
Amazon Sets Its Sights on the $88B Online Ad Market - extarial
https://www.nytimes.com/2018/09/03/business/media/amazon-digital-ads.html
======
cm2012
Amazon ad revenue alone ($2.2 billion) for Q2 was already around 15% of
Facebook's total Q2 revenue ($13 billion). That is nuts, if they have any room
to grow that further, since ads isn't even Amazon's specialty.

For reference, Snapchat did $290 million in the same timeframe, Twitter $660
million.

~~~
scoggs
If it wasn't obvious already:

> For reference, Snapchat did $290 million in the same timeframe, Twitter $660
> million.

Just goes to show how much potential Amazon has in the Ad Market. Does anyone
else think Amazon could overtake one or both of Amazon's biggest competitors
in the market (Facebook or Google)?

~~~
josephjrobison
Amazon is most like Facebook in that the ads are only displayed on its own
property rather than all across the whole internet on any site that displays
3rd party ads. That, combined with the fact that Amazon also has a ton of data
on its users just like Facebook makes them very alike (not that Google doesn't
as well).

What separates Google from Amazon is that their paid ads can be displayed on
any 3rd party site that they don't own, through DoubleClick. And of course the
whole search engine monopoly makes that impenetrable for now.

Of course, it's all up for grabs, Amazon could go out and buy an ad network
like Mediavine and go head-to-head with DoubleClick.

~~~
noer
Facebook has a display network similar to DoubleClick, called Audience
Network. In my experience it pays publishers a lot better than DoubleClick.
For advertisers, they're able to target on more demographic categories (for
now, the CA scandal has done a lot to reduce targeting options).

~~~
propogandist
in my experience FB's audience network was junk

~~~
nandreev
The first thing I look at when optimizing a Facebook ad campaign is to look at
performance by placement.

In many cases, turning off the Audience Network will do wonders for your CPA.

~~~
wastedhours
Seconded - one of my default actions when setting up a campaign is to switch
that off.

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krn
Seeing ads in Amazon search results has substantially reduced my perceived
trust in Amazon brand, since as a buyer I no longer feel like Amazon is on my
side. I feel like I am Amazon's product. That it's me, who is for sale.

~~~
cloudwizard
Probably a bigger issue for Amazon is that a large part of the ad market is
competitors or potential competitors. Walmart, Safeway, and Azure won't be
advertising on Amazon.

Does P&G want Amazon to control more of the retail market? Not if it has any
brains. Amazon has it's own branded home speaker systems and will not sell
Google's. If Amazon brought out a shampoo brand, would it sell head and
shoulders?

~~~
j-c-hewitt
Why would other big retailers pay for ads on Amazon's website? Brands are the
ones who pay and already do. P&G already places a ton of advertising on Amazon
for its various products. Search 'Tide' and look at the headline ad spot.

That's P&G paying for that placement.

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scarface74
This is my bear case for Google. Google offers the least precise targeting
compared to Facebook and Amazon.

Facebook knows more about its users because users tell it about themselves and
Amazon knows more about purchasing habits of its users because of thier
purchase and search history.

If I’m searching for something with the intention on buying it, I am going to
go to the specific site - like Priceline, hotels.com, Zillow, etc.

Besides, ad blockers don’t work with Facebook or Amazon embedded ads.

~~~
hartator
I don't know. Google is still way ahead.

> Google’s U.S. ad revenue is expected to rise $5 billion this year to $39.9
> billion, while Facebook could rise $3 billion this year to $21 billion,
> according to eMarketer.

Adwords is just so effective to find your customers. You won't beat `buy new
headphones` type traffic on Amazon or Facebook.

~~~
scarface74
If I’m looking for headphones, wouldn’t it be more logical to start on Amazon?

It’s not like Amazon is a site that people haven’t heard of. It’s the 4th most
trafficked site in the US.

~~~
lozaning
Personally, Amazon is where I go to check prices after I've decided what it is
I'm buying. I've never gone to Amazon without knowing exactly what I wanted.

~~~
scarface74
Your experience doesn’t jibe with market realities. Merchants play all sort of
games to be the number one listed search result when you are searching for
something generic like “headphones”.

~~~
briandear
Who actually searches for such a short tail term and expects good results?
Does anyone ever google the term “cars” when they want to buy a car? More
likely it’s a term like “8 seat SUV” or something more focused. Maybe
headphones are different though..

