I came across an article on the Wall Street Journal that I think is a must read for toy and play industry members. The article by Lara O'Reilly and Laura Stevens, is entitled "Amazon, With Little Fanfare, Emerges as an Advertising Giant". The articleprovides valuable insight on Amazon's startling growth as a major provider of advertising and its implications for other digital players, bricks and mortar retailers and advertising agencies.
According to the article: "The online retailer has ascended to the No. 3 spot in the U.S. digital ad market behind the dominant players, Alphabet Inc.’s Google and Facebook Inc." The company's advertising revenue is projected this year to hit to $5.83 billion and to reach almost $25 billion by 2025.
The authors go on to report that:
A big chunk of Amazon’s ad business comes from its retail site, where companies pay to be listed as a “sponsored product” high up in the search results…In addition, marketers going through Amazon can choose video ads, TV-style spots in live sports telecasts, ads on the company’s FireTV device and even ads on its cardboard delivery boxes. Amazon also helps brands advertise across the web on sites it doesn’t own.
And that list doesn't include the potential for Alexa. The advantage that Amazon holds over Google and Facebook is that it has so much rich, consumer data. Those who want to promote their brands want those insights.
Bricks and mortar retailers are feeling the pinch. They have for years secured supplier advertising dollars for everything from slotting allowances to end cap displays and in-store promotions. There is, however, only so many advertising dollars to go around and Amazon is taking a chunk of those dollars away from their physical store competitors.
Wal-Mart.com and Target.com are attempting to copy Amazon but, until another e-commerce heavyweight comes along, Amazon is going to playing an increasingly important role in where and how advertising dollars are spent