Link: http://adage.com/article/digital/amazon-a-plan-profitable-advertising/311992/
The topic of Amazon and how they would eventually become profitable and live up to investor expectations (and high stock prices) has come up repeatedly in a number of our classes over the past two years. Given the other online giants like Google and Facebook have been in the advertising space for many years, it is a bit surprising that the online retail giant has not been. It seems they are now wisening up and leveraging the online space that has essentially replaced the in store shopping experience for many consumers.
Rather than spending money on the "physical shelf" advertising of yesterday, retailers will be able to target consumers during their shopping activity with even greater customization and specificity. Additionally, they will be able to see results real-time to know how far their advertising dollars are taking them and what adjustments might be needed. For retailers, spending on Amazon advertising will be an imperative and not an option if they want to survive the transition from in store to online; most of these firms are recognizing and acting on that.
Two things to watch:
1. How successful Amazon is at generating sales beyond Amazon
2. If and how much money is re-routed from Google and Facebook to Amazon - my view (in line with the article) is that it will have minimal impact on the Google/Facebook spend, and will be taken from in-store, TV, and other traditional mediums
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