Welcome To AdTech Weekly

The Giant Amazonian Elephant In The Room

I've been thinking a lot lately about Amazon thanks to Arun Sundararajan's The Sharing Economy. The book does a fantastic job of both describing the economics of the sharing economy, but also illustrating -- quite articulately -- the motivations and circumstances required for a company to build a successful "sharing" platform.

A couple of weeks ago, while I was listening to the audiobook version during my children's swimming lessons (I do both, listen and read a book at the same time. I find it really helps with information retention), it dawned on me: Amazon is in a unique situation, and they could be standing on a revenue goldmine.

If Amazon decides to focus energy on scaling its advertising like the tea leaves suggest, they already have access to everything that's needed for their platform to be a runaway hit:

  1. Amazon has tremendous scale. Some have even said it's 2-3X that of Google.
  2. Amazon has the world's largest walled garden.
  3. Amazon already has "content" that people are looking for today; They're already a destination site with a hooked audience.
  4. Amazon doesn't really need media or publishing companies to create "content" for their platforms so they can already reach critical mass.
  5. Amazon has already begun chipping away at affiliate marketing programs, lowering payout plans.

But, it's this next point that may be the most important. Amazon already owns everyone's purchasing history, and the company could track conversions better than anyone in the industry today. They could, single handily, redefine what it means to advertise online. I'm not being hyperbolic. If marketers want performance-driven technologies for online ad campaign measurement, Amazon can do what no other can: they can track the entire conversion process from discovery through to purchase and then even delivery (so advertisers could target secondary campaign messaging the moment someone has a package delivered). Amazon can accurately report on everything from point A to Z. The company could even calculate a customer's life-time value, then tell marketers exactly how and where to find more people just like them.

How does Sundararajan's The Sharing Economy connect to this? Imagine Amazon rolling out features that gives users the ability to rent expensive purchases to friends on top of their advertising offerings for marketers. Or, even give their users tools to advertise and manage those rentals based on the viewing habits of friends who keep looking at expensive, low use items but never buy. Imagine them being able to design profit-sharing models for their partners. Something like 70% of a rental going to the owner, 15% going to the product manufacturer, then another 15% going into Amazon's war chest? Not only would Amazon become the world's largest ad tech company, but they'd also become the world's largest "sharing" company overnight (well, almost overnight).

A whole new type of advertising company may be upon us. Ad tech isn't dying; it's just evolving. It's growing up. It's starting to feel like Amazon gets that more than most have given them credit for to date.

By Joshua Schnell

AdTech News And Editorial