Analysis: Sleeping ad giant Amazon finally stirs

Wed Apr 24, 2013 1:11am EDT
 
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By Alistair Barr and Jennifer Saba

SAN FRANCISCO/NEW YORK (Reuters) - Amazon.com Inc is known in the advertising industry as the "sleeping giant" because the world's largest Internet retailer harbors a trove of consumer-spending data that many marketers have called an unrealized opportunity.

Now it's awakening to the potential. After running ads on its own website for years, the company has taken the first steps toward becoming a true Internet advertising network, using the knowledge garnered from its data to place targeted ads for some of the world's biggest advertisers across thousands of other websites.

An Amazon mobile ad network, launched late last year, is now blasting ads via apps on smartphones and tablets, including Apple Inc iPhones and devices powered by Google Inc's Android operating system.

For Amazon, an ad business is a new revenue stream with fatter margins than its retail operations. To Google, Facebook Inc and other online ad leaders, Amazon is a threat because it has data they lack.

Google knows what people are searching for. Facebook knows what people like and who their friends are. Amazon knows you searched last week for running shoes, but also that you bought a pair a year ago. That kind of information has advertisers salivating.

"In today's marketing world, data is gold and Amazon is Fort Knox," said Jeff Lanctot, chief media officer at digital ad agency Razorfish, which counts Mercedes Benz USA, Delta Air Lines and McDonald's among its clients.

Lanctot has worked with Amazon for over a decade and says the company's attitude to advertising used to be "take it or leave it."

"Now it's clearly an area they decided to invest in," he said. "They have made a concerted effort to listen to what advertisers want - the type of data you need, the type of scale you are looking for."   Continued...

 
A zoomed image of a computer screen showing the Amazon logo is seen in Vienna November 26, 2012. REUTERS/Heinz-Peter Bader