~~~
scarface74
And the first non advertising link is car.com where I can search for specific
cars. Now Google has lost a customer and car.com has gained one. Now I can
advertise on car.com and get a much better targeted advertising.

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greglindahl
It's worth noting that Amazon showing ads on amazon.com is more like a
"slotting fee" or "slotting allowance" than a display ad. Given that you're at
amazon.com because you want to buy something, it's no surprise that online
slotting fees can be lucrative. But it doesn't mean Amazon has much room to
grow that beyond their overall growth.

~~~
angstrom
It probably depends on the value funnel. As you get closer in rellavance to
the target the ability to influence ought to be most valuable. I question if
they are monetizing the ad value funnel fully.

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mooreds
I heard at a talk a few months ago that if you are planning to build an app to
sell to retailers, you should build it on any cloud except for AWS. This is
because the large retailers are uncomfortable with giving any revenue to
Amazon.

I heard echos of this in the last paragraph of the post, but there's plenty of
co-opetition going on as well.

~~~
goatherders
Sort of. Some retailers have chosen to use other providers because they
compete with Amazon. But anyone building a new app is a LONG way from that
being a roadblock to success.

~~~
mooreds
If it is a B2B app, maybe not that far :). But I agree, if you get to a
certain size, you can move no matter where you start. I think it'd be an
interesting angle displaying customer empathy though.

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danso
I've been long amazed at how bad Amazon's web ads are, as if the department
was authorized to get rid of money as fast as possible. Besides the times --
because of one click through to a joke product like $10K ultrapremium audio
cables -- that I would get followed by weeks with absurd ads, my favorite
example is getting barraged by Battlestar Galactica season 3 ads _right after
I bought the damn thing_. OTOH, perhaps Amazon's ad/recommendation system was
_too_ smart, trying to warn me from purchasing season 4.

I understand that big data learning systems are harder to tweak than what we'd
suspect from ground-level day-to-day experience. But it just seems like Amazon
still has plenty of room to apply some conventional heuristics to get far more
efficiency than they do now.

~~~
j-c-hewitt
Those ads are mostly on Amazon's automatic remarketing systems. They only
recently opened up control over the bidding and targeting of those to sellers
and brands. Eventually considering how well that ad system tends to work in
the right hands, I would expect it to be less intrusive and more effective
over time.

Amazon's remarketing tends to be paid for by Amazon and it behaves like any
remarketing system run by other companies if you don't change anything from
the defaults, set a very high frequency cap, and don't pay attention to
whether or not the person converts.

------
millstone
Amazon leadership principle numero uno:

"Leaders start with the customer and work backwards. They work vigorously to
earn and keep customer trust."

Today:

> The push by the giant online retailer means consumers — even Prime
> customers, who pay $119 a year for access to free shipping as well as
> streaming music, video and discounts — are likely to be confronted by ads in
> places where they didn’t exist before.

Was this really the outcome from "start with the customer and work backwards?"

> ...it [Amazon] is rapidly emerging as a major competitor to Google and
> Facebook.

Gotcha. We all know who "the customer" is in this market.

Seriously, completely wrong direction Amazon. Our trust is already eroding due
to fake reviews, counterfeit items, and Amazon Marketplace nonsense. Racheting
up ads will make us further question where your loyalties lie.

~~~
krapp
>Our trust is already eroding due to fake reviews, counterfeit items, and
Amazon Marketplace nonsense. Racheting up ads will make us further question
where your loyalties lie.

It doesn't matter until it matters in aggregate and affects share price.
Whenever Amazon refers to "the customer" remember what they really mean is
"the customer's money," which they're still getting plenty of.

------
snissn
I've been getting strange ads on facebook for industrial kitchen items on
amazon recently... i didn't think i wanted one, but now i am considering an at
home industrial orange juice presser...

------
tjpnz
Slightly different topic but what are the big ad networks doing these days to
address the proliferation of malware across their networks? I've been having a
lot of issues with browser hijacking lately from ads that appear to be served
from legitimate ad networks (after some cursory investigation namely from
Doubleclick), and typically from HN submissions.

I've attempted to report these issues on a number of occasions. But the amount
of attention it gets suggests at worse a level of complicity.

