Ways Amazon Will Eat Media and Marketing
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ways Amazon will eat media 6 and marketing Amazon seems to have everything going for it: Endless scale, bottomless coffers and a customer-centric point of view that can provide the kind of data marketers and media have only been dreaming about for the last few years. If Amazon can improve some of its advertising back-end and focus on growing its non-commerce business, 2018 will certainly be the year of Jeff Bezos. How Amazon could become an Amazon is everywhere 02 04 entertainment powerhouse How Amazon will eat Why Amazon is set to change 06 advertising 08 advertising as we know it Pitch Deck: How Amazon is Inside Amazon’s pitch to agencies 10pitching ad buyers 20 Amazon gets deeper into Too big to ignore 23 programmatic 25 01 Amazon Is Everywhere Amazon’s living up to its name. The company has sprawled seemingly into every corner of every industry. Here’s where Amazon has its fingers. By Shareen Pathak Shareen By 02 Marketplace in 2009. Amazon Fashion is a growing It lets it extend its Prime membership This is the big one Amazon is set to presence — its big challenge is convincing offering, showcase its devices like Kindle account for over half of all of the coun- high-end brands that it won’t dilute them and Echo, and reach a new legion of try’s e-commerce by 2012. Bolstered by — and it has a real opportunity in becom- customers. Prime members, Amazon is a wholesale ing a showroom for upcoming designers. seller of some of the world’s biggest brands — and for others, acts as a third- Amazon Studios party marketplace. Essentially, it acts as Advertising Amazon is pushing deep into video. In both a buyer and a seller, and because of Amazon is turning into an advertising order to shore up Prime subscriptions sheer scale, it can control pricing, creat- powerhouse. The company has a pro- (which are the company’s third-largest ing a virtuous cycle that keeps customers grammatic ad product that will generate source of revenue), Amazon is creating happy and keeps brands on its platform. it $1 billion this year — and potentially premium streaming content that custom- break the Google-Facebook duopoly. ers will want to pay for. Content Amazon’s Through Amazon Marketing Services and Echo home device plays a big part not Amazon brand Amazon Media Group, Amazon is now only for its retail business, but also its To cause more consternation, Amazon selling an ad product that brands have a media. Echo lets it deepen its media is also able to compete with the brands lot of interest in. Amazon Web Services relationships, opening it up to companies that sell to it either wholesale or through Amazon’s second biggest source of reve- like the BBC (and Digiday) to reach new its third-party system. The brand now nue made about $12.2 billion in sales last audiences. sells AmazonBasics for essential items year. While more under the radar than and has private labels in consumer its other businesses, AWS is a behemoth, packaged goods and apparel as well. It letting Amazon sell more than actual The Bank of Amazon makes sense: It barely has to spend on products — and sell storage space. It’s Amazon’s foray into brick-and-mortar marketing, and the data it keeps close to also been a big reason why the company has been extended with July’s launch of its chest enables it to know what is selling is able to attract tech talent. Amazon Pay, which lets customers pay for well. Then, it tries to undercut brands by items in a store like they’re on Amazon. making its own products. com. This extends Amazon’s reach into The Amazon Store the world of finance, where banks still From the test bed of Amazon Go — the control a lot because customers can use Luxury and fashion retail store with no human employees — to debit or credit cards to buy things. It’s a While Amazon may have the market Amazon Books, Amazon is pushing hard natural stepping stone to a future “bank cornered on basic retail, it also has its into bringing its online brand into the of Amazon,” which can do lending and sights set on luxury. It has made a series physical world. Coupled with its moves manage money. For a company that is of investments, from buying e-commerce in grocery with the acquisition of Whole more trusted by people than most banks site Shopbop in 2006 to acquiring Zappos Foods and AmazonFresh, being in the are, it’s probably a good fit. real world is a huge asset for Amazon. 