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Amazon in the World of Online Advertising

Since the dawn of the web, there have been a multitude of online selling/shopping sites, all presenting different means with which transactions are performed (ie. craigsList, eBay). However, in recent years, one website in particular has been dominant over the others — Amazon. As one of the few websites that offers free two-day shipping with a large variety of its products, as well as its large variety of products from reliable sellers, it’s no wonder that Amazon is becoming more and more popular. As Amazon gains more popularity, it is gradually outsourcing its platform, now offering programs such as Amazon Echo, Kindle, and access to a cloud with large volumes of media and high-demand content. Now, Amazon is starting to turn towards selling online ads — a platform that Facebook and Google have dominated for many years.

Why does Amazon have such a growing presence in selling online ads? Well, one of the main reasons is the type of users who end on Amazon. When a person goes on Amazon, most of the time, they intend to purchase something, and are searching on Amazon for a product that is suitable for their purposes. Currently, Amazon focuses on displaying results that are “relevant”; that is, they match the query most closely, for each individual user. Having a search function that both takes in and supplies results without charge is very convenient for the buyers/sellers that use Amazon. However, Amazon is starting to capitalize on its search function, using online ads.

Why would Amazon turn to online ads? When a user searches a certain product, they are more inclined to look at/purchase the first products that appear; therefore, the slots on the top of the results page have a highly favorable position as opposed to other slots on the page. How is this different from Google and Facebook? Well, these other “search engines” tend not to have as many potential buyers surfing on them; there are sometimes users who will click on a link simply out of curiosity, not for purposes of purchasing. In the perspective of the sellers looking to advertise online, it is much more valuable to have their products displayed on the top of a page on Amazon, rather than on Google or Facebook, because of the higher concentration of buyers on Amazon, in comparison to the other two sites. Therefore, Amazon has the potential to charge advertisers a higher price per click, and may have a higher volume of ads flooding it in the future.

http://www.thedrum.com/news/2017/09/18/how-amazon-becoming-the-third-force-advertising-making-the-duopoly-oligopoly

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