Amazon ads might just be the next big thing in the digital marketing landscape as Amazon.com, Inc. (NASDAQ:AMZN) is likely to directly compete against Alphabet Inc (NASDAQ:GOOGL) Google with an expected ad revenue of $1 billion this 2016.
The Future of Amazon Ads
As an ecommerce giant, Amazon has access to massive consumer data necessary in digital advertising. The company can tap this availability to further grow its advertising business.
For so long now, targeted Amazon ads are displayed across affiliate websites. On its own platform, merchants can buy their respective ad space. Amazon is the first company to have introduced header bidding, which enables merchants to bid on compelling ad spaces simultaneously.
Given its strong ad business performance, the company is expected to generate an ad revenue of more than $30 billion in the US alone by 2017.
With the immense growth of digital advertising today and Google leading the game, analysts are anticipating a head-to-head competition between Amazon and Google. The company’s access to valuable consumer data is an indication of where can Amazon potentially go moving forward from here.
Amazon’s Core Businesses
Nonetheless, Amazon remains highly focused on Amazon Prime— both on growing its user base and expanding ad-based revenue.
Almost 500k new subscriptions since Twitch Prime. Partners report doubling, tripling, quadrupling their sub count (some higher). Hell yeah.
— Justin Wong (@JustinWong) October 5, 2016
Just recently, Amazon has introduced Twitch Prime, a service that enables Amazon Prime members to enjoy all Twitch Turbo perks for free. It is part of the company’s efforts to encourage new Amazon Prime memberships, taking advantage of the popularity and growth of Twitch.
According to Mark Mahaney, an RBC Capital analyst, digital advertising is not yet a main priority for Amazon— at least as far as retail and artificial intelligence (AI) efforts are concerned.
“It’s a good add-on business for Amazon that will get bigger over time, no question,” added Mahaney.
Undoubtedly, Amazon ads have a significant role in the company’s revenue regardless of whether it is currently a core focus or not.
On Friday, Amazon and Alphabet have closed at $839.43 and $800.71, respectively.
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