SEATTLE • Amazon.com has hit on a new way to grab a bigger chunk of the US$129 billion (S$174 billion) digital advertising market now dominated by Google and Facebook: sell video spots on the e-commerce giant's smartphone shopping app.
Amazon has been beta testing the ads on Apple's iOS platform for several months, according to people familiar with the plan. A similar product for Google's Android platform is planned for later this year, said the people, who asked not to be identified because they are not authorised to share the information publicly.
The brief mobile video spots appear in response to search results on the shopping app, valuable space for advertisers since people searching for products on the app have a higher propensity to buy than those scrolling through Facebook or watching videos on Google's YouTube.
Amazon has emerged as a fast-growing challenger in the digital advertising market since it captures 50 per cent of all online sales in the United States. Amazon's digital advertising market share will grow to 8.8 per cent this year from 6.8 per cent last year, according to EMarketer. Market leader Google will see its share slip to 37.2 per cent from 38.2 per cent. Amazon, through a spokesman, declined to comment. A spokesman for Google did not immediately return a request for comment.
Selling more mobile video ads opens a new revenue opportunity for Amazon's advertising division, which mostly sells space featuring brand logos, product photographs and descriptions that are the equivalent of digital billboards. Video ad spots are similar to television commercials and can deepen the power of promotion.
Brands will spend nearly US$16 billion on mobile video advertising this year, up 22.6 per cent from last year, according to EMarketer.
For years, Amazon refrained from selling advertising space on its site for fear of disrupting the shopping experience.
Amazon began adding more product-related video content to the site two years ago to prevent shoppers from defecting to YouTube and Instagram to watch video demonstrations and testimonials from influencers not found on Amazon.
The latest mobile video ad push is a continuation of that effort to put more product videos on the platform. Amazon is requiring a US$35,000 ad budget to run the spots at five US cents per view to run the ads for 60 days, one person said. Prices can vary by category and not everyone pays a fixed rate, said another person.