order to gain sales rank to get more organic sales.
>can Amazon get 50 bucks a click on a search?
Google is only getting that on cars or enterprise software or other things with high purchase prices. If Amazon sold cars, I'm sure they'd be able to get people to pay 50 bucks a click.
This is a very important point. I sell on Amazon and I run ads at break even profit to get more organic reviews and higher sales rank. Much more retained value compared to paid search engine ads in ecommerce
Alphabet = $110B (about 85% comes from advertising) Facebook = $40B
If Amazon is doing ~$8B and the others about $4B annually.. how does this square with the $88B market size in this article headline?
Edit: I just look up the worldwide total for Digital Ads are $228.44 billion in 2017. Total Ads market worldwide including TV, Print Ads etc are 500+ Billion per year.
The latter will probably earn them decent scratch, even if it's perhaps not long-term sustainable with data issues and adblocking (Facebook can work for passive advertising because the user intent is snacks of procrastination, passive ads can be snacks of procrastination too if done well, though will always be low rent). The former though, now they're in pretty much every vertical, is where the winning happens.
As in the article, even if companies don't sell through Amazon, there'll still be an Amazon Tax if they want to get into the search results like with AdWords.
I wouldn't be at all surprised to see Amazon leapfrog Facebook, once their attribution pixel gets some traction in the wild.
Does P&G want Amazon to control more of the retail market? Not if it has any brains. Amazon has it's own branded home speaker systems and will not sell Google's. If Amazon brought out a shampoo brand, would it sell head and shoulders?
I bet P&G would love to get branded Dash buttons all over people’s houses.
That's P&G paying for that placement.
That's when Amazon will need to draw on their deep wells of goodwill, but they're squandering them today by cozying up to advertisers.
Facebook knows more about its users because users tell it about themselves and Amazon knows more about purchasing habits of its users because of thier purchase and search history.
If I’m searching for something with the intention on buying it, I am going to go to the specific site - like Priceline, hotels.com, Zillow, etc.
Besides, ad blockers don’t work with Facebook or Amazon embedded ads.
Could you explain further? Do you mean A/FB ads on A/FB, or A/FB ads on third party sites? As long as they're marked as ads they're removable.
Didn't google have to provide a big refund to advertisers just due to adnauseum use?
Don't they? They seem to work pretty well for google embedded ads.
Facebook ads are seen on thier site and in their apps as is Amazon’s. Google is not a “destination site” aside from YouTube.
FB uses “native ads” and “boosted content” that are indistinguishable from regular posts.
> Google’s U.S. ad revenue is expected to rise $5 billion this year to $39.9 billion, while Facebook could rise $3 billion this year to $21 billion, according to eMarketer.
Adwords is just so effective to find your customers. You won't beat `buy new headphones` type traffic on Amazon or Facebook.
It’s not like Amazon is a site that people haven’t heard of. It’s the 4th most trafficked site in the US.
People searching on Google (or checking in on friends and family on Facebook) or browsing the Internet don't expect their history to be mined for advertisements.
People browsing on Amazon have already signaled their intent to shop.
3 out of 4 people searching "buy new headphones" will buy a product on amazon.com
On Google ads, you're lucky if one quarter of your clicks convert into anything.
Advertisers are choosing amazon because people on amazon are 1 click away from transacting. Google just can't compete there for eCommerce.
Now, on home services and virtually everything else Amazon falls short, but for direct to consumer eCommerce they win hands down.
It showed ads where I could get headphones from different web sites - where neither I nor most people have an account.
What’s more likely? That I am going to register for an account on “Under Armour” - the first site that appeared or that I’m going to go to Amazon where they already have all of my information,I’m an Amazon Prime customer and where I have one-click activated?
If Under Armour were smart they would have web based Apple Pay payments available to reduce friction.
Retail vs. online is a prime example of channel selling. Some people prefer to try on things or are so brand loyal that they're blind to other retailers.
Not that Amazon is a startup exactly, but they certainly act like one a lot of the time.
In my experience, Amazon has _incredibly poor_ targeting. Search and place an order for cat food, and the next day you'll get an email with:
> Based on your recent activity, we thought you might be interested in this.
>
> ... cat food, the exact same brand I bought already ...
Not only that, their targeting doesn't seem to be based on my past purchases nor my frequent purchases, but almost solely based on what I have searched for recently.
They don't seem to use the _massive_ amount of data they have on my purchase history _at all_.
Unlike say, consumer grade CPUs or specific video games.
