Get All Access for $5/mo

Advertising Is Growing Amazon's Business, So Let Amazon Help Grow Yours Too If you're expanding your venture, consider investigating Amazon advertising.

By Timothy P. Seward

Opinions expressed by Entrepreneur contributors are their own.

NurPhoto | Getty Images

One of the largest shows in the world for brands and private label sellers on Amazon recently wrapped in Las Vegas. The Prosper Show, is an annual conference focused on sharing best practice education and providing networking for established brand manufacturers and Amazon sellers. One of the event's keynote speakers was Collin Colburn, an analyst from Forrester Research who covers digital advertising, shared some great takeaways about how Amazon is growing its advertising business -- and how you can use it to give your own venture a boost.

Amazon is now the third largest seller of digital advertising in the US, third only to Google and Facebook. Forrester estimates that Amazon did $10 billion in worldwide advertising sales in 2018, a whopping 117 percent increase over 2017.

Colburn's take is that Amazon's strong and growing ad business helps many of Amazon's other business units. For example, as brand manufacturers and sellers buy more advertising from Amazon, more products get sold, making Amazon's top line revenue grow even stronger.

But why Amazon advertising and why now? 24 years in, Amazon is still attracting a ton of people to its site. It's estimated by Forrester that in 2018, 200 million Americans visited Amazon's website. That's over two thirds of the US adult population and is tied with the number of Americans who visit Facebook annually.

28 percent of Americans reported to Forrester that they used Amazon to research their most recent retail purchase, and 25 percent said that when hunting for a new purchase, they opted to look at the product in the store. So not only does Amazon have substantial traffic, when those people do go to the site, they are actively looking for new products.

Read this: Ultimate Guide to Amazon Advertising I Amazon I Barnes & Noble

Here are Colburn's five "to do's" for your brand's Amazon ad strategy:

  1. Learn your customer's life cycle. According to Colburn, there are six customer life cycle stages that Forrester has been talking about for ten years: discover, explore, buy, use, ask, and engage. Each customer of yours is in one of these six life cycle stages, learn about each one.

  2. Use the channels that support each stage of your customers life cycle. Colburn told the Prosper audience that most sellers are capturing new customers in the explore and buy stages on Amazon. He encouraged sellers start earlier in the life cycle (i.e. the discover stage).

  3. Determine the right media mix. He mentioned that this is a challenge for large consumer packaged goods (CPG) brands, likely because they may be still in traditional media mix spend models. He said digital advertising will grow from 45 percent of all advertising to 57 percent by 2023, so make sure digital is getting a fair share of your brand's budget.

  4. Acknowledge that in-store sales still matter. While 84 percent of all US sales will be transacted offline in 2019, 36 percent of those offline sales will be influenced by digital. Colburn noted that the majority of the dollars that are moving to Amazon advertising from brands are moving there from shopper and trade marketing budgets not off of Google and Facebook.

  5. Do not over-index on ad spend on Amazon (versus all other channels). He encouraged brands to start testing ads on other retailer's websites including Walmart, Target, Best Buy and even Kroger. Of course the size of your marketing budget matters, you don't want to be spread thin, but to the extent that you're under-indexed on digital, spend as much as you can without a decline in return on ad spend (ROAS) on Amazon, then look into these other websites and apps (providing your product is sold there).

Whether you want to explore the possibility of getting started with Amazon Advertising as a first party vendor to Amazon or a brand seller on the Marketplace, or you're a seasoned brand executive wanting to get a jumpstart on your potential for further growth, you owe it to your company to explore Amazon advertising as a channel for acquiring new clients and grow your overall revenue.

Read this: Ultimate Guide to Amazon Advertising I Amazon I Barnes & Noble

Timothy Seward leads ROI Revolution in its mission to drive growth for brands, retailers, and e-commerce merchants with digital marketing technology and services. With his extensive technical, marketing and retail background, he is a thought leader who has spoken at over 70 industry events.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Business News

I Tried Buying a Car on Amazon. Here Are the Pros and Cons.

Amazon Autos just launched, and users can buy a new car online. Here's how it works and what needs to improve.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business News

Barbara Corcoran Says the Best Entrepreneurs Are Good at This One Thing

Real estate entrepreneur and investor Barbara Corcoran says a few key traits prove effective when starting a business. Here's her top pick.

Growing a Business

How to Prepare Your Small Business for Impactful Investor Partnerships That Go Beyond Funding

Here's how investorpreneurs transform startups with mentorship and strategic investments.

Starting a Business

Nearly 50% of America's Workforce Has a Secondary Source of Income or Side Hustle. Here Are 7 Steps You Should Take to Create Lasting Value for Yours.

Today's entrepreneurs have the opportunity to generate long-lasting supplementary income if they take these steps.