Amazon Grows its Ad Revenue Share
Google has for a long time enjoyed their number one spot when it comes to search ad revenue. However, another company giant, Amazon, has been trying to build and expand its ad platform to compete with Google and Facebook. Amazon, using its upper hand in e-commerce, has quickly become a first-choice search engine for consumers. Amazon helps advertisers better connect to customers at a time when they’re ready to buy, rather than during the search phase. More and more online shoppers use Amazon as their only destination for their goods, the once handy Google search. Also taking into consideration their immense data on consumer purchasing habits, Amazon has a greater advantage in profiting from advertisement.
Like Google and Facebook, Amazon utilizes an auction system where sellers bid on search terms, and slots are sold on a pay-per-click basis. Utilizing a bidding auction, the seller with the highest bid that is also eligible for the slot wins the auction. The company has recently launched new bidding and targeting features designed for advertisers to have more control and help improve their performance. Advertisers have the choice of selecting the traditional fixed bids options, but also the choice of two new automated bidding strategies that adjusts their bids in real time based on the likelihood of conversion.
The two new dynamic biddings are presented in the form of up and down or down only. In an up and down dynamic bidding, once a sponsored product ad is eligible, Amazon predicts the likelihood of a click being converted into a sale using their consumer data, and then uses that to either increase or decrease your bid. For example, let’s assume a sponsored product has a high conversion rate, Amazon will increase the set bid up to 100 % in order to increase your chances of winning the bid. If there is a low likelihood of conversion, Amazon will decrease the bid up to 100%. In a down only dynamic bidding Amazon will only have the power to decrease a bid.
Whether or not the company knows the value that the advertiser has on their sponsored product being advertised on Amazon, they have the technology to place their own calculated value for the sponsored product ad. In a way the company is creating their own price tags for their products, which leads to wondering why even implement a bidding system? If Amazon is manipulating prices that reflect their greater insight in profitability, they might as well sell the ads with their determined price. The advertisers lose the freedom to bid their own prices according to their value, taking away some of the strategies that go into bidding.
https://adage.com/article/digital/amazon-makes-quick-work-ad-industry-10-billion-year/316468
https://sellercentral.amazon.com/gp/help/external/G201528440?language=en_US