They are just following the money, it might not make sense to an individual, but product recommendations are optimised for sales based on historical data.
A TV seems excessive though, but maybe that's just me. I mean it was a $700 TV, how much money does Amazon think I have to buy two of them?
The fact is, I assume Amazon really doesn't care about the ad business. They've offloaded that via affiliate links to third parties (a smart move).
Putting more effort into offering ad targeting now seems less about making money and more about draining value from Google and Facebook.
Amazon has always been driven by volume. Get enough of it, and no one else can survive.
From that perspective, selling ad impressions is... tangential. So they make "a few" (billion) on the side, it doesn't further their primary business.
Whereas Google or Facebook without ads would be... what?
It also makes it possible to find users who are at different specific stages of the buying process. That's way more powerful than what FB or Amazon offer.
Sidenote, adblockers work with Amazon and Facebook.
Most Facebook use is mobile and the Facebook app is one of the most popular.
Ad blocking works on Google’s website.
Source: I've managed and tested $10 million+ of ad spend that needed provable ROI across a wide variety of platforms.
1) Set up Facebook pixel on your checkout thank you page + collect referral into into a database.
2) Spend $1,000
3) See how many purchases Facebook reports came from Facebook, check out how many sales you get recently have the Facebook referrer.
4) Repeat if sales revenue > $1,000.
This is obviously the simplest use case possible, but there you are. It's pretty reliable.
Not much point in driving $1,000 in _revenue_ with $1,000 in marketing spend unless your margins are 100%.
If I was Amazon, i'd look at buying mint from intuit to get all the banking data from users.
I would think that a lot of communications on mobile would be going through third party chat apps.
Nobody uses google+.
> Search is what is relevant to the custom at the moment of time.
Yes, but in 5 years? Amazon is playing the long game.
I'd be surprised if Google doesn't know more about its users than Facebook. Google (theoretically) has access to its users' email, physical locations, browsing history, and more.
And search ads remain dominant for one time, high value purchases (think insurance or a mortgage).
For high value purchases like a mortgage, wouldn’t better targeting be by advertising on a site like Zillow?
Where have you been? You are constantly tracked if you have an android device. (not sure whether it also works for iOS with google maps on). No need to check in.
Hobbies and interest - search history.
The amount of granular information that Google could potentially have on an individual person is terrifying. The search history alone is effectively a peek into your stream of consciousness.
Google can only “peek”, FB is having an active conversation.
Google doesn’t have the level of data for iOS devices on locations. iOS users in western countries are far more statistically valuable to advertisers than Android users.
So to answer your questions:
> How does Google know my birthday
> exactly how old I am
I'll give you FB has exactness better specified, though I question how relevant it is. Regardless, gmail could easily figure this out by looking at inbound emails. Also linkedin public profiles.
> the events I said I was interested in
Given the lack of updates on FB, search is a much better proxy for this.
> everytime I change jobs
Email + linked in
> my relationship status
Search and email is going to be a very good proxy here, possibly better if FB updates are stale.
> where my wife and I went to see a show the other night
Maps. (And I'd guess usage of maps far outweighs people who voluntary tell FB)
> Google doesn’t have the level of data for iOS devices on locations. iOS users in western countries are far more statistically valuable to advertisers than Android users.
Yes, but number of Google-Android users, let alone users who use Google products, probably far outweighs frequent FB updaters.
We aren’t talking anecdotally about “people you know”. Facebook has more than 2 billion daily active users.
I'll give you FB has exactness better specified, though I question how relevant it is. Regardless, gmail could easily figure this out by looking at inbound emails. Also linkedin public profiles.
Google claims it doesn’t use email for targeting ads and how will it correlate LinkedIn profiles with Google users? I doubt that MS owned LinkedIn is going to share the data. LinkedIn only has 260 million active monthly users.
Given the lack of updates on FB, search is a much better proxy for this.
Lack of updated by your circle...not based on published numbers.
Search and email is going to be a very good proxy here, possibly better if FB updates are stale.
How many people use email in 2018 for personal communications?
Besides....
https://www.mnn.com/green-tech/computers/stories/how-faceboo...
Maps. (And I'd guess usage of maps far outweighs people who voluntary tell FB)
People only use maps when they don’t know where they are going. People will check in a lot more.
Agreed, I'm raising anecdotes as I haven't seen any data users frequently update.
