Videos and AI: Amazon’s ad plans for 2023

While nothing is ever certain in digital advertising, it marks a shuffling in the positions of the biggest players in digital advertising. And while Amazon was the sleeping giant of the space a few years ago, it is now fully awake and kicking. Last week the company announced a 19% year-over-year growth spurt in the fourth quarter to $11.6bn in its advertising division.

Piers Heaton-Armstrong, vice-president of EU Sales at Amazon Ads, told The Drum that the e-commerce giant is focused on using its strong user data holdings to solve some endemic issues in digital marketing. He explained: “ad addressability and the fragmented media landscape are just a few of the challenges that marketers are facing right now. To help marketers navigate these challenges, we are focused on delivering more effective campaign planning, measurement, and optimization.”

He cites Amazon Marketing Cloud (AMC) as an example of one of those products. Amazon’s own stock of user data allows its advertising partners to perform analytics across ‘pseudonymized signals’, including Amazon Ads’ own signals, in a way that is designed to be privacy-safe and therefore in line with advertiser priorities.

He says: “Adtech agency Perpetua… used AMC to analyze campaign performance across media for apparel brand Into The AM. Perpetua observed that audiences reached by both sponsored products and Amazon DSP ads were 16 times more likely to make a purchase. Using these insights, Perpetua created a new campaign for the brand that helped drive a 200% new-to-brand sales increase and a 49% increase in branded searches in the Amazon store.”

One of the most important areas of disruption in digital advertising is that of SME ad spend. That is the current battleground for TikTok and Meta, as the smaller platforms seek to entice advertisers away from Facebook and Instagram for pastures new. For Amazon too, those smaller advertisers are a priority. Heaton-Armstrong says more than half of all units purchased in Amazon’s stores come from small businesses, “which continue to grow faster than Amazon’s own sales”.

He says: “For several years, we’ve offered smaller advertisers advertising tools that are self-service with a low cost of entry, designed to flex with their resources and budgets. Some smaller advertisers use our sponsored ads offering, which helps them to surface relevant products for Amazon customers at scale.”

Video and AI

While Amazon’s ad business is growing, it is predicated on being able to deliver ads in a format that consumers would choose to engage with. To that end, Amazon is investing resources into building out its video advertising capabilities, based on the consumption habits of users. With Amazon’s growing stable of video, it is unsurprising it would be building out its video ad capability to match audiences’ hunger for that format.

Heaton-Armstrong explains that Amazon’s sponsored display options are designed to give advertisers options in the video ad space: “Brands can deliver immersive video ads, such as tutorials, demos, unboxing, and testimonials, and measure campaign performance with standard sponsored display metrics.”

Amazon’s comms around its advertising capabilities are confident. The company has taken a while to fully engage with the advertising community, but its vast array of capabilities and data means it is in a strong position to weather some of the wider advertising headwinds that are battering its rivals. As Heaton-Armstrong says: “With the current economic climate creating so much uncertainty, the importance of measurement cannot be underestimated.

“We know that many advertisers are working with limited budgets and they want to feel reassured that their advertising investment is as optimized and efficient as possible. They simply cannot afford any wastage.”

With ROI at the top of advertisers’ priority lists, Amazon might well be in a good position to take advantage of the destabilized digital advertising system in 2023.