It’s pretty impossible to navigate life in 2021 without bumping into Amazon at least once a day. From their streaming services to e-commerce to AWS hosting, Amazon is everywhere. (To see just how embedded they are in our day-to-day, check out this article).

One of the ways that the tech giant is expanding its already massive footprint is in the digital advertising space. Amazon’s share of the online advertising market rises every quarter, and its ad revenues surpass its e-commerce earnings. In Q3 2021, Amazon reported 87% growth year-over-year in its ad revenues.

What does this mean for marketers? For starters, it means lots of people are advertising on Amazon. Whether or not you should, though, is an entirely separate question. Amazon advertising certainly should be on your radar screen, but here are the deeper questions you should be asking yourself before jumping on the Amazon ads bandwagon.

Don’t let Amazon advertising FOMO cloud your judgment. Take the time to assess the ROI and weigh the negatives against the potential upside. Then, only if it makes sense, should you join the rush on Amazon ads.

What do you sell, and who are your customers?

When it comes to e-commerce, Amazon is lightyears ahead of the competition. Amazon claims about 41% of the e-commerce market in the US, and every other major retailer trails by a significant margin.

If you’re in the product game, there is a major benefit to having an advertising presence on Amazon. With 200 million Prime subscribers and Amazon’s app dominating shopping apps across devices, millions of consumers bypass Google and other apps entirely when looking for a retail product. They head right to Amazon and drop that item into their cart for that free two-day shipping.

If you’re not advertising on Amazon, millions of eyeballs are passing over your ads elsewhere and beelining to the Amazon app.

It’s also worth considering who your customers are. Is your brand B2B or B2C?

For most B2C brands, it’s a no-brainer to be on Amazon. You likely already sell there. But there’s a case to be made for B2B sellers, too. You can buy just about anything on Amazon, including office supplies, work devices and technology, and WFH essentials a B2B might need. And increasingly, B2B sales are happening online.

If you’re selling software, Amazon advertising probably isn’t the right fit. But for B2Bs selling physical products, it’s worth looking more closely at Amazon advertising.

How do your customers use and perceive Amazon?

If you fit into any of the more general buckets of “businesses that might benefit from Amazon advertising,” it’s worth taking a closer look at your actual customers.

Generalities are never a sound basis for business decisions. Take the time to survey your existing customers to understand their relationship with Amazon. Do your B2B clients have Amazon accounts linked with their corporate cards? Or do they have longstanding relationships with local vendors?

Do you serve a demographic that avoids Amazon for moral reasons? Gen Zers and Millennials are famously conscious consumers who vote with their dollars and buy from organizations with meaningful social missions. Jeff Bezos’s trip to space might not be on their list of causes they support.

What’s the value of first-party data?

Everyone’s talking about the death of third-party data, and with good reason. We already see changes in the way Apple handles privacy, and when Google Chrome finally blocks third-party cookies, it’s going to change the way we all advertise.

One ace Amazon has up its sleeve is its immense well of first-party data. As the direct seller or broker for all sales on its platform, Amazon knows exactly who bought what and when.

This provides Amazon a leg up on other advertisers, whose algorithms are typically based on correlative data (“This is the kind of consumer who would likely be interested in your product.”). Amazon has the benefit of being able to say, “We know this consumer would be interested in your product because they bought something similar from your competitor three months ago for X dollars.”

While that’s valuable information for advertisers, that level of granularity comes with a catch: When you advertise on Amazon, you direct your buyers to purchase through Amazon’s marketplace, thereby handing Amazon access to your first-party data as well.

Amazon controls the transaction, so Amazon learns more about all consumers (including yours) and further shores up its stronghold on the world of digital advertising. While that may benefit you now, there’s no guarantee Amazon won’t use that information against you at some point. A premium algorithm may come to demand a premium price tag.

What are you giving up by selling on Amazon?

In addition to giving up your stronghold on your first-party data, you’re also losing your ability to control your brand’s narrative and pricing.

Amazon’s ads and sales pages strip brands of much of their individuality. Unlike when you advertise on social media or sell on your website, your logos, branding, colors, and design play second-fiