Amazon Threatens Digital Advertising Duopoly, Finds Nanigans Survey

Advertisers are shifting more of their budgets to Amazon, but express
concerns about data access and competition

BOSTON–(BUSINESS WIRE)–Nanigans,
the leader in performance advertising software, today announced results
from its latest survey conducted by Advertiser Perceptions. Based on
responses from 100 digital advertising decision-makers at retail
companies generating at least $50 million in online sales annually, the
survey reveals that Amazon is rapidly gaining momentum in the digital
advertising race.

Retail marketers estimate Amazon gets 14 percent of their digital ad
spend, placing it third behind the Duopoly of Google (21 percent) and
Facebook/Instagram (19 percent). Additionally, half of those surveyed
said they are planning to spend more with Amazon over the next 12 months
— with an average planned increase of 25 percent. While some marketers
are shifting ad dollars from other channels like Google (29 percent) and
Facebook/Instagram (34 percent), 41 percent are adding incremental
budget to support their increased Amazon spend.

“Amazon has a unique advantage as an advertiser, an ad network and a
marketplace,” said Ryan Kelly, vice president of marketing at Nanigans.
“Amazon had a marketplace that existed long before its ad business, so
when the company decided to compete with the Duopoly, the supply and
demand already existed — 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.”

Amazon is experiencing this growth for good reason: marketers say the
platform meets their goals. The top three reasons respondents advertise
on Amazon are: strong performance and return on investment (ROI), size
of the audience, and their target audience is active on Amazon. Of those
serving ads on Amazon, an average of 30 percent of online sales come
through that channel. Marketers also say it outperforms both Google and
Facebook/Instagram on key performance indicators, including:

  • Return on ad spend (ROAS) – 39 percent of respondents saw higher ROAS
    than Google, and 54 percent saw improvement over Facebook/Instagram
  • Cost per mille (CPM) – 32 percent of marketers reported lower CPMs
    than Google, and 38 percent felt the same about Facebook/Instagram

“It’s uncertain if the ROAS and cost benefits retail marketers are
seeing with Amazon over the Duopoly will maintain as Amazon matures as
an ad network,” Kelly added. “There’s very likely a real first mover
advantage that brands are experiencing with Amazon. As we begin to move
past the early adopters, and advertising on Amazon starts to get adopted
by the masses like that of the Duopoly, the channel could become less
effective for retailers as more competition will drive up prices thus
lowering ROI.”

Despite Amazon’s proven results, marketers have expressed concerns about
the platform. Forty percent are worried about Amazon having too much of
their data and almost a third (31 percent) see Amazon’s retail business
as competitive with their own. A majority of marketers (57 percent) even
predict Amazon will eventually misuse consumer data as other large
digital players have. Nearly half (48 percent) expect consumers will
become increasingly turned off by the advertising experience with Amazon.

Additional notable findings from the survey include:

  • Just 22 percent of marketers surveyed said having transparency into
    where their digital advertising spend dollars are going is an
    important factor when allocating that spend — and just 3 percent
    ranked it as their top factor.
  • After Google, Facebook and Amazon, it’s anyone’s game in terms of
    where retailers’ digital advertising dollars are allocated. The
    following lag behind in fourth, fifth, sixth and seventh,
    respectively: Twitter (11 percent), Microsoft (10 percent), Snapchat
    (7 percent) and Pinterest (7 percent).
  • Despite the emergence of Amazon as an advertising platform, almost
    half (47 percent) of senior marketers consider themselves experts at
    using the tool. The only other tool seeing more “expert” users is
    Google.
  • Nearly three-quarters (75 percent) of marketers advertising with
    Amazon would prefer to have the ability for Amazon ads to link back to
    their own sites, rather than Amazon.com.

For more information on Nanigans’ research about how Amazon is shaking
up the Duopoly, please view the full report here.

About Nanigans, Inc.
Nanigans is the winning advantage of
today’s most competitive performance advertisers. With a decade of
experience, Nanigans offers marketing teams battle-tested ad management
software and unmatched strategic support. As partners to CMOs and
in-house marketers around the world, Nanigans powers an ownable
competitive advantage that delivers the performance growing businesses
need to win. Nanigans is headquartered in Boston with offices in New
York, San Francisco, London, Singapore and Seoul. For more information
on Nanigans, please visit www.nanigans.com.

Contacts

PAN Communications
Jenny Radloff, 617-502-4300
nanigans@pancomm.com

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