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Amazon is getting closer and closer to its declared objective of becoming the global “Everything Store”.
Ever since the platform opened itself up to third-party providers at the turn of the millennium, the numbers of retailers using it, and of products listed, have continued to grow. According to a study by Marketplace Pulse, over 100,000 new retailers joined the German marketplace in 2018 alone. Meanwhile, the number of products listed on Amazon.de stands at well over 200 million.
As this development continues apace, ever more retailers are offering the same products, which is resulting in a bitter fight for conversion-maximising preselection for the trolley – the so-called BuyBox. From both a short and a medium-term perspective, this is a situation that is chiefly benefiting the consumer, with a multitude of attractive offers.
Growing competition between retailers
By contrast, the continual expansion of the product catalogue is resulting in increased competition between similar, substitutive goods. Making their own product visible and preventing it from disappearing amid the mass of similar offers is, consequently, one of the biggest challenges faced on Amazon’s Marketplace by vendors and sellers alike.
The retail giant from Seattle recognised this state of affairs early on as an opportunity to enter into an additional, extremely lucrative business segment. Since as early as the end of the 2000s, Amazon has offered a multitude of advertising solutions that both manufacturers and retailers can use to promote their products and appeal to enthusiastic consumers over the full length of the customer decision journey.
The Amazon division founded specifically for the purpose of marketing, originally named Amazon Media Group, is today simply named Amazon Advertising. The division provides its advertising partners with a comprehensive tech stack that is extremely complex to use, and can only be fully exploited with the help of profound expertise. In order to make your product as visible as possible, you should devote special attention to the following two systems:
1. Sponsored Ads
Launched in 2015, this self-service tool was known up to the beginning of the year as Amazon Marketing Services (AMS). It currently includes three advertising formats (Sponsored Products, Sponsored Brands, and Product Display Ads), which can be implemented in a performance-based manner via pay-per-click ads on the search results page and product description pages. The possible targeting options are numerous, and vary from format to format, ranging from an automated delivery to a keyword, product, or category-specific delivery of the advertising material.
Equipped with a corresponding advertising budget, as a retailer you have the option, for example, of placing your product directly among the coveted first search results, in order to appeal directly to potential customers with your range.
Due to the existing demand, the advertising formats are blended into the customer’s experience (pull marketing), and are hardly perceived as adverts thanks to their strongly native character. This means that Sponsored Ads presently represent Amazon’s best-performing advertising solution, and are even responsible for what is the largest share of Amazon’s advertising revenues by some margin.
2. The Amazon Demand-Side Platform (DSP)
Known prior to 2019 as Amazon Advertising Platform (AAP), this purchasing system enables display and video inventory to be programmatically purchased and precision-modulated using search and purchasing data gathered by Amazon from millions of its users.
This means, for example, that users who visit a product description page on Amazon without making a purchase can be appealed to again in a targeted manner even outside the marketplace, and guided back to the product range to make the final transaction (this process is called re-targeting). Even campaigns that come in at earlier stages in the decision-making process can be segmented into numerous so-called in-market or lifestyle segments, in order to appeal in a targeted way to people with specific tastes, interests, or lifestyles.
The competition never sleeps
Even though Amazon presently offers what is certainly the most comprehensive and developed advertising portfolio, it shouldn’t go unmentioned that with Ebay Advertising, Zalando Marketing Services (ZMS), and Otto Group Media (OGM), other marketplaces are investing in their own advertising portfolios and developing exciting retail media solutions of their own. Due to its comparable positioning as a general stockist and offer of mechanics and advertising formats similar to Amazon’s, OGM in particular has the potential to represent more than just a good add-on for advertisers in the years to come.
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