How Amazon Is Changing the Game with Its New Advertising Features
Hi everyone, welcome to another article where we explore the latest trends and developments in the world of online marketing. Today, we are going to talk about one of the biggest players in the e-commerce space: Amazon. Amazon is not only a giant retailer, but also a powerful advertising platform that offers a variety of solutions for brands and publishers. In this article, we will look at some of the new advertising features that Amazon has recently announced and how they can help you reach your marketing goals.
Amazon has been investing heavily in its advertising business, which generated over $21 billion in revenue in 2022, up 52% year-over-year. Amazon Ads offers a range of products and services, such as Sponsored Products, Sponsored Brands, Sponsored Display, Amazon DSP, Amazon Attribution, Audio Ads, and more. These solutions enable advertisers to reach millions of shoppers across Amazon's own properties, as well as third-party websites and apps. Amazon also provides tools and insights for publishers to monetize their content and grow their audience.
What's New with Amazon Ads?
In October 2022, Amazon hosted its Unboxed event in New York, where it announced several new features and enhancements for its advertising solutions. These updates reflect Amazon's vision to create more engaging and personalized experiences for customers, as well as more opportunities and value for advertisers and publishers. Let's take a look at some of the most notable announcements and what they mean for you.
Rewarded Sponsored Display
One of the new features that Amazon introduced is Rewarded Sponsored Display, which allows brands to offer an Amazon shopping credit to customers who click on their ads and purchase their products. This feature is designed to increase conversion rates and customer loyalty by providing an incentive for shoppers to buy from the advertiser. The shopping credit can be used for any product sold by Amazon or its third-party sellers.
Rewarded Sponsored Display is currently available in beta for select advertisers in the US. It can be used for campaigns targeting Amazon's own properties, such as product detail pages, search results pages, and the homepage. The ads are displayed as banners or overlays on desktop and mobile devices. The amount of the shopping credit is determined by the advertiser and can range from $0.50 to $10 per purchase.
Amazon Ad Server
Another new product that Amazon launched is Amazon Ad Server, which is a supply-side platform (SSP) that helps publishers sell their ad inventory more efficiently and effectively. An SSP is a software that connects publishers with multiple demand sources, such as ad networks, ad exchanges, and DSPs (demand-side platforms). An SSP helps publishers optimize their ad revenue by allowing them to set up rules, preferences, and pricing for their inventory, as well as access data and analytics on their performance.
Amazon Ad Server is powered by Amazon Audiences, which is a proprietary data source that includes information on millions of Amazon customers, such as their shopping behavior, preferences, and interests. By using Amazon Ad Server, publishers can leverage Amazon Audiences to enhance their ad targeting and creative optimization on Amazon DSP campaigns. This means that publishers can deliver more relevant and engaging ads to their visitors based on their affinity with Amazon's products and services.
Amazon Marketing Cloud
Amazon Marketing Cloud is a suite of tools and services that helps advertisers and publishers measure and optimize their cross-media campaigns. It includes three components: Media Mix Modeling (MMM), Attribution Insights (AI), and Data Clean Room (DCR). MMM helps advertisers understand the impact of their media investments on sales and other business outcomes across different channels and platforms. AI helps advertisers measure the incremental effect of their digital campaigns on online and offline conversions. DCR helps advertisers and publishers securely share and analyze data without compromising customer privacy or data ownership.
Amazon Marketing Cloud is integrated with Amazon Ad Server, which means that publishers can access cross-media insights from MMM and AI within the same platform. This can help publishers improve their ad monetization strategies by understanding how their inventory contributes to the advertiser's goals. Additionally, publishers can use DCR to create custom audiences based on their own data and share them with advertisers for targeting on Amazon DSP campaigns.
A Breakdown of Amazon's Advertising Revenue
To get a better sense of how important advertising is for Amazon's business, let's take a look at some numbers from its financial reports. According to its Q4 2022 earnings release[^1^], Amazon reported $87.4 billion in net sales for the quarter, up 21% year-over-year. Of this amount, $21.5 billion came from its "Other" category[^2^], which primarily consists of advertising services.[^3^] This means that advertising accounted for about 25% of Amazon's total net sales in Q4 2022.
Moreover, advertising is also one of the fastest-growing and most profitable segments for Amazon. Its "Other" category grew 52% year-over-year in Q4 2022, compared to 15% for its online stores, 28% for its physical stores, 32% for its third-party seller services, and 28% for its subscription services. Its "Other" category also had an operating margin of 52%, compared to 5% for its online stores, -5% for its physical stores, 19% for its third-party seller services, and 60% for its subscription services.[^4^]
The table below summarizes Amazon's net sales and operating income by segment for Q4 2022.
| Segment | Net Sales ($B) | Year-over-Year Growth (%) | Operating Income ($B) | Operating Margin (%) |
|---|---|---|---|---|
| Online Stores | 45.7 | 15 | 2.3 | 5 |
| Physical Stores | 4.4 | 28 | -0.2 | -5 |
| Third-Party Seller Services | 27.0 | 32 | 5.1 | 19 |
| Subscription Services | 9.7 | 28 | 5.8 | 60 |
| Other (primarily advertising) | 21.5 | 52 | 11.1 | 52 |
| Total | 87.4 | 21 | 14.8 | 17 |
Frequently Asked Questions about Amazon's New Advertising Features
How can I use Rewarded Sponsored Display?
