When you generate $60 billion in annual revenues, it’s hard to pay attention to an emerging business line. That’s the problem the Amazon Advertising Platform is running into. Launched in 2012, the business may already be generating a billion dollars per year. As a result, Amazon is thinking of ways to extend its ad business — and what better way than video?
Given the flow of ad dollars from display to video, rumors are circulating that Amazon has set its sights on short-form videos, which has thus far been YouTube’s bread and butter. While Amazon’s hardware ambitions have pitted it against Apple of late, such a move would make “the biggest threat to YouTube be Amazon,” said Mark Suster, partner at venture capital firm Upfront Ventures, in an Ad Age piece.
Of course, just because a deep-pocketed company sets its sights on the media business doesn’t mean success is guaranteed: just take a look at Intel, whose cable play has hit snags.
If Google is vilified for launching a myriad of products with little or no success (at least early on), Amazon doesn’t necessarily fare much better. But whereas Larry Page’s tenure brought Google more discipline and some could argue, impatience; Amazon has always remained patient despite investor pressure.
That may pay off this time: Amazon has so much data on consumer behavior and purchasing it’s no wonder advertisers have embraced its ad offering. Then as a reseller of TV shows, movies, books and much more, Amazon has an advantage in curating and packaging programming to users. Mind you, there is no guarantee that audiences who buy and watch long-form content will embrace short form clips.
Amazon is a consumer marketing, retail, and tech company with enough of the ingredients to succeed as an advertising company. After all, Google was a tech company that ventured into an ad-supported business and is now a full-fledged media business.
While some are quick to argue that there’s technically no reason why Amazon can’t replicate Google’s success, there are many hurdles in Amazon’s path.
Seattle is far from Madison Avenue. When Google bought YouTube, it already boasted a massive ad business via AdSense. Sure, Google’s early monetization plans for YouTube faltered, but eventually, it got it right. Today, YouTube is a monster in video advertising, and its TruView offering fends off attackers before they can even take aim.
Jeff Bezos has always put profits behind market share and growth. That’s a good thing, because online video has abysmal margins early on. But to succeed with content owners, Amazon’s revenue share and performance-based mantra won’t fly with most content owners who will likely welcome a competitor to Google but will likely demand or seek some kind of guarantees until they have enough results to determine if Amazon is a worthy competitor.
Last but certainly not least, Amazon’s shoppers are a very good audience to serve ads to; that explains why marketers embrace Amazon’s ad offering. However, Amazon doesn’t have a captive audience that is voraciously watching content, nor does it have the content aggregation juggernaut that feeds the engine to the tune of 100 hours of content uploaded per minute.
Amazon has some of the ingredients — but just because the recipe is readily available for all to see doesn’t mean that the end result is the right dish.