Amazon’s Next Big Business Is Selling You (and your data) AMZN
From Wired:
Facebook knows who your friends are. Google knows what you’re
interested in finding on the internet. Amazon knows what you’ve bought,
and has a pretty good idea of what you might want to buy next.
If you were an advertiser, which company’s data sounds most valuable
to you? If you had a product you wanted to sell, which of those things
would you most want to know?
In a digital economy where some of the internet’s biggest companies
and the country’s richest people have built their fortunes on the
ability to more precisely target ads, one company sits on a trove of
data it has barely started to exploit. In internet advertising-speak,
visitors to Amazon.com are further down the purchasing funnel than
visitors to Google or Facebook. “The opportunity is huge,” says Marcus
Pratt, director of insights and technologies for Mediasmith, a San
Francisco digital ad agency. “With rich data on its users, Amazon is
uniquely positioned to match advertisers with shoppers.”
In a recent note to investors, analysts at Baird Equity Research said
they estimated Amazon would generate anywhere from $500 million to $1
billion in advertising revenue this year. Amazon won’t break out those
numbers, and the estimate doesn’t put Amazon anywhere near the tens of
billions Google makes from ads every year. But for a company whose main
business isn’t selling ads but selling stuff, a billion dollars is far
from nothing. And Amazon is just getting started.
The company has kept its advertising ambitions mostly to itself until
earlier this month when a high-ranking Amazon executive made a standing-room-only appearance
at Advertising Week, Madison Avenue’s biggest annual ad industry
gathering. Amazon Vice President of Global Sales Lisa Utzschneider
reportedly touted everything from display ads on ad-supported Kindles to
the company’s ad-targeting data based on clicks not just on Amazon.com
but other popular Amazon-owned sites like Zappos, IMDB, and Diapers.com.
In an interview with Ad Age,
Utzschneider described Amazon’s ad business not so much as a money
maker in itself but as a subsidy that would let the company push its
retail prices lower: “If we think about Amazon in two worlds, one world
is an Amazon with ads and lower prices. Another world is an Amazon with
no ads and higher prices. Which one would we choose?”
But ads have the potential to do even more for Amazon’s bottom line.
The company’s sites are viewed by more than 100 million different people
in the U.S. every month, which ranks Amazon sixth behind just Google,
Microsoft, Yahoo, Facebook, and AOL on the list of most-visited sites,
according to comScore. The top five companies’ web business models
depend above all on advertising. Amazon’s doesn’t. But with traffic that
ranks them up among the web’s most valuable media properties, comScore
analyst Andrew Lipsman says Amazon has no reason not to jump into the ad
game....MORE
