Is Amazon The Future Of Media?

What happens when real consumer data meets marketing?

In my next book, CTRL ALT Delete (coming out in May 2013), there is a chapter titled, Sex With Data, that looks at a the coming together of our traditional consumer information with all of this amazing social data that each and every one of us is willingly putting out into the world. Ultimately, the merging of these two data sets is going to create a very visual picture of the modern day consumer that will transcend any of the conventional demographic and psychographic stuff marketing professionals have been able to capture to date. We are having many roads converge in media, and what’s becoming abundantly clear is this: consumers are going to have more relevant and highly targeted advertising in front of them that is placed and bought in both an automated fashion and in real-time. It was a dream only a few years ago, but it’s a reality today. It’s still not perfect, but it keeps getting better and better.

The true age of digital advertising?

Putting creative up on a digital channel is one thing, truly leveraging the power and connectivity of technology and digital channels to drive better results and efficiencies in media is going to create many new business opportunities, while destroying a lot of the traditional methods we have held so dearly to date. Yes, our sacred media cows are about to be… well, you know what I mean.

Who will be the winners? Who will be the losers? 

On December 17th, AdWeek ran what was one of the most fascinating stories about media in the modern age that I have read in the past long while titled, Amazon, Advertising’s Sleeping Giant, to Awaken in 2013. While people wax poetic about the retail prowess and clout of Amazon, I am always quick to point out that they are one of the most fascinating media companies that has ever been created. Marketing professionals and luddites alike typically stare at me the way that a dog does when you try to talk to it. What the majority of people don’t know is that Amazon is able to undercut so many retailers not just because they have a more streamlined or technologically advanced supply chain system, but because each and every customer also provides Amazon with a significant amount of media revenue per user that eclipses most other media properties (let alone competitive online retailers). I have no formal proof of this and Amazon is very quiet about how media is played on their site and partner sites, but industry insiders from all corners have all conferred that Amazon gets a lot of media dollars per user, and is able to optimize that number by constantly and consistently putting highly targeted and relevant offers in front of them.

Amazon will be the media company to watch.

According to this AdWeek article (and Amazon’s previous announcements), this is what Amazon either has planned or is optimizing in the media world (hold on to your hats):

• They have built "a proprietary real-time bidding platform that plugs into exchanges and supply-side platforms, including Google‘s AdX and PubMatic. This platform lets the company retarget its users across the Web based on their browsing and purchase habits on Amazon’s owned-and-operated properties."
• "As early as the first quarter of 2013 it will introduce a self-serve real-time bidding platform for media buyers, including agency trading desks, which will be able to use the platform to manage their own buys."
• Amazon also has its Amazon Advertising Platform, which was highlighted during Advertising Week. Currently, it is a fully-managed service, run through their own, proprietary technology. The system offers two types of (limited) targeting: lifestyle and in-market functionality (retargeting, etc…), but that will likely evolve in the next short while.
• "Ads served on Amazon’s owned-and-operated sites have been sold on a cost-per-thousand-impressions basis, but agencies are said to be wary of Amazon switching them to a cost-per-acquisition model since the e-commerce company would then have more insight into which clicks resulted in purchases (potent data that often isn’t shared with most publishers). Nonetheless, the idea of such closed-loop advertising has many media buyers excited."
• "Amazon also has an opportunity to shift up the funnel, to go after demand-generation ad budgets (i.e. branding dollars) by using its audience data to package targeting segments. It’s easy to imagine these segments as hybrids of Google’s intent-based audience pools and Facebook‘s interest-based ones."
• While Amazon will not confirm the number, this AdWeek article claims that Amazon Media Group has about 600 employees.

The possibilities are endless. The data is endless.

There are other mitigating factors that make this line of thinking fascinating to the marketing industry. Amazon has a very trusted brand, consumers have a high-level of affinity for the brand and, as a retailer, Amazon’s laser focus on providing great pricing, selection, relevancy and information is second-to-none in the online commerce channel. The bigger question becomes an issue of data and privacy. To date, Amazon has been extra cautious in protecting the data that they have accumulated. It is without question that there are few retailers (or even retail associations) that have the type of insight and consumer data into pricing, choice, selection, interest and more than Amazon. If they are able to pull this off into a media play (and, by all accounts, they are already doing it), 2013 could very well become one of the most interesting years in advancement of media that we have seen in a long while.

Amazon as a media empire. What do you think?