Interviews, insight & analysis on digital media & marketing

Why Amazon is becoming the new home for SME advertisers

By Ciaran Deering, Head of Online, The Grove Media

Facebook and Google have long been the platform of choice for mid-size advertisers. Facebook makes about 75% of its ad revenue from SMEs. TikTok has wised up to this and is making a big play for this market. But the company that is set to give all of them a run for their money is Amazon. 

Amazon reported ad sales were up by 25% year-on-year in the last quarter, and it makes more money from ads than from Prime, Prime Video audio and ebooks combined. Importantly, launches announced recently at Amazon’s annual advertising event Unboxed are set to make Amazon a whole lot more money by luring more SMEs to the platform.

Amazon are well placed to expand their advertising services and have been successfully growing these. They now control 14.6% of the US digital ad market (eMarketer). Their growth in the US is outstripping Google and Meta. And Amazon is now showing signs of making a serious play to win new non-endemic advertisers – those that don’t sell products via Amazon. 

Amazon is home to sellers large and small and has given them a platform to grow, often as their only route to market. The bedrock of Amazon’s advertising offer for this vast endemic base is sponsored product ads. These have delivered great returns for retailers on Amazon and are cheaper than Facebook and Google, although successful sellers have to spend anywhere between 10 and 20% of their sales on Amazon ads.  A suite of ‘sponsored’ products are available to Amazon sellers. ‘Sponsored Products’ is a search driven proposition allowing advertisers to target product related ads to keyword searches. Ads appear on top of, or to the side of shopping results.  ‘Sponsored Brands’ is a similar opportunity, the difference being that the ad showcases a seller’s brand alongside a list of multiple products. Both are self-service options that can be managed by a media agency or directly by an SME, with support from Amazon. 

Amazon also offers sponsored display ads to endemic advertisers. These deliver ads on Amazon’s homepage and product pages, but also on Amazon-owned Twitch and third party websites that are part of the platform’s network of publishers. 

Self-serve for SMEs?

Non-endemic advertisers have been able to programmatically buy display ads to reach audiences on Amazon and also on Amazon-owned websites via the platform’s DSP. This route gives access to the platform’s first-party data and can be used in combination with the Amazon Marketing Cloud to marry sales data with DSP impression data. The challenge for some advertisers with the DSP approach has been the high entry cost –  $50k if you work through Amazon’s managed service. However, there are options to work with specialist Amazon partners who can buy for lower entry costs.

However, at its ‘Unboxed’ conference in October, Amazon announced a new way for non-endemics to advertise on the platform. This is a completely self-serve ad type that doesn’t require any minimum spend, and is simple to set up, deploy, and manage, compared to the DSP.  This is really interesting as it signals a move to attract a wider advertiser base and is a clear play for the valuable SME market that Google and Meta have been so successful in cultivating.

At the moment, this new self-serve ad is a US-only beta test, but given that the UK is often the first European market outside of the US that facilitates betas like these, we may expect to see this option available to UK advertisers in the near future.

A  central theme of this year’s Unboxed was ‘Empowering brands of all sizes’ and other tools were announced that are clearly designed to shift the dial in this direction, including: preset features in sponsored ads for advertisers new to the platform and performance recommendations mid campaign. But one of the most interesting launches is a video creation tool for smaller advertisers to help them unlock the power of streaming media on the platform. 

Video formats are available to non-endemic advertisers, not just Amazon vendors and sellers.

Amazon’s Streaming TV is currently only available in the US and UK,  so UK advertisers are in a fortunate position to test and take advantage. Video ads appear across Freevee, Amazon Publisher Services broadcaster and network apps, Live Sports, Twitch and the News app on Fire TV.  

As with display options, working through Amazon has a higher cost of entry but agencies can help at a lower cost. Amazon also offers audio advertising, but you need to work through Amazon sales teams on this. Ads are broadcast on Alexa and play periodically during breaks in content – music is one of the top customer interactions on Alexa.

While it’s early days and self-serve ad is still in beta, these launches represent significant opportunities for SME advertisers looking to branch out beyond Facebook and Google….and to benefit from Amazon’s rich and deep e-commerce data, that goes beyond anything that Meta and Alphabet can offer. Years of purchase data gives Amazon the edge over many of their adtech competitors in terms of insights on buying habits and product preferences. 

Amazon’s DSP advertising proposition is most likely to appeal to advertisers selling products and services that are closely related to the products people are buying on Amazon. For example, at The Grove Media we have targeted buyers of kids toys on Amazon with messages from promoters selling tickets to shows that appeal to kids and their parents.

As SMEs look at the advertisers options for 2023, they should be heartened that big tech is increasingly looking to support them and create solutions that are in their best interests. With Google and Facebook cleaning up for several years, you could be tempted to ask why it’s taken Amazon so long to make a real play for this market. 

Opinion

More posts from ->

Social Media

The metaverse – is it the real deal?

once a distant, futuristic idea, the concept of an immersive, virtual shared space is coming – and it has the capacity to change everything, writes Chris Pottrell of Nebula…

Read More ->

Related articles

Why you should invest in retail media in 2023

The value of the global retail media market has reached an all-time high, writes Jean-Vincent Chardon, International Sales Director at mediarithmics…

Retail

How to grow more business on online marketplaces

With brands and retailers paying up to 30% margin for selling on marketplaces, they cannot afford any mistakes in how they present, promote and fulfil their products, says James Barlow, Regional Director UK&I at Akeneo…