At a time when Google and Facebook are facing backlash from advertisers for placing their ads alongside questionable content, Amazon has been able to appeal to brands.
Amazon Customers To Find Ads In New Places
For Amazon customers, including Prime Members, it's resulting in ads showing up in places they haven’t before, reported the New York Times. Take Twitch, Amazon’s video game streaming service. The paper reported gamers were upset late last month when they learned they would have to upgrade to Twitch Turbo, the $8.99 a month premium service to have an ad-free experience. While Amazon still gets the lion's share of its revenue from e-commerce, its online advertising business is growing at a very rapid pace. In the first quarter of this year, online ads saw sales increase around 130% to $2.2 billion compared with the first quarter of last year, according to the New York Times. (See more: Amazon: Morgan Stanley Ups Price Target to $2,500.)
Advertisers are turning to Amazon in part because it is more of a controlled environment than Facebook and Google, which have failed to create standards that advertisers want, according to Collin Colburn, an analyst at Forrester, cited in the Wall Street Journal .
Amazon Increasing Focus On Ads
Although Amazon has sold some form of online ads for the past few years it now putting a greater emphasis on its ad sales. The New York Times, citing data from research firm Gartner L2, noted that brands such as General Mills, Hershey, and Unilever have increased the amount they spend on Amazon this year. But it's not only companies that sell goods that are turning to the online retailer. Services companies such as Verizon, AT&T, and Geico are also running ads on Amazon’s platforms. John Nitti, chief media officer at Verizon, told the paper that Amazon’s customers have a shopping mindset which is valuable to Verizon. In addition, Amazon can target ads based on demographics and shopping history due to the data Amazon captures on customers. Amazon is not stopping with just online ads. Verizon is gearing up to run a test with the e-commerce giant in which it will put ads for FIOS, its video service, on Amazon packages going to residents in areas Verizon serves. (See more: Amazon Planning a Roku Competitor: Report.)
Still, not every brand is clamoring to advertise on Amazon. Those that make products that will face competition from Amazon’s own line of goods are hesitant to run ads, as they would be paying a competitor to run their ads and potentially allow Amazon to gather information on the brand and its customers.