Advertising is a $600bn market globally. Digital advertising contributes more than 50 per cent of the total ad spend. Digital advertising is comprised of search, social, display, video, native and email marketing. Digital advertising has seen double-digit growth year-on-year due to its precise targeting and measurability.
Google dominates the search-ad markets and also has a huge share of display ads. This makes Google the largest shareholder of digital ads, with 32 per cent. The priority for any advertiser is search advertising because it is highly relevant and results-oriented. Every advertiser wishes to grab the maximum share of searches relevant to their business.
Second to search ads come display ads. They are visually appealing; they help in increasing brand awareness and intention. Display ads give us the possibility to target users based on their demographics, interests, in-market behaviour, the content they are consuming, and past browsing history.
In the recent past, there have been drastic changes in the market to the laws and policies of digital advertising.
There is GDPR (General Data Protection Regulation). In layman’s terms, this meant that organisations or marketers couldn’t use users’ data to market to them without the users’ consent. This reduced the revenue of many publishers and increased the traction towards Google and Facebook.
And then came Covid-19, which affected our lives for the worst. The world saw drastic wealth destruction. To contain the infection, governments implemented lockdowns. This affected economic activities and traditional business got affected. During these times of distress, e-commerce appeared as a boon. Even local shops and businesses went online.
Amazon is the largest e-commerce organisation in the world. It holds 38 per cent of the US retail market and more than 14 per cent of the global e-commerce market share. It is growing its footprint in physical stores, OTT, subscription services, web services and advertising. Amazon DSP (demand-side platform) offers access to the real-time shopping behaviour of its users, which the advertisers can leverage on and off Amazon into campaigns aimed at relevant customers. One can target users based on their buying behaviour, in-market behaviour, demographics, etc. with the objective of increasing brand awareness, consideration and conversions.
In the US, 69 per cent of Amazon DSP spends happens across Amazon sites, leaving just 31 per cent for the open exchange.
That’s the dominance Amazon enjoys in the US market and the competition given to Google. Amazon’s DSP business grew by 44 per cent in Q4 2019, as compared with Q3 2019. And we expect to see a similar trend in the Middle East as well. This is an attractive market because of its digitally-savvy consumers and a high level of disposable income. Amazon strengthened itself in the Middle East by acquiring Souq in 2017, and it has been growing 25 per cent year-on-year.
In the past few years, programmatic has become a standard planning and advertising strategy. And the market keeps on growing, due to the increase in the inventory and data inputs. In advanced markets, programmatic is being used for outdoor screens, connected TV and radio campaigns. Selection of a partner depends on their ability to integrate in innovative ways, along with reporting granularity, transparency, user-friendliness, etc.
Each partner has something new and unique to offer and that’s what helps them position themselves in the market against their competitors. A few of the features that Amazon lacks currently include geo-fencing, bid modifiers and A/B testing. In the past, Google has been questioned about targeting the cookies of users rather than real people on programmatic. Amazon is going strong because of the real-time audience data it has on offer. Marketers have huge expectations from Amazon in terms of upgrading the whole offering. A healthy competition is very necessary for continuous evolution and product upgrades.
So, will Amazon significantly affect Google on display advertising? This depends on advertisers investing on Amazon DSP. With first-party data on the table and the world moving towards zero cookies, it could be a lucrative option. In addition to the endemic brands (that are selling on Amazon), the major chunk of Amazon DSP is used by non-endemic brands. For example, a car brand, which doesn’t sell cars directly on Amazon, can target new parents because they bought a baby car seat – and a lot more similar signals. The most important factor for consideration would be transparency, profitability and scalability.
We are ready to accept the changes and explore new marketing avenues. We expect that programmatic will become an integral part of digital advertising and we will get to experience transparent and top-notch product experience.