Quick search shows https://zephoria.com/top-15-valuable-facebook-statistics/. If you do the math, there's about 1.3 status updates/week/active-user. That's not a lot of voluntary data being given per user and I suspect this is subject to a huge power law where median is far less than 1.
> how will it correlate LinkedIn profiles with Google users?
Profiles are public and picked up by Google search. Correlation is pretty easy to do - simple method is real name match + geo-ip.
> How many people use email in 2018 for personal communications?
I don't have solid data; do you? That said, I and almost everyone I know uses email as the primary means for long-form (i.e. anything that requires more than a sentence) personal communication. (I feel like we're talking past each other due to the lack of data + being in different circles)
> People only use maps when they don’t know where they are going. People will check in a lot more.
Source on both pieces of data?
I'm skeptical as:
1. Maps is valuable for traffic-adjusted navigation.
2. Maps has 1B montly active users
3. Check-ins are rare. (looking at my feed - I can't find numbers)
Even if they aren’t actively posting updates, they are liking, following, clicking on things.
Other staggering statistics are that 50% of all 18-24 year olds check Facebook when they first wake up....
https://zephoria.com/top-15-valuable-facebook-statistics/
And “email is for old people” has been a popular topic for over a decade.
https://www.theguardian.com/technology/2007/dec/06/digitalco...
How much personal email are people really doing in 2018 that’s not not either bulk email or business to business (meaning Google wouldn’t have visibility), etc?
Or logging on to third party sites that use FB login.
If they wanted to be really invasive, they could get a lot. Not saying that they are doing it, but they can
1) Birthday - on every birthday, there are a bunch of random sites where you have an account that send you congratulations.
2) How old - beyond patterning (which can get you within a fairly narrow range), I am sure that most people have received or sent an email which states their date of birth - whether in the text, or as part of a form
3) Job changes - in any european country, you get your employment contract via both mail and email. (and btw...this means they have your salary too)
4) College you went to - if you already had gmail while at university, they have you. if you got it afterwards, they probably saw the "alumnus" emails
5) Relationship status - this is arguably trickier. There's no "hard" proof. I think FB has the edge here, though not as large as it used to be (I remember that 10 years ago everyone had their status on FB. now it's almost no one, but it's irrelevant, because they can look at your photos, and whether you mention "gf/bf/wife" etc.
6) Running - again, FB have the edge in determining how much/where etc. But google know you are running, because they have your emails from the apps to which you subscribed.
A good chunk of consumer purchasing, especially high margin goods, are bought for signaling and not based on deep desires.
No way in hell. Google knows exactly what you are "searching" for. Sure Facebook is good at "guessing" but Google doesn't even need to guess. You just tell him what you are looking for.
On Facebook I can advertise to people in a well-defined geographical area, who are interested in a scarily well-defined set of things.
On Google it's more of a just-in-time approach; catching people who are searching for something in a certain place etc.
My business doesn't lend itself to Amazon ads, but I can totally see how it'd generate an ROI far exceeding Google or Facebook for product businesses that sell on Amazon.
you don't need to. since google is interested in providing you cheap relevant clicks, it will deliver them to you without exposing all the targetings. all the data available wil be utilized in choosing the right audience anyway.
And if you do branding... branding is hard to measure anyway.
Note -- I'm not affiliated with google in any way, I just think their offering makes a lot of sense.
If you're selling a product that's available nationally and appeals to a reasonably big demographic, you might not care much about targeting.
But if your business only supplies weddings in New York, then impressions/clicks by people who aren't planning a wedding in New York are largely worthless.
If they have an Alexa device, Amazon can get shampoo manufacturers to pay to be the default choice when someone says “Alexa, order more shampoo.”
https://support.google.com/google-ads/answer/1722043?hl=en
Disclosure: I work for Google in Ads Developer Relations
Adwords location targeting options have been around some time with 3 targeting options for location: http://prntscr.com/kq9coa
And my advice when using this - Adwords defaults to "People in, or who show interest in, your targeted locations" but I would recommend "People in your targeted locations" as the first seems to be a very loose definition by Google and in my experience brings in dud traffic.
Location settings are one of the common set-up mistakes when I see client historic accounts. And there's some good tricks with combining these settings for business that need physical proximity that can make them very effective and flexible.
Google Analytics, Adwords/Adsense, Doubleclick network, Android and store, Chrome Browser, Chrome OS, Maps/Streetview, Gmail, G-Suite, Youtube, Google Play, Google Fiber, Google Fi, Public DNS, all the various websites with 1st party cookies, connections to Salesforce CRM, and the recently announced Mastercard purchase data.
