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Amazon Ad Business Booming, Despite Declining Prices

1 MINUTE READ | May 21, 2020

Amazon Ad Business Booming, Despite Declining Prices

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David Gong

With PMG since 2012, David Gong has led marketing initiatives at PMG, drawing on his past experience at agencies, publishers, and industry partners.

Chances are, you are one of the millions of people who have ordered from Amazon during the COVID-19 crisis. Enough people have done so, helping the company see a 44% spike in year-over-year ad sales during the last quarter. However, according to PMG’s Price Glomski, while the company’s ad business is booming, there are significant challenges that Amazon must overcome to legitimately consider itself on par with Facebook and Google’s ad platforms.

In thoughts shared with Business Insider, Glomski mentioned that one of Amazon’s challenges is around logistics, which is surprising given how renowned their fulfillment process is. However, the company had to switch to handling only essential items during the crisis, which impacted its appeal to advertisers looking to promote non-essential items.

Furthermore, Glomski said that “cost-per-click prices for Amazon search ads increased 30%” for some brands in March when shopping sales shifted to essential goods, but in April, advertisers saw prices decline 21% on average across all formats.” The turbulent pricing reflects major brands pulling out of the platform, but could also represent an opportunity for smaller advertisers.

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