As a company, Amazon booked record revenues of $386 billion in 2020, while its stock price appreciated 74%. Those weren’t its only impressive numbers, however. Its U.S. ad revenue last year grew to $15.7 billion, up an eye-popping 52.5% from 2019.Now here’s a little quiz about 2021: Who will be the leading share gainer in the digital advertising business this year, and who stands to benefit the most from Apple’s upcoming ad privacy changes? The answer to both is Amazon, according to industry experts.The Wall Street Journal recently cited an eMarketer report that found Amazon’s share of the U.S. digital ad market grew to 10.3% in 2020 from 7.8% in 2019. That’s a 32% jump! Of course, Google and Facebook still accounted for 28.9% and 25.2% of the digital advertising business, respectively, in 2020. “But Amazon is quickly becoming a viable competitor,” said the WSJ. eMarketer predicts Amazon’s share will hit 11.9% in 2022 and 12.8% in 2023.Nicole Perrin, a principal analyst at eMarketer, says Amazon’s share gains will come especially from search advertising. Amazon’s search ad business alone will grow to $14.5 billion in 2021, bolstering its share of U.S. search ad spending to 19%, up from 13.3% in 2019. The eMarketer report noted that Amazon is taking much of its search advertising share from Google.In January, CNBC reported about an ad-buyer survey from Cowen. It said the survey’s respondents believe Amazon is most insulated from the impact of Apple’s upcoming ad privacy changes. The strength of Amazon Advertising is due to high customer purchase intent, Cowen noted, because “people are on Amazon to purchase, not just to scroll.”The Cowen analysts gave this further comment: “Amid the backdrop of the upcoming IDFA change on iOS and discussion around privacy and tracking, survey respondents stated that Amazon was least likely to be impacted by the upcoming change (ahead of YouTube and Google Search). AMZN seems relatively well positioned compared to peers, helped by high conversion from within the Amazon storefront, and lessening reliance on other sites / apps for attribution.”Conversion PowerSellerApp is a behavioral ecommerce analytics software that provides Amazon sellers insights derived from their data through tools and reports to help optimize their sales and generate more sales. Here’s what it had to say in a recent post: “Amazon Advertising had stupendous growth in 2020… In 2019, Amazon came up with some cool options for Sponsored ads (which) gave more flexibility to sellers in placing their ad campaigns. With (changes caused by) the pandemic, global brands are moving from the experimenting phase to strategizing their PPC. These exciting developments promise a bright future for Amazon sellers.”Why is Amazon Advertising powerful? SellerApp says the answer is simple: “Unlike Google and Facebook, Amazon shoppers have strong purchase intent, making the advertising features more profitable than the others. This is the major reason that sellers and brands are keen to explore this major marketplace. Secondly, conversions occur on Amazon right away. This makes it easy to track campaign performance.”Brands Come RunningHere’s how EY, in a recent report, described the surge in online vs. in-store buying because of the pandemic: “One consequence of this sudden tilt toward ecommerce is that we’ve seen a decade of digital disruption in just a matter of months.” Manufacturers and retailers of all sizes had to hit the fast-forward button on their sales and distribution strategies, and it’s no surprise Amazon became the largest beneficiary of that shift in 2020.So, you may wonder, how many more brands jumped onto Amazon in 2020, and how did they do? Feedvisor recently announced a brand survey – its third annual – which analyzed more than 1,000 U.S. brands and their unique relationships with Amazon and e-marketplaces. Among other things, it looked at the advertising and media strategies of these brands, their plans for expansion, and the pandemic’s impact on their businesses. What did they find? Of the brands surveyed before COVID-19, a shocking 42% more of them are now selling on Amazon. Further, “61% of brands on Amazon saw overall revenue increase by up to 30% in 2020,” Feedvisor said.“The growth of e-commerce during COVID-19 has substantially benefited e-marketplaces, especially Amazon,” said Dani Nadel, president and COO, Feedvisor, in the news release. “Brands can no longer afford to ignore Amazon’s significance, nor can they rely solely on their owned channels for the reach needed in today’s e-commerce landscape.”[caption id="attachment_28515" align="aligncenter" width="4001"]
Get help running your amazon ads[/caption]No Shortage of ToolsThere are many established companies in the Amazon Advertising space, and one recently raised big money. Summit Partners is a leading ecommerce-focused private equity firm. It recently led a $110 million investment in a firm called Jungle Scout, based in Austin TX. How big are they? Well, the Summit Partners news release says they support more than $8 billion in Amazon revenue and serve more than 500,000 brands and entrepreneurs who are working to build successful businesses on Amazon. Jungle Scout has “a data engine that processes data for more than 500 million Amazon products, offering sales, keyword, and other trend insights to help brands, entrepreneurs, and agencies identify opportunities and sell successfully in the Amazon channel,” according to the news release.Neil Roseman is a technologist-in-residence at Summit Partners, and a former VP of technology at Amazon, where he helped lead software development for some of the company’s early marketplace and commerce capabilities. He says Jungle Scout was “one of the first companies to identify the opportunity to provide SaaS-based tools to help businesses and brands expand their ecommerce footprints on Amazon and beyond, and the company has built on this leadership position over the last several years.”Several other private equity firms also invest in ecommerce, digital media, and advertising companies. One such firm is Rockbridge Growth Equity, which invested in Amazon adtech firm Quartile Digital in October 2020 for an undisclosed amount. (One report said it was an acquisition.) Quartile Digital is a provider of AI-driven autonomous advertising optimization and spend management software used by leading brands and sellers across various digital commerce platforms. “Quartile provides a differentiated platform to capitalize on two significant trends in the market: a move to ecommerce, which has accelerated due to COVID, and a shift towards high ROI performance-based digital advertising,” said Kevin Prokop, managing partner at Rockbridge Growth EquityA Startup StoryOne example of a smaller company taking advantage of the growth of Amazon Advertising is Ad Badger, also based in Austin TX. It has an Amazon Advertising automation tool, specifically for PPC (pay-per-click) advertising. It helps companies looking to scale and grow on Amazon — and, importantly, make a profit.About 10 years ago. Michael Erickson Facchin, the founder and CEO, started an agency for ecommerce brands. Then, in 2017, he launched Ad Badger to be a software-as-a-service (SaaS) company so brands could manage advertising on Amazon themselves. That firm has been growing rapidly -- 50% in 2020, and it expects that level of growth again in 2021.The majority of Ad Badger’s customers were new in 2020, said Facchin. “And of our existing customers, I’d say 70% of them experienced growth.” He noted close to three-fourths of his customers are U.S.-based, “and even companies that are international still have the U.S. as their primary Amazon market.”The relationship Ad Badger has with Amazon is through its developer program. “That means we abide by a set of rules, such as for security, and Amazon reviews the feature set of our tool to be sure it’s not doing anything they would have to disallow,” he said. “Plus, we get alerted to news before the general public.”More and more firms are offering solutions and tools for Amazon advertising. “The landscape is continuing to evolve,” said Facchin, “helping people make Amazon PPC easier and more accessible. It's pretty exciting. We’re really focused on scaling our business this year.”Time to Boost Your Ecommerce BusinessYes, Amazon makes a ton of money -- including lately from advertising! -- but sellers can make money as well, and many more are in fact seeing their profits increase. There’s plenty of help available, whether you’re a new or experienced seller -- either via self-service tools, or from agencies that will manage your advertising and ROI for you.There’s still time to make 2021 your year!