Facebook and Amazon are nowhere close this level of exposure from hardware devices to internet protocols to the biggest websites around, and anyone with experience in adtech will tell you the same thing. Also adblockers can trivially block any network request or DOM component on a page, including Facebook and Amazon ads.
Do you know how many people check in every single time they work out?
People don’t use Google Maps when they know where they are going, but they will check in.
As far as adblockers blocking contents “in the DOM”, that doesn’t help if you’re using the FB app - one of the most popular apps in the store and most people aren’t going to install network based ad blockers.
Only geeks use Google’s DNS. Most people use whatever DNS the DHCP settings on thier router tell them. If you are using cellular data can you even change your DNS?
For the really paranoid, you can completely turn off most sharing with Apple, disable iCloud backups and backup to your PC with iTunes.
I’d argue Google’s data is 100x more accurate of who I am as a person than the data I provide FB. As a theoretical example, based on my search history, Google knows I have hemorrhoids, am paranoid about pancreatic cancer, looking for a SMS API provider, am a borderline gambler (because i check betting odds every day), and pondering the benefits of a divorce.
FB on the other hand has all the “shallow” information. It knows I like Game of Thrones, NBA basketball and paintball. It knows I like to eat ramen. It doesnt know all the other stuff because I dont tell my friends I have hemorrhoids. I dont tell my friends I might be getting a divorce.
Does FB know the needs/wants/fears of me as a person compared to google? I think not.
Data mining is incredibly insightful in aggregate, but my searching for "Cheetos" is a difficult path to (a) my being hungry for snacks, (b) my wanting to see the mascot, (c) seeing if they have a new flavor, etc. etc.
https://www.huffingtonpost.com/2014/02/14/facebook-relations...
Google knows where you eat because when you leave the restaurant it offers you to review it for google map.
Google analytics does know the same user across sites and devices but this is of course not exposed to the site, it's used by Google for ad targeting.
Browser fingerprinting is not necessary because people log in (to apps and sites) and will never be possible to fully reduce unless Apple can somehow make identical computer chips down to the atom.
Apple's cookie war also only helps Facebook and Google who maintain active 1st party cookies with every user, and meanwhile hurts all the independent networks and publishers who have to get people to keep logging in. This is why it helps to actually have some adtech expertise and industry cooperation instead of creating silly browser rules and turning Safari into the new IE.
How does that help unless they are sharing the data with Google?
Apple's cookie war also only helps Facebook and Google who maintain active 1st party cookies with every user, and meanwhile hurts all the independent networks and publishers who have to get people to keep logging in. This is why it helps to actually have some adtech expertise and industry cooperation instead of creating silly browser rules and turning Safari into the new IE.
If you haven’t noticed, Apple isn’t trying to help the adtech industry. Apple has a built in framework that allows third parties to submit ad blocking rules into Safari and (some) embedded webviews.
I didn’t know how bad Google’s search results were with most of the page taken over by shopping results on mobile until I started loading results with content blocking turned off to post on this topic.
This means people tell it exactly what they want. Who cares what your relationship status is when I can see you type in "wedding ring" into a search box? Who cares where you like to eat in the past when you searched for "chinese food" on maps, and potentially even clicked on an ad for a restaurant?
This is called "intent" and it's incredibly powerful because you can advertise for exactly what a person is actually looking for at that moment. Inference (like Facebook likes and profile details) will never be as good for real-time targeting.
Nobody cares about some app that gets 0.001% of the usage and probably doesn't even have any strong identity link. "Shopping data" isn't magical nor is it of interest to every advertiser. Purchase data is also already processed by specific companies with their own properties or in aggregate by many ad networks. And, in case you missed my first comment, Google recently closed a deal to get purchase data directly from Mastercard which is far more than any single retailer could provide.
If you actually have an example of a specific app that is delivering much greater ad performance then perhaps you should share it.
Your random searches are not that valuable from a monetization standpoint. Searches that lead people to buy things are. Those searches are easy to pick off on a category by category basis. I had no idea that Google actually took up most of the screen on mobile with ads for products for sell until this thread. I’ve had Ad blocking on for just that long.
In fact it's the opposite happening with Google now pushing into searches for flights and hotels with far better UX, even though those verticals were dominated by other vendors.
https://developers.google.com/speed/public-dns/privacy
>We don't correlate or combine information from our temporary or permanent logs with any personal information that you have provided Google for other services.
