Amazon has its sights set on the digital advertising world, and it’s good news for publishers.
In 2022, for the first time in years, Google and Meta’s market share dipped below 50%, thanks in large part to the growing influence of Amazon.
In fact, the e-commerce giant now commands over 11% of all digital ad purchases, a trend that has been quietly building over the past couple of years.
In this article, we’re going to explain how Amazon’s rise to prominence in the advertising world benefits publishers, and what they need to do to take advantage of it.
Amazon’s Strategy
While Amazon has long provided a platform for advertisers to promote their products, it has expanded its reach by serving ads on external websites.
It wasn’t until the beginning of 2022 that the full extent of Amazon’s advertising business was revealed when the e-commerce giant released its 2021 numbers: a staggering $31.2 billion in advertising revenue.
In Q4, Amazon’s ad revenue showed year-over-year growth of 19%.
It’s clear that Amazon has set its sights on the programmatic advertising world, presenting exciting opportunities not just for advertisers, but for online publishers as well.
Unique Demand Source for Publishers
Amazon Publisher Services, the company’s supply-side platform (SSP), is a unique demand source for publishers in three ways:
- New quality advertisers
- Wealth of first-party data
- No third-party fees
New Quality Advertisers
Amazon brings a unique set of quality advertisers to the table.
Unlike other SSPs that often bring in existing advertisers and route them through various ad networks, Amazon’s advertisers are distinct as they are primarily found on Amazon’s own demand-side platform (DSP) and offer e-commerce products.
This creates an entirely new category of advertisers that Amazon introduces to the market, and they are only accessible through its SSP.
Wealth of First-Party Data
Amazon’s access to an enormous amount of first-party data is a significant advantage.
In a world where third-party cookies are becoming a thing of the past, having access to top-quality first-party data is essential.
If you’ve ever made a purchase on Amazon, you have voluntarily provided them with valuable information about yourself, such as your location, interests, and purchasing habits.
This first-party data is incredibly beneficial as it allows publishers to serve more relevant ads to users, leading to higher conversions for advertisers, which in turn means publishers can charge more to serve their ads.
No Third-Party Fees
The absence of third-party fees on Amazon’s SSP is a considerable benefit for publishers.
Advertisers frequently use third-party networks that charge substantial fees in return for their services. Unfortunately, this can lead to publishers receiving less overall ad revenue.
However, by using Amazon, advertisers can bypass the middleman and pay fewer fees, allowing more of their ad spend to go directly to the publisher – if managed effectively.
Opportunity for Publishers
Amazon’s expansion into the programmatic advertising sphere represents a golden opportunity for publishers seeking to monetize their websites and increase their ad revenue.
First and foremost, Amazon has a vast pool of high-quality advertisers. By partnering with Amazon, publishers can increase their fill rates and drive revenue by selling a significant portion of their ad space to Amazon advertisers.
Moreover, Amazon’s efforts promote fierce competition with Google and other advertisers, creating a higher demand for the publisher’s inventory. This increased demand enables publishers to leverage the competition to charge higher CPMs to both Amazon and Google.
As Amazon continues to grow its advertising business, publishers will be able to further leverage the competition between these two industry titans to negotiate higher prices and secure even more significant profits.
Challenges for Publishers
In order to fully capitalize on multiple demand sources, publishers must implement header bidding, an area where Amazon lags behind.
While Amazon does offer a one-code wrapper for header bidding, it creates a dual-layer process that first passes through Amazon and then to other demand partners. This slows down the website and limits potential revenue.
To truly leverage Amazon’s advertising potential and harness competition effectively, publishers must implement a custom solution that integrates Amazon’s demand on par with Google and other demand partners. This allows for simultaneous bidding, which can lead to increased CPMs.
To maintain this advantage, ongoing monitoring is critical to prevent slowdowns in ad requests and secure the highest possible pricing through competition.
Another challenge for publishers is gaining acceptance into Amazon’s Publisher Services program. Not all publishers meet the eligibility criteria, and those that do often receive unfavorable terms, such as late payments. Amazon’s pays at net 90 days, which can lead to potential cash flow difficulties.
Careful Execution
Amazon’s increasing involvement in programmatic advertising provides publishers with a promising opportunity. However, it necessitates careful planning and execution to realize its benefits.
To maximize revenue potential and leverage Amazon’s SSP effectively, advanced ad technology, ongoing management, and securing the best possible terms are necessary. While this can be a challenging endeavor for many publishers, it is crucial to ensure proper implementation and management.
Publishers who struggle with this can seek assistance from third-party experts like Adnimation, a Google Certified Publishing Partner (GCPP) and MCM/Google AdX partner.
When executed correctly, publishers can enjoy the fruits of Amazon’s continued growth in programmatic advertising with ease.
To get started, of if you would just like a free consultation, get in touch with our monetization experts today.
*The original version of this article, written by Adnimation CEO and Co-Founder Maor Davidovich, appeared in What’s New In Publishing.