03 How Amazon could become an entertainment powerhouse By Lucia Moses The list of industries trembling lets viewers subscribe to streaming shipping benefits gives people more at the thought of Amazon turning its services including HBO Go, Showtime incentive to join and renew their sub- sights on them is not short. One juicy and Starz as well as smaller chan- scription and watch more Amazon target: Hollywood. nels. It’s gotten a foothold in sports video. Amazon already has a foothold programming, having made a deal “The end game is to cement the in entertainment. After all, Amazon in April with the NFL to stream 10 subscription-bundled relationship Prime Video already reaches roughly Thursday night games and outbid with the consumer so that you 18 percent of U.S. households. Sky for the U.K. rights to broadcast never leave the bundle,” says Rich Amazon chief Jeff Bezos is poised to ATP tour tennis matches. Greenfield, media and tech analyst at spend $4.5 billion on video content in Its Alexa-powered device, Echo, BTIG. “I believe they think they’ll win 2017, nearly double what it spent the already dominates the voice-acti- by controlling your time. Consumers year before. Amazon, like Netflix, is vated home assistant market. spend four to five hours a day watch- poised to eat Hollywood. Oh, and it’s also getting into ing television. So there’s a huge pot Central to its entertainment social media, launching Spark, an of fish to catch.” empire is Amazon Studios, the arm Instagram-like network for shopping; Amazon clearly wants more. It still that puts out original TV shows like and working on Anytime, a messag- lags behind Netflix in a few ways. It’s “Transparent,” “The Man in the High ing app. one of the four major OTT apps, but Castle” and “The Grand Tour” — con- is third in household penetration and tent that’s available for free to the 80 Prime time fourth in terms of monthly viewing million people who pay for a $99-a- Amazon’s biggest trump card in its hours per month, behind Netflix, year Amazon Prime membership. It’s entertainment ambitions is that they YouTube and Hulu, per comScore. spent $12 million to buy movies (and help it sell toilet paper. Amazon is To keep people re-upping Prime, credibility) at this year’s Sundance; bulking up on all this entertainment it also needs to keep giving people the year before, its “Manchester by because it’s critical to Amazon Prime, more attractive content. And Amazon the Sea” was the first movie bought which is fueling much of Amazon’s hasn’t had a breakout hit on the level by a streaming service to win an growth. Prime members spend of Netflix’s “Orange is the New Black” Oscar, per Fortune. twice as much — $1,300 — a year on or “Stranger Things.” Beyond the homegrown shows, Amazon than non-Prime members. With Amazon, the common Amazon buys and distributes feature Prime also gives Amazon data on its refrain is, “Amazon can do anything films and videos from publishers shoppers, which it can use to target it wants.” And media and entertain- including Condé Nast and Playboy more products and ads to them. So ment are no different. Observers and HowStuffWorks. Amazon also adding entertainment to Prime’s free see Amazon going after more and 04 varied content. It’s expensive to keep Intelligence Research Partners. Less to watch Google’s YouTube. relying on third parties for content, likely, but not out of the question, he “It speaks to how Amazon has so Amazon will continue to create its says, Amazon could leverage Bezos’ packaged these things together as own, says Darren Herman, operating ownership of The Washington Post to part of the Prime membership to partner at Bain Capital. start a cable news network, which it create these synergies,” says Mike could then promote and distribute. Rich, vp of emerging products at Buy or build Making video part of Prime’s ben- comScore. “Clearly, Amazon is differ- However, as its acquisition of efits makes Amazon’s entertainment entiating in making video a broader Whole Foods shows, Amazon isn’t model different from other streaming suite of products and services, so averse to buying established com- services, which are just competing there’s a stickiness they’re going for.” panies after starting out building for people’s entertainment budget. Video helps Amazon in other its own, as it did with food retail. This Prime model also seems to be ways. According to CIRP, Prime mem- In entertainment, that could mean bringing new customers to streaming bers who watch free video are more buying a movie studio. video. Netflix dominates stream- likely to buy and rent video from It could bid for more sports rights. ing video, but fully 26 percent of Amazon. Observers see it bundling streaming Prime video watchers aren’t already What does this all bode for channels a la skinny cable bun- subscribing to Netflix, according to publishers and content creators? dles, positioning it to take video ad comScore research.