Amazon and Ads: Missing the Point?
October 8, 2020
“Amazon’s Growing Ad Business Could Forever Change Tech: Google and Facebook’s Ad Business Might Not Survive Amazon” joins a growing cottage business: Criticizing what thumbtypers have supported. The main idea is one that some people accept with a shrug of your shoulders as if to say, “What are you gonna do?”
The write up contains a useful observation; to wit:
And the ads are cheap. For one campaign, I paid just $249 to show my ad to 1,049,000 people. Ads are cheap because Amazon has a vested interest in driving more sales. The company collects a commission of between 6% and 20% on every item sold through the site. For every product I sold through a Sponsored Products campaign, Amazon was effectively getting paid twice — once for running the ad, and again for managing the sale of my product. This likely allows them to keep ad rates lower than those charged by their competitors.
Amazon does get paid twice; however, close investigation of the public information about the company suggests some other ways Amazon gets paid; for example, sellers may use Amazon’s products themselves. These can include the home security devices, videos, or Amazon Web Services.
Another pipe into the money streams taps data. What’s Amazon do with the data gathered? That’s a good question. Who would pay for access to these data? What new partnerships do these data trigger? These are interesting questions and may suggest that Amazon gets paid more than twice.
Stephen E Arnold, October 9, 2020
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