From Bloomberg
Amazon has hit on a new way to grab a chunk of the $129 billion digital advertising world: selling video spots on their smartphone shopping app. The video ads appear in response to search results on the app, which is valuable for advertisers since people searching for products on the app are more likely to buy than those scrolling through Facebook or watching videos on YouTube.
Selling more 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 $16 billion on mobile video advertising this year, up 22.6% from 2018, according to EMarketer. Advertisers are shifting their spending to follow the growing number of people watching videos on mobile devices and are making brief video snippets to appeal to people on the go.
For years, Amazon refrained from selling advertising space on its site for fear of disrupting the shopping experience. Instead it used price, product descriptions and consumer reviews to determine which products were most prominent on the page. The site is increasingly a pay-to-play platform, with the top of the page dedicated to the highest bidder, a shift that has helped boost Amazon’s profits.
Amazon began adding more product-related video content to the site two years ago to prevent shoppers from going to YouTube and Instagram to watch video demonstrations and testimonials from influencers not found on Amazon. Many of those video posts on other platforms feature links to sites other than Amazon where shoppers could buy products. Amazon’s lack of video content revealed a weakness in shopper engagement and product discovery that other sites were capitalizing on.
The latest mobile video ad push is a continuation of that effort to put more product videos on the platform. Selling video advertising on smartphone apps expands a product Amazon developed for its own devices, like the Fire TV streaming device and Kindle e-reader, to non-Amazon devices like Apple smartphones, which more people use to shop, says Collin Colburn, analyst at Forrester Research.
“They roll out these new experiences slowly to see if it disrupts the shopping experience and see if it’s something advertisers want,” he said. “This creates a new format for them and another way to sell space on the platform.”
By the looks of it, Amazon was beta testing the new addition to the app on the iOS mobile platform. As of now, it feels like the beta testing has come to an end. Nevertheless, the company itself has not come forward with any confirmation.