Amazon’s Potential — What The WSJ Didn’t Say

Amazon’s Potential — What The WSJ Didn’t Say

by

Laurie Sullivan , Staff Writer @lauriesullivan, January 29, 2018

eMarketer estimates Google will report earnings on Thursday of $83.4 billion from advertising revenue in 2017.

Google will remain the dominant player in search advertising in 2018, but eMarketer analysts suggest that its share of display continues to fall.

And while no other company comes close to generating that kind of revenue from advertising, Christopher Mims — who

wrote a detailed piece for the “WSJ” — examines the potential of Amazon’s data as being a huge driver for advertising revenue.

Amazon's Potential -- What The WSJ Didn't Say | DeviceDaily.com

He cites JPMorgan’s data — which estimates Google’s ad revenue at $73 billion for 2017, Facebook’s ad revenue at $40 billion, Oath’s ad revenue at $5.3 billion, Amazon’s ad revenue at $2.8 billion, Twitter’s ad revenue at $2 billion, and Snap’s ad revenue at $0.8 billion — and shows that Amazon is far from catching up to Google and Facebook.

But I agree with Mims when he points out that it’s the data that will take Amazon over the top in years to come. Google has data from searches and browsing. Facebook allows advertisers to combine social graphs with other data, such as location and purchases.

Amazon has the potential to combine offline point-of-sale data with online browsing and purchases, but it also has the opportunity to use physical in-store foot traffic data — mostly its own.

In addition to data aggregated at Whole Foods stores and its

cashierless Amazon Go stores, Amazon could also gather data resulting from its partnership in late 2017 with Kohl’s to sell Amazon devices and to take returns at the Amazon smart-home shop in 10 department stores around the Los Angeles and Chicago area.

The kiosks selling Amazon products like Echo are run entirely by Amazon, but the returns are handled by Kohl’s employees. The data from those sales would also support ad targeting on Amazon and ad exchanges.

In addition to purchases, Amazon could measure foot traffic into stores. Companies, such as Reveal Mobile, which now measures foot traffic from about 100 million mobile devices by tracking a variety of signals, are working on ways to identify the type of media search, video, display that drives consumers into stores.

Foot traffic, online purchases, in-store purchases, and browsing history all add up. Amazon also counts small businesses — the ones that only sell online through its marketplace. This is a segment that organizations like the Interactive Advertising Bureau (IAB) haven’t paid much attention to until now.

Chris Kuist, senior vice president of research and impact at the IAB, recognized during a webinar late in 2017 an “influx of small and medium-size businesses in the local market” that remains unaccounted for.

Kuist noted that about 75% of the small and medium-sized U.S. businesses have spent money on advertising. Of these, 80% have used self-service platforms and 15% have leveraged programmatic advertising.

These findings indicate significant ad spend going to publishers with these capabilities that really have not been accounted for by the IAB, making the potential for Amazon to take market share across its marketplace a real possibility.

MediaPost.com: Search Marketing Daily

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