In life and business, things come in threes. In any market, it seems that there are always three dominant players that control the vast majority of business and the rest of the market just picking up the scraps. The small players remain relevant only as they serve their particular niche in the vast market, filling the gaps left void by the big players. The ads market is dominated today by two large players – the duopoly of Google and Facebook. But following the rule of threes, market focus turns to the emerging member of the big three, Amazon, which is long considered as the dark horse in the industry.
The announcement of WPP’s acquisition of Marketplace Ignition for an undisclosed amount has brought the industry’s attention to the perceived third force – Amazon. It is the same Amazon that enjoys unprecedented success in e-commerce and cloud computing. It is the same company whose Amazon Prime is subscribed to by two-thirds of American households. It is the same Amazon that is looking to sell almost anything to American consumers. Amazon can no longer be ignored.
Google’s ad business, worth $125B, and Facebook’s $49B are still the focus of agencies and brands because they dominate the market. Amazon’s market share in the ads business approaches only $5B, but it got the attention of WPP. There are reasons behind such move. Jeff Bezo’s company is projected to reach $20B in 2020. While the projection is still small compared to the two big players, WPP considered the following:
- Amazon dominates e-commerce in terms of shopper behavior and conversion, giving the company the most valuable first party targeting data you could find on the market today. Amazon continues to improve performance and expand network capabilities, which will further increase the company’s value, particularly to focused brand advertising.
- Advertising efforts within the Amazon ecosystem continue to develop with the involvement of companies like BuyBox Experts and Marketplace Ignition that have consulting engagements across hundreds of brands that sell on Amazon.
It is now clear why WPP acquired Marketplace Ignition, the largest consultancy dedicated to help brands optimize for Amazon. WPP saw promise in Amazon’s marriage of merchandise and marketing. They want to be the group that will help consumers all the way from awareness to the actual delivery of the merchandise to his doorstep.
WPP expects Amazon to continuously expand its public-facing advertising tools, using its unprecedented access to shopper data and its sophisticated e-commerce logistics system. They expect to see Amazon’s expansion of ad-tech layers riding on Amazon’s media and serving solutions similar to the ad-tech boom experienced by Google and Facebook during the past few years.
As more online shoppers head to Amazon as their e-commerce search platform, shoppers’ conversion to Amazon and its brands will become more prevalent in the coming years. It is something that the industry cannot just ignore.
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