- Amazon's acquisition of Whole Foods — and the addition of the specialty retailer's private label products on its virtual shelves — is putting serious pressure on rival food sellers, per analysis from CNBC. This might ultimately drive them to buy more ads on Amazon in order to remain competitive, which would be a major boon for the e-commerce giant's growing digital advertising business.
- At the same time, Amazon is also expanding its programmatic offerings in two ways, according to a report in Digiday. It's opening its Amazon Media Group as a self-service platform to agencies, making the process very similar to programmatic exchanges, along with allowing sellers to buy its high-value headline search ads as long as they are brand owners. Digiday said headline search ads are only behind sponsored product ads in terms of clout on the platform.
- The change in the self-serve option for Amazon Media Group advertising is significant because agencies had to previously go through Amazon's manager services to run campaigns. Now, they can directly manage those campaigns. In June, Amazon also launched Advertiser Audiences, a self-serve platform that allowed for segmentation and targeting using Amazon's first-party user data.
All the news taken together indicates that Amazon is quickly expanding its advertising business through more robust products for brands and agencies as well as more incentives for sellers on its platform to start advertising. Amazon putting Whole Foods products on its platform is a win-win for the company: It expands its e-commerce offerings to include the grocer's products while also inevitably spurring Whole Foods' competitors, who also rely on Amazon to sell their wares, to buy more ads. Opening headline search ads to sellers now is a strategic play, as the format is high-performing and food sellers might feel compelled to jump at the opportunity.
These developments lend credence to earlier forecasts by industry leaders, including WPP CEO Martin Sorrell, that suggested Amazon might eventually be positioned to compete with the two dominant digital ad platforms, Google and Facebook. Back in March, during WPP's Q4 earnings call, Sorrell said that Amazon poses a threat to Google for search ads and that the company keeps him up at night in terms of the influence it could wield.
In June, when news of Amazon's intention to purchase Whole Foods first broke, the ad exec added that the deal could be the tipping point for turning Amazon into a major digital advertising player because the company's already massive online consumer database could be leveraged in tandem with offline consumer insights from Whole Foods shoppers.