TECHNOLOGY

Amazon a growing power in advertising, according to survey

BY Dan Berthiaume

Google and Facebook/Instagram have some company in the competition for retail digital ad dollars.

According to a survey from advertising software vendor Nanigans and Advertiser Perceptions, Amazon is rapidly gaining momentum in the digital advertising race. Retail marketers estimate Amazon gets 14% of their digital ad spend, placing it third behind longtime leaders Google (21%) and Facebook/Instagram (19%). Additionally, half of those surveyed said they are planning to spend more with Amazon over the next 12 months, with an average planned increase of 25%.

While some retail marketers are shifting ad dollars from other channels like Google (29%) and Facebook/Instagram (34%), 41% are adding incremental budget to support their increased Amazon spend. The top three reasons respondents advertise on Amazon are: strong performance and return on investment (ROI), size of the audience, and their target audience is active on Amazon.

For retailers serving ads on Amazon, an average of 30% of online sales come through that channel. Marketers also say it outperforms both Google and Facebook/Instagram on key performance indicators, including:

• Return on ad spend (ROAS) – 39% of respondents saw higher ROAS than Google, and 54% saw improvement over Facebook/Instagram.

• Cost per mille (CPM) – 32% of marketers reported lower CPMs than Google, and 38% reported the same about Facebook/Instagram

Many survey respondents expressed concerns about Amazon. Forty percent are worried about Amazon having too much of their data and 31% see Amazon’s retail business as competitive with their own. A majority of marketers (57%) predict Amazon will eventually misuse consumer data as other large digital players have. Nearly half (48%) expect consumers will become increasingly turned off by the advertising experience with Amazon.

Additional notable findings from the survey include:
• 22% of marketers surveyed said having transparency into where their digital advertising spend dollars are going is an important factor when allocating that spend — and just 3% ranked it as their top factor.

• After Google, Facebook and Amazon, the following digital ad platforms rank fourth, fifth, sixth and seventh, respectively: Twitter (11%), Microsoft (10%), Snapchat (7%) and Pinterest (7%).

• Nearly three-quarters (75%) of retail marketers advertising with Amazon would prefer to have the ability for Amazon ads to link back to their own sites, rather than Amazon.com.

Results are based on responses from 100 digital advertising decision-makers at retail companies generating at least $50 million in online sales annually.

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