Edit - s/root/default
G-Suite sure isn't used for ads, otherwise the enterprise customers will be mad.
> Facebook and Amazon are nowhere close this level of exposure from hardware devices to internet protocols to the biggest websites around
FB might be, not for Amazon.
Hardware wise, Amazon has kindle (not so useful) Fire, and Alexa powered smart home devices.
Amazon own siganificant share of Internet through AWS.
Amazon owns big wesites as well.
I suspect they are still working on this pivot in various non google plus ways. Outside of android becoming a massive media platform I don't think much has worked. (Don't call it a media company we don't control the news we're just a platform la la la I can't hear you controls the news)
And quite often that specific site will tell Google everything they know about you because it wants to advertise on the AdSense network.
For example, if you go to Singapore Airlines website and search for a flight to Thailand but do not buy it, then open the New York App to read the daily news, you will likely see an ad for Singapore Airlines - perhaps even showing a special deal on flights to Thailand.
If that's true why haven't Facebook or Amazon launched a competitive AdSense alternative?
Amazon can do the same, but the user is probably already looking to buy, although with less breadth of category coverage. Amazon is also more of a closed ecosystem, which is less flexible for advertisers but probably better for conversion.
Google (search) on the other hand, seems to be a much closer competitor to Amazon because lots of people search for products there and then use Google's product search to find the product they want from many different retailers. It's sort of Amazon vs. the field. Do you want to limit your search to Amazon and its platform or expand your search to every online retailer who doesn't sell on Amazon? I've found Google product search to be extremely useful in finding the right combination of trusted retailer and lowest price (including sales tax and shipping). Add to this a list of highly-ranked reviews or sites related to the product I'm searching for directly beneath the list of products, and I usually find Google a better shopping experience.
I heard echos of this in the last paragraph of the post, but there's plenty of co-opetition going on as well.
https://www.wsj.com/articles/wal-mart-to-vendors-get-off-ama...
Amazon would be dumb to use AWS to cross-subside their retail business. That just hamstrings AWS, and gives other cloud vendors an advantage.
I understand that big data learning systems are harder to tweak than what we'd suspect from ground-level day-to-day experience. But it just seems like Amazon still has plenty of room to apply some conventional heuristics to get far more efficiency than they do now.
Amazon's remarketing tends to be paid for by Amazon and it behaves like any remarketing system run by other companies if you don't change anything from the defaults, set a very high frequency cap, and don't pay attention to whether or not the person converts.
"Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust."
Today:
> The push by the giant online retailer means consumers — even Prime customers, who pay $119 a year for access to free shipping as well as streaming music, video and discounts — are likely to be confronted by ads in places where they didn’t exist before.
Was this really the outcome from "start with the customer and work backwards?"
> ...it [Amazon] is rapidly emerging as a major competitor to Google and Facebook.
Gotcha. We all know who "the customer" is in this market.
Seriously, completely wrong direction Amazon. Our trust is already eroding due to fake reviews, counterfeit items, and Amazon Marketplace nonsense. Racheting up ads will make us further question where your loyalties lie.
It doesn't matter until it matters in aggregate and affects share price. Whenever Amazon refers to "the customer" remember what they really mean is "the customer's money," which they're still getting plenty of.
I've attempted to report these issues on a number of occasions. But the amount of attention it gets suggests at worse a level of complicity.
Also most of the malware is not directly on the big networks but specialized and spammy networks that sites run because they pay more.
...and later:
> “We can reach the right consumer at the right time using their wealth of data to target,” Ms. McGurk said. “Other traditional digital platforms do not have the level of purchase data that Amazon has on their customers.”
It seems rather disingenuous to paint Google and Facebook as the bad guys for selling out their users' data for ad revenue but then go on to say that they are behind Amazon because Amazon has so much more useful customer data and is willing to sell it. It's becoming clear that the NYT is going to war with Facebook and Google (understandably so, since they killed their business).
One final point- in a time of economic expansion, which we have been in for a few years now, ad spending is going to rise. All players- Facebook, Google, Amazon, probably even the New York Times- will see better results. There are more dollars floating around the economy as consumers spend more instead of save and advertisers feel that they need to spend more across all channels just to keep up with their competitors.
I can switch to DDG, Telegram, and Yahoo Mail, but I certainly will continue do shopping on Amazon - there is no easy escape from it and I wonder why?
Am I the product as well as the customer on AWS?
While Google with their cloud services has the same opportunity, this additional source of data is not available to FB.