Amazon Positions Itself to Become An Advertising Empire
Jeff Bezos is at it again. Amazon’s CEO holds his torch high as the team settles into their next big idea. Over the last twenty years, Amazon’s profit margins have suffered due to Bezos’ unorthodox growth tactics. But defiance against conventional methods may have resulted in, quite literally, a billion dollar idea. Amazon is dipping its toes in the rocky waters of advertising, using their 180 million customers a month to profit from something other than their products.
What will this do for Amazon?
Last week, when BMO Capital Markets got word of Amazon’s latest endeavor, the price target went from $1,300 per share to $1,600 based mainly on advancements in the ad business. In fact, some analysts claim Amazon will eventually reach $2,000, making it the first company with $1 trillion in market value.
Amazon’s forward thinking is preempting their reign atop the ad ladder. By 2021, advertising on websites and mobile devices will account for half of all ad spending in the United States. This is more than radio, television, newspapers, and billboards combined.
Why is advertising on Amazon better than advertising with their competitors?
In 2017, Amazon made $1.7 billion in revenue from advertising alone. Granted, this is a tiny fraction of what competitors Google or Facebook made, but the growth is evident. Why? Amazon attracts consumers. When a user visits the site, they are looking to buy, making Amazon.com the ideal platform for advertising your product.
Companies such as Procter and Gamble smell dollar signs from miles away as the shift into e-commerce skyrockets. Furthermore, the multifunctional site isn’t just prime ad real estate. They also offer real time insights on how your marketing campaign is doing. These amongst many other reasons make for an optimal experience in branding. Jeff Bezos may be onto his greatest enterprise yet.
Bernie Levi, the author, is the Project Coordinator at Marketing Keys. She is a frequent Amazon Prime user for all things both vital and unnecessary.