Amazon has its sights set on an even bigger prize: the non-endemic advertiser – Forbes | CarTailz

Amazon’s
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Advertising unit was a bright spot in recent Q3 results. Ad revenue is very profitable, and it’s growing.

But Amazon is preparing for a future in which that growth could slow as it looks to other market segments that would benefit from its expanding offering of advertising solutions.

“Non-endemic” brands are brands that do not sell physical goods on Amazon but may advertise on their website or other media properties. Think automakers, insurance companies, and restaurants.

At its “Unboxed” conference in October, Amazon announced a new way for non-endemics to advertise on Amazon.com – the Sponsored Display ad type. This is a fully self-served ad type that requires no minimum spend and is exceptionally easy to set up, deploy, and manage compared to the Amazon Demand Side Platform (DSP), Amazon’s programmatic ad platform. This effectively removes all previous barriers for non-endemic brands to advertise on Amazon’s vast advertising ecosystem.

For brands that are actually looking for more sophisticated ad buying and reporting, they can use the DSP in combination with the Amazon Marketing Cloud – connecting their own sales data to DSP impression data and showing which ads helped customers in the buying process.

With these tools, Amazon is hastily trying to shake off the perception that its advertising capabilities are strictly for consumer brands. At Amazon Unboxed, the grand opening case study was not for an endemic brand, but for Carnival Cruises, which is the sponsor of Amazon’s new TV show The heap up. The strategy is starting to work, at least with Amazon’s streaming TV listings. Thursday Night Football and Freevee both have a lot of ad placements from traditional non-endemics like State Farm, Geico and Hyundai.

These brands can benefit from Amazon’s deep understanding of their customer demographics, purchase history and interests. When I was watching a Freevee TV show recently, I was shown an ad for Zaxby’s in between ads for Geico, Oreos, and Sensodyne. Zaxby’s is a regional fast food chain with locations almost exclusively in the Southeast. As a resident of Atlanta, this ad was relevant to me, and Zaxby’s likely targeted viewers by geography.

Geography is one of the simplest forms of targeting, but I expect to see much richer targeting options used in the near future to serve impressions to users at different stages of the buying journey. Amazon knows what model of car I own based on the type of floor mats I just bought. They know I may be considering a car upgrade soon, and could include me in a pre-packaged audience of potential car buyers that Hyundai would advertise. Amazon also knows from my grocery shopping that I’m health conscious and live in Atlanta, so maybe Sweetgreen should be more interested in approaching me than Zaxby’s.

This new market for advertisers might be good news for Amazon shareholders, but not everyone will be happy about Amazon’s diversification strategy. Endemic brands (who actually sell their wares on Amazon) may find that increasing competition for ad space increases their advertising costs. Mondelez and Hyundai could now be competing for the same Amazon ad inventory to appeal to a suburban family with young children.

So what should non-endemic brands do?

Brands need to question their thinking about what Amazon advertising actually is. It’s no longer just a place for consumer goods brands. Amazon knows more about our intended and actual purchases than any other company, and this activity may indicate other interests. A buyer looking for baby gear may be willing to consider life insurance.

Brands also need to be familiar with Amazon’s DSP (Demand Side Platform). This programmatic media buying platform comes with extensive audience targeting capabilities such as lifestyle segments, in-market audiences, and even your own customers. The options for ad creation also warrant investigation — they’re more extensive than you might think.

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