Amazon is testing a targeted ad strategy

from – http://www.businessinsider.com/amazon-testing-search-related-product-recommendations-2018-5?r=UK&IR=T

The e-commerce giant is developing an ad type that will recommend products based on consumers’ purchase or search histories, Bloomberg reports. Such ads will appear on several different sites visited by consumers, effectively following them around and linking them back to Amazon if they click.

Amazon Online Stores Net Sales
– BI Intelligence

This would be a useful alternative to its typical ad offering, in which companies pay for an improved position in Amazon’s search results. The new ads will be tested later this month by merchants selected by Amazon, according to Bloomberg.

This move comes as part of Amazon’s effort to flesh out its ad business. Amazon’s proprietary ad business has rapidly been gaining traction, bringing in $1.7 billion last year and reflecting 60% year-over-year (YoY) growth, according to Digiday. It also stopped buying Google’s product listing ads this April, and this new ad type suggests it may be looking to more directly compete with Google and other companies in the retail advertising space.

Withdrawing bids for Google ads and introducing its own ads will also allow Amazon to become less dependent on paid search; now, it’ll be making money from product search rather than paying Google for the best paid search placement.

This new ad style may allow Amazon to further tighten its overall grip on the online shopping process.

  • Product search: Though the e-commerce process very often ends with customers making their purchases on Amazon, the product search phase starts on a search engine rather than the Amazon website in many cases. If the e-commerce titan can more consistently preempt the search process with widely offered, targeted ads, it could establish a stronger presence at all points in the online shopping process by becoming the go-to starting point for even more customers, as well as the ending point.
  • Price comparison: Ads that follow the customer around could also give Amazon an edge while the customer is hunting for the best deal. If a customer goes to another site to look at the same product, or a similar one, that they viewed on Amazon, and Amazon’s ad remains present on the screen, it keeps Amazon fresh in the customer’s mind and can inspire one final consideration of Amazon’s deal before a purchase is made from a competitor.

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