Report: Amazon tests retargeting ads in strike at Google, Criteo

Dive Brief:

Amazon is reportedly testing a new ad display offering that allows sellers in its online marketplace to purchase spots that follow shoppers through their online sessions across the web and try to lure them back to Amazon to make a purchase, according to Bloomberg.
Select merchants will be invited to test the new ads later this month, sources told Bloomberg. Currently, sellers can buy other types of ads on Amazon, which gives prominent placement to sponsored product ads in its search results. With the new tool, sellers could bid on ads that would appear on other websites and apps, and would only pay Amazon when the ads are clicked on.
Amazon’s new offering could position the company as a threat to Google and companies like Criteo SA, which generated $2.3 billion in revenue last year with its retargeting offering that lets companies track and serve ads to consumers that have shown interest about a product in the past.

Dive Insight:

Amazon’s plans to move into retargeting, also known as remarketing, comes as the company has been aggressively beefing up its ad business in order to compete with the duopoly of Google and Facebook. Retargeting is one of digital marketing's advantages because it gives brands a way to repeatedly show ads to a consumer who has shown interest in their product or service. Retargeting is popular with apparel brands in particular, and Amazon's movement into this area could prove attractive to apparel marketers as their numbers continue to swell on the e-commerce platform.

Retargeting come with its challenges, though. Such ads are viewed as annoying or creepy by some consumers. In fact, Google, a leader in this space, recently gave users more control over who can serve them retargeted ads, which Google calls reminder ads. And, a recent survey by Nanigans revealed that 83% of marketers question the effectiveness of retargeted ads, with many citing measurement as their biggest challenge. Amazon could have an advantage on the measurement front, as marketers are planning to increase their budgets for Amazon, attracted by the company’s wealth of consumer data, including search histories and purchasing behaviors. Another advantage is that Amazon commands a major presence with consumers, as 65% search on Amazon always or most of the time.

Google and Amazon continue to take swipes at each other as they increasingly compete more directly. In April, Amazon reportedly stopped bidding in Google Shopping auctions, leading to speculation over whether the move was temporary as the company reconsidered its bidding strategy or was part of a larger strategy. In the mean time, Google continues to extend its reach into shopping through shoppable ads and Google Assistant.

While small alongside Google and Facebook, Amazon’s ad business has been steadily growing. For Q1 2018, the company reported that its “other” category, which includes advertising, rose to $2 billion, a 72% increase from the previous year, with some adjustments. In the previous quarter, Amazon’s “other” revenue was $1.7 billion. The company does not specifically break out its ad revenue.