Amazon’s Two-Way Relationship With Advertising

[Deborah Thompson]

The company struggles to catch up with Google and Facebook as protagonists of the digital advertising sector, but in parallel it is the main advertiser among eCommerce companies in countries like Spain.

Amazon is no longer just a machine to generate money by buying and selling products on its platform. He demonstrated it at the time with Amazon Web Services, your colossus in the cloud that serves companies such as Netflix, which in turn rival Prime Video, its commitment to online entertainment (complemented by the growing power of Twitch or their firm bets on music with Amazon Music or even on audiobooks, supermarkets …).

Now, Amazon is targeting online advertising. The company is gaining ground in this sector by leaps and bounds and there are many who see Amazon as the third most important player in the world, after Google and Facebook. Currently, that position is in the hands of the Chinese Alibaba, which in 2019 will invoice around 29,000 million dollars for digital advertising, compared to 14,000 million of Amazon, in fourth position. Both emerging companies are light years ahead of Google’s 103 billion and Facebook’s 67 billion, according to eMarketer calculations.

Amazon receives publicity

Either way, Amazon is gaining importance in the digital advertising market due to the strength of its platform. Only in Spain it entered 55 million euros in 2018 for ads, three times more than in 2017, when it had a turnover of 17 million. It is increasingly common to see third-party ads on Amazon, but this segment also includes promoting items when searching, a business that has made Google a multi-million dollar. The Amazon search engine is no less important, since in many cases it is the first option to carry out searches related to electronic commerce, something that Google has tried to combat with the Shopping tab, taking as a consequence2, 420 million euros of fine from the European Union for abuse of the dominant position.

Despite its interesting advertising revenue in Spain, the subsidiary produced just 12,000 euros in profits in 2018, although it is a better figure than the 244,000 euros it lost in 2017. It has 48 employees, compared to 26 in 2017. The company receives more advertising than ‘El Confidential’ or ‘El Español’, which undoubtedly makes Jeff Bezos’ companies a competitor for the media on a par with Google and Facebook.

Amazon advertises

But Amazon is not only an emerging player in the reception of advertising. Your relationship with ads has a side … as an advertiser. Continuing with the case of Spain, Amazon last year allocated more than 18 million euros to advertise in the media. 75% of the budget went to television, where it is common to find their ads throughout the year, although the bulk of the campaigns are broadcast from September, ahead of Christmas.

The advertising investment of Amazon on television is above the average of the sector, which is 48% as Best Option Media, and even above what they spend other e – commerce platforms, whose average is 62%. Although it does not reach 99% of Trivago, the hotel comparator that allocates practically 7.9 million euros of its annual advertising budget in Spain to the small screen.

The bulk of advertising investment in television on electronic commerce platforms is taken by Atresmedia and Mediaset España, with 40 and 39% of the total, respectively. Pay TV takes another 12%, well above the 5% of the average advertiser. But it is not the only item with weight: digital also get a good pinch, specifically 19% of the budget, compared to 17% of the average of the advertising market. Stand ‘El Mundo’, ‘Brand’ and ’20 Minutes’, with 4.2; 3.6; and 2.5 million euros invoiced to these platforms in 2018, respectively. Far below are the written press (5% of the budget) and radio (4%). And they can’t blame the advertisers themselves; Amazon invested six times more in advertising in Spain in 2018 than in 2016. Because on the one hand it competes with the media to host advertisements, but on the other it sprinkles them with money to continue dominating electronic commerce.

Amazon Category Ungating Service

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