To use Rewarded Sponsored Display, you need to be an eligible advertiser in the US who sells products on Amazon or through Amazon's third-party sellers. You also need to have an active Sponsored Display campaign with a minimum daily budget of $100 and a minimum bid of $0.50. You can create a Rewarded Sponsored Display campaign by selecting the "Rewards" option in the campaign settings and choosing the amount of the shopping credit you want to offer. You can also customize your ad creative with your own logo and message.
How can I use Amazon Ad Server?
To use Amazon Ad Server, you need to be a publisher who owns or operates a website or app that has ad inventory available for sale. You also need to have an account with Amazon Publisher Services (APS), which is a program that helps publishers monetize their content with Amazon Ads solutions. You can sign up for APS here. Once you have an APS account, you can access Amazon Ad Server from the APS dashboard and set up your ad inventory, demand sources, and reporting preferences.
How can I use Amazon Marketing Cloud?
To use Amazon Marketing Cloud, you need to be an advertiser or a publisher who works with Amazon Ads solutions, such as Sponsored Products, Sponsored Brands, Sponsored Display, or Amazon DSP. You also need to have access to Amazon Advertising Console or Amazon Advertising API, which are platforms that allow you to manage your campaigns and access your performance data. Once you have access to these platforms, you can request access to Amazon Marketing Cloud from your account manager or contact us here. After you get access, you can use MMM, AI, and DCR from the Amazon Advertising Console or the API.
What are the benefits of using Rewarded Sponsored Display?
Rewarded Sponsored Display can help you increase your sales and customer loyalty by offering an incentive for shoppers to buy your products. By providing a shopping credit that can be used for any product sold by Amazon or its third-party sellers, you can encourage repeat purchases and cross-selling opportunities. You can also track the performance of your Rewarded Sponsored Display campaigns and measure the return on ad spend (ROAS) and customer lifetime value (CLV) metrics.
What are the benefits of using Amazon Ad Server?
Amazon Ad Server can help you optimize your ad revenue and grow your audience by leveraging Amazon's data and technology. By using Amazon Ad Server, you can access Amazon Audiences, which is a unique datasource that includes information on millions of Amazon customers, such as their shopping behavior, preferences, and interests. This can help you deliver more relevant and engaging ads to your visitors based on their affinity with Amazon's products and services. You can also use Amazon Ad Server to manage your ad inventory and demand sources more efficiently and effectively, as well as access cross-media insights from Amazon Marketing Cloud.
What are the benefits of using Amazon Marketing Cloud?
Amazon Marketing Cloud can help you measure and optimize your cross-media campaigns more accurately and holistically. By using Amazon Marketing Cloud, you can understand the impact of your media investments on sales and other business outcomes across different channels and platforms, such as online, offline, TV, radio, print, and social. You can also measure the incremental effect of your digital campaigns on online and offline conversions, as well as securely share and analyze data with your partners without compromising customer privacy or data ownership.
How much does it cost to use Rewarded Sponsored Display?
Rewarded Sponsored Display is a cost-per-click (CPC) model, which means that you only pay when a customer clicks on your ad. The amount you pay per click depends on your bid, which is the maximum amount you are willing to pay for a click. You can set your bid manually or use Amazon's dynamic bidding feature, which automatically adjusts your bid based on the likelihood of a conversion. The minimum bid for Rewarded Sponsored Display is $0.50. You also need to have a minimum daily budget of $100 for your campaign.
How much does it cost to use Amazon Ad Server?
Amazon Ad Server is a free service for publishers who use Amazon Publisher Services (APS). There is no fee or revenue share for using Amazon Ad Server. However, if you use Amazon Ad Server to sell your inventory to Amazon DSP or other demand sources, you may incur fees or revenue shares from those sources. You can check the terms and conditions of each demand source before setting up your ad inventory and demand sources on Amazon Ad Server.
How much does it cost to use Amazon Marketing Cloud?
Amazon Marketing Cloud is a fee-based service for advertisers and publishers who use Amazon Ads solutions. The fee varies depending on the type and volume of data you use for MMM, AI, and DCR. You can contact your account manager or contact us here to get a quote for using Amazon Marketing Cloud.
Conclusion
Amazon is constantly innovating and expanding its advertising solutions to create more value for customers, advertisers, and publishers. With its new advertising features, such as Rewarded Sponsored Display, Amazon Ad Server, and Amazon Marketing Cloud, Amazon is changing the game in the online marketing space by offering more engaging, personalized, and measurable experiences for all parties involved.
We hope you enjoyed this article and learned something new about Amazon's new advertising features. If you want to learn more about Amazon Ads solutions and how they can help you grow your business, check out our other articles here.
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