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Amazon wears several hats – retailer, gadget maker, cloud provider, Hollywood producer – but until recently, ad titan did not belong to it.
At least, few people have thought of Amazon (AMZN) this way. But it changes. This week, an eMarketer report revealed that Amazon is now the third most popular digital advertising platform, ahead of the Verizon Oath (VZ). US advertisers will spend $ 4.61 billion on Amazon's platforms this year, accounting for 4.1% of all digital ad spend.
It's still far behind the two kings of Internet advertising, Alphabet (GOOGL) and Facebook (FB), which together account for 57.7% of digital ad spend. But as eMarketer notes, this distribution could change: Amazon 's share of the market is expected to double in 2018 and reach 7% by 2020.
"Amazon has the ingredients of a true digital advertising business, whose key is to do more than sell advertising impressions," wrote Nicole Perrin, eMarketer.
Those of us who primarily use Amazon to shop or watch videos can barely know that Amazon even has an advertising business, but its more and more robust advertising products include paid advertising in its own markets and commercials on YouTube. other sites. As the first default stop for many online shoppers, Amazon has more detailed data on commerce and buying habits than its competitors, and potential advertisers are becoming aware of it.
This month, Amazon announced a number of changes designed to simplify the ad buying process, including the consolidation of all ad and report purchases under a single "Amazon Advertising" brand.
In a blog post, Amazon Advertising Vice President Paul Kotas described the change as "another step toward our goal of providing simple and intuitive advertising solutions to the hundreds of thousands of advertisers who use our products to develop their business. "
Amazon is experimenting in other areas that merge navigation with automated suggestions: it is also experimenting with a service called Scout, which offers suggestions for particularly visual products such as home furnishings and footwear, depending on of your preferences. In a statement, an Amazon spokesperson described it as "a new way to shop, allowing customers to browse millions of items and quickly refine the selection only according to the visual attributes ".
A shopping site, a data experience, or another potential source of revenue? With Amazon, it can be hard to say. Unlike Facebook for example, Amazon does not divide advertising sales. Most of its net sales come from its online store, at $ 27.1 billion for the June quarter, with an additional $ 9.7 billion from third-party sellers services. Amazon's web services generated net sales of $ 6.1 billion and advertising was classified in an "other" category that generated $ 2.1 billion in sales for the quarter .
But even if it remains a small part of Amazon's revenue, advertising is more than a footnote.
In response to the call launched by Amazon investors in July, CFO Brian Olsavsky described the rising star advertising sector as saying that he was beginning to "have a impact "on the gross global profits of Amazon.
"It's now a multi-billion dollar affair for us," Olsavsky said. "We're seeing strong adoption on many fronts: Amazon vendors, vendors, authors, and third-party advertisers who want to reach Amazon customers."
Amazon can not calculate with consumers, but for investors, it could just add something soon enough.
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