Nearly half of U.S. internet users initiate product searches on Amazon. As I read this Kenshoo.com blog post I tried (unsuccessfully) to recall a recent web search of mine that didn't begin on Google. Yet, in the last twelve months Amazon generated $12.7 billion in advertising revenue... so they must be doing something right! While, digesting the idea that Amazon could be taking meaningful share of product searches from Google, I couldn't help but think about just how conflicted it is to pay Amazon to advertise on their platform. Amazon is increasingly competing with brands through its own private label, yet companies still opt to pay Amazon for prized desktop and mobile advertising real estate with dollars that they could be funneling to other less biased platforms. Why?
A study by data analytics consultant, Analytic Partners uncovered some compelling statistics about the power of advertising on Amazon. 70-90% of the impact of Amazon Display Ads and up to 50% of the impact of Amazon Paid Search is onto non-Amazon sales channels. A portion of this can be explained by the "test and learn" approach that customers take, in order to compare prices and reviews on Amazon but purchase elsewhere. With Amazon's scale, regardless of any conflicts of interest, it has earned itself a sizable share of corporate ad budgets.
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