Above: Amazon's Jeff Bezos at a 2010 event.
The secret to delivering relevant ads is data. Demographic, psychographic, personal data. Google has data on what we search for, Facebook has data on what we like and share, but Amazon’s data may be the best of all for targeting ads. It has data on what we browse and buy.
That’s why yesterday’s revelations that Amazon is gearing up to launch its own ad network are particularly interesting: Amazon could offer retailers a much-wanted alternative to Facebook and Google ads, and Amazon may prove to be better suited than either of its rivals at putting ads in front of consumers that actually get clicked.
The new ad network, which Amazon is calling “Amazon Sponsored Links,” will also set up back end systems that allow ad agencies to “buy audiences” by buying ads in bulk. The agencies would then place ads on behalf of their clients based on the target audience demographic of the product.
Again, those ads would be targeted to consumers using a sophisticated real-time system that knows the viewer’s product preferences, as expressed by their browsing and buying history on Amazon.
If all this happens, Amazon’s new platform would look a lot like Google’s AdWords program, in which more than a million users bid on ad inventory on sites all over the web..
Right now Google and other third parties place ads for clients on Amazon, but that will likely be the first thing to change. Like Facebook and Google, Amazon will place its own clients’ ads on its own site.
Amazon already has a small program that can place ads for clients on other sites. But reports yesterday say the program will get much bigger, and will run different sorts of ads. Amazon likely will launch a wider ad network through which it will be able to target ads for advertisers on lots of partner sites around the web.
Amazon has already told some of its existing advertising partners that it will launch the new ad network later this year.
This could be a particular threat to Google, whose business rests on the $50 billion or so it makes every year on web ads.
An ad network would add one more battleground on which Amazon is competing with Google. Google Shopping puts up a small fight against the Amazon site. The Google Shopping Express competes with Amazon’s AmazonFresh and local pick-up services. Both companies now make phones, and the two are currently in a price war in the cloud storage market.