Analyzing Amazon’s Foray into Digital Advertising
With precious user data, Amazon expands its presence in digital advertising that has been the realm of Google and Facebook.
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In conventional or online stock trading, you must watch out for stocks that have the potential to topple their competition in various fields. Amazon ($AMZN)is one such very successful company that is truly branching out, with the power of technology driving it forward. To pinpoint one specific area out of this, it would be digital advertising. Amazon Can Take the Fight up to Google and Facebook Google ($GOOGL, $GOOG) and Facebook ($FB) lead the way in digital advertising, but Amazon is also getting there. It is trying its hand at so many other things including physical retail and drone delivery, and now it’s into advertising as well. And there’s something that gives it real power to compete with the best in the business – user data. Though Amazon.com may only have 300 million active subscribers, it has precious shopping data on them. This data, that gives indications of the buying habits of users, is something Amazon has in abundance, even more than Facebook or Google. That gives it greater ability to target ads than Google or Facebook possibly could, though they themselves possess large amounts of user data. That gives $AMZN a vital edge over $FB and $GOOG, $GOOGL in digital advertising. Shoppers Start Their Search on Amazon Amazon sells most of its ads on its websites. When you search for any product on Amazon.com you do come across many sponsored listings, quite like you’d find on Google search pages. Amazon believes there is a significant opportunity for expansion in this area. A BloomReach report in 2016 revealed that 55% of people shopping online start searching for their product on Amazon.com. This gives the company the opportunity to show more and more ads. Google’s Eric Schmidt acknowledged back in 2014 that Amazon is its biggest competitor. It isn’t difficult to see why. With more and more people searching on Amazon,there will be ever increasing sponsored listings that will take a good deal of ad income away from Google since more online shoppers are beginning to search for products on Amazon rather than Google. Digital Advertising beyond the Website And Amazon isn’t restricting its advertising to its own websites. It conceived a headerbidding system for ad inventories by which publishers can take more offers rather having to examine each offer one after the other, thanks to computer algorithms. Amazon’s process is
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really quick since this complex ad bidding process is performed in its AWS servers, which helps the websites of these publishers load faster. It’s quicker than the other header-bidding systems. This space had been Google’s turf, but not anymore. With enviable user data at its disposal $AMZN can take the fight to Google and Facebook that rely on their targeting capabilities. Conceiving and further improving upon its advertising products on other websites are what Amazon needs to do increase its share of the digital advertising revenue pie enjoyed by Facebook and Google. The $AMZN stock is definitely one to keep monitoring in your online stock trading. Thanks to the company’s successful and ongoing expansion to other fields, its revenue is likely to keep rising while improving its bottom line and stock value. Digital advertising alone can give it ambitious growth since the market is massive and is expected to rise to $335 billion by 2020.
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