About a third of retail marketers are shifting ad spend from traditional digital media giants like Facebook and Google to Amazon, according to a new study of 100 retail companies that generate at least $50 million in annual digital sales.
Which makes sense.
Thanks to Amazon’s recent earnings report, we just learned that Amazon’s digital ad business doubled in size last quarter.
Retail marketers already spend 14% of their digital ad spend dollars with Amazon, according to the report, and half of them are planning to spend more this coming year. Of that increase, 29% are shifting dollars from Google, and 34% are shifting dollars from Facebook and/or Instagram.
41% of retail marketers are also adding new incremental spend with Amazon.
“Amazon has a unique advantage as an advertiser, an ad network and a marketplace,” said Ryan Kelly, vice president of marketing at Nanigans, which commissioned the study. “Amazon had a marketplace that existed long before its ad business … so Amazon was able to gain momentum quickly. Amazon also had very accurate and robust audience data from its users, including purchases and search history data, which enabled the platform to compete with others from day one.”
Retail advertisers give three reasons for increasing their Amazon spend, says Kelly.
First, they’re getting a strong return on investment. Second, the size of the audience is significant — there are now more than 100 million Amazon Prime members, and hundreds of millions more shop at Amazon. And third, not surprisingly, retail companies’ customers are actively shopping on Amazon.
But this is not a slam dunk for retailers.
Clearly, as they advertise with Amazon, they’re feeding the beast that is competing fiercely with them for shoppers and buyers.
“Despite Amazon’s proven results, marketers have expressed concerns about the platform. 40% are worried about Amazon having too much of their data and almost a third (31%) see Amazon’s
retail business as competitive with their own,” Nanigans says.
Essentially, brands are doing a deal with the devil.
Other places retailers are spending include Twitter at 11%, Microsoft (Bing) at 10%, Snapchat at 7%, and Pinterest at 7% as well. That last one is somewhat surprising: as a product-focused site, Pinterest should have the ability to drive more ad dollars.