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Amazon is the master of online retailing, and is proving that it's capable of making it easy for consumers to find and buy whatever they're looking for across digital channels.

But don't let Amazon's ecommerce dominance fool you: the company's ambitions extend well beyond simply selling product. Increasingly, the company is looking to take advantage of its position to extend its reach into new markets, including, now, advertising.

Calling this year's Advertising Week "our coming-out in terms of sharing what our ad program is all about," Amazon's global ad chief, Lisa Utzschneider, explained the online retailer's ad strategy in an interview with AdAge:

Over the last couple years we have been building out an ecosystem. The ecosystem consists of several buckets: the first is running display across our owned-and-operated sites-- sites like Amazon.com, IMDB, Diapers.com and Zappos.com. The second bucket is what we call connected devices: Kindle, Kindle with Special Offers, Kindle Fire and mobile. The third component is Amazon's advertising platform. That gives marketers the ability to connect with Amazon customers around the web.

Why build out an ecosystem? According to Utzschneider, there are two Amazons: one "with no ads and higher prices" and one "with ads and lower prices." As Utzschneider sees it, consumers will increasingly desire the latter.

An attractive partner for agencies

Not surprisingly, Amazon's ad strategy has it cozying up to agencies. And, perhaps not surprisingly, there's interest. According to Utzschneider, agency clients want to better understand shopper marketing and establish their own ecommerce strategies -- things that Amazon can ostensibly help with.

And Amazon has something many publishers agencies work with don't have: tons of purchase-related data.

As Utzschneider explained, Amazon's targeting capabilities not only give advertisers the ability to reach consumers by lifestyle categories, like fashionista and gadget geek, but also by the type of products consumers have viewed on Amazon's properties. That, for obvious reasons, is extremely attractive, and unique.

With Amazon, what's good for customers is good for advertisers

Data, of course, is important, but it's not the end of the story. One advantage Amazon has in connecting consumers and advertisers its intense focus on customer experience. According to Utzschneider, "The way we view advertising is it has to be additive to the customer experience. It enables us to invest in other areas that are really important for customers. I think we've figured out that right model that enhances the customer shopping experience."

For many publishers, pleasing advertisers and users means engaging in a tough balancing act. Facebook, for instance, has tried to fend off advertiser demands for bigger, bolder ad formats. With Amazon, however, there may be far less friction between the needs of users and advertisers because Amazon has more tools and a better understanding of what drives purchasing decisions.

Case in point: Kindle with Special Offers, an ad-supported discounted Kindle device, was the company's best-selling Kindle and delivered, in some cases, "a three-times life in purchase intent." And while Amazon's decision to integrate advertising into its new Kindle devices by default has been a controversial one, Utzschneider isn't fazed: "With Kindle with Special Offers we literally have had customers who come back and say, 'I want to add Special Offers back into my old Kindle that I bought.'"

Crazy? It just might be true.

More than just a retailer

Amazon may be the 800-pound gorilla of online retail, but it's increasingly clear that retail will not define the Amazon going forward. Already, the company has made itself a prominent part of the cloud computing revolution, and with its advertising efforts, it appears that Amazon could become a fixture on Madison Avenue in the very near future too.

Patricio Robles

Published 10 October, 2012 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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It's difficult to find experienced people about this topic, however, you sound like you know what you're talking about!
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