~~~
manigandham
It's a business problem, not technical. Lack of any regulation or consequences
means no real economic incentive to stop malware in the industry.

Also most of the malware is not directly on the big networks but specialized
and spammy networks that sites run because they pay more.

------
dkrich
> Thanks to the vast amount of data Amazon collects from its customers, it can
> target ads not only to basic demographics — say, women over the age of 35 —
> but to a more precise segment of customers who are likely to be shopping for
> cellphones or barbecue grills.

...and later:

> “We can reach the right consumer at the right time using their wealth of
> data to target,” Ms. McGurk said. “Other traditional digital platforms do
> not have the level of purchase data that Amazon has on their customers.”

It seems rather disingenuous to paint Google and Facebook as the bad guys for
selling out their users' data for ad revenue but then go on to say that they
are behind Amazon because Amazon has so much more useful customer data and is
willing to sell it. It's becoming clear that the NYT is going to war with
Facebook and Google (understandably so, since they killed their business).

One final point- in a time of economic expansion, which we have been in for a
few years now, ad spending is going to rise. All players- Facebook, Google,
Amazon, probably even the New York Times- will see better results. There are
more dollars floating around the economy as consumers spend more instead of
save and advertisers feel that they need to spend more across all channels
just to keep up with their competitors.

------
novaRom
Amazon knows way more about its users than Google and Facebook. It is easy to
deduce a lot of information from my purchase history, my reviews, my 'helpful'
clicks, my address, etc.

I can switch to DDG, Telegram, and Yahoo Mail, but I certainly will continue
do shopping on Amazon - there is no easy escape from it and I wonder why?

~~~
Ahl4Gom6
If bits benefit from centralization the atoms do even more so.

------
ddtaylor
How long until one of these big tech companies sees a Microsoft style anti-
trust problem like in the 90s?

~~~
oblio
At least until 2021.

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telltruth
Amazon is already an ad agency for vast number of 3rd seller while also
offering fullfilment services. You can see the impact of transitioning to this
business model. Large number of those “sponcered” listing is crape. A sizable
3rd party sellers are straight from China looking to dup the customers.
Significant number of products that I bought past few months are branded like
Duracell but completely fake.

------
rapnie
If I run some large customer-facing services on AWS (or any service, for that
matter), doesn't that provide Amazon with the same (or even better) detailed
insights on customer behavior I can have?

Am I the product as well as the customer on AWS?

While Google with their cloud services has the same opportunity, this
additional source of data is not available to FB.

~~~
justfor1comment
Services you run on AWS are isolated from Amazon. It is part of their legal
agreement. This is important so that businesses can store sensitive data on
AWS without worrying about Amazon using this data for their own use cases.

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RA_Fisher
My friend in commercial real estate said something I thought was interesting:
the cost per acquisition in a mall can often beat the online CPA. I had
assumed malls would have much higher CPA. It'd seem low-priced point retailers
like Bonobos lend creedance to her claim.

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phobosdeimos
The tech industry is being propped up by ad money, no wonder we get all these
privacy scandals.

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levischoen
If they have your information, every public company today will try and sell
it. No exceptions. :-/

~~~
sib
They will try to sell access to you based on the information that they have
about you, but they will generally not sell the information they have about
you. (For one thing, they could only do that once...)

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singularity2001
This is horrible news. Now they are incentized to become as bad an actor as
Google?

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hnbroseph
is there anything amazon isn't going to "set it's sights on"? will they be
building and selling Amazon Houses and providing Amazon Health Insurance soon?

~~~
justfor1comment
Amazon health insurance is already happening:
[https://www.cnbc.com/2018/01/30/amazon-berkshire-hathaway-
an...](https://www.cnbc.com/2018/01/30/amazon-berkshire-hathaway-and-jpmorgan-
chase-to-partner-on-us-employee-health-care.html)

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aiyodev
So Amazon is going to help other companies advertise products to customers
that they have already bought?

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rahulkapil
It is hard to beat Google at its own turf.

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throwawayperson
Ultimately, it's not a good thing.

