Alex Ogilvie is MD for the multichannel management solution, Seller Dynamics, and naturally keeps his eye on what’s going on within the marketplace world. Today he shares the news that Amazon may replace Google Adwords with their own inhouse ad system:
Amazon is reported to be close to replacing the use of Google Adwords on their sites. At present Amazon are believed to be one of the biggest buyers of Google Adwords, so the move is likely to cause some friction between the two organisations.
Industry experts report that Adwords currently generate $1Bn in revenue for Amazon, suggesting it’s a revenue stream that is not just valuable, but one that Amazon want to own outright. The move will significantly expand the existing “in house” advertising system that Amazon have and allow Amazon to extend its reach with respect to advertising on third party sites.
It’s pretty easy to see why they want to do this. they’re under pressure to make a profit and they are well placed to generate hard cash in this huge online space. It’s a surprise they haven’t really went for this sooner.
With Amazon under continuing pressure to realise profits the move will be a welcome income generator for investors and shareholders of stock. Amazon Sponsored Links will allow Amazon to use their significant consumer behaviour knowledge base to target and re-target adverts at shoppers – the end result is likely to be a much more relevant experience for consumers with an obvious strong upside for sellers.
The move to Amazon Sponsored Links is anticipated as commencing later this year. The move can only strengthen the opportunities that the marketplace provides their third party sellers.
2 Responses
Hi Alex, interesting article. I can imagine some third-party sites replacing Google Adsense with an Amazon equivalent, but many will not.
If Amazon really ditched Adwords they would lose all their advertising on Google itself, and most of their advertising on third-party sites. So I don’t think they will dropping it completely, but a big scaling back could be sensible. A high proportion of buys from ad clicks might have come their way anyway and they could probably focus much more narrowly.
This is a good news for other Retailers currently using Adwords. It will be interesting to see how this will affect positively in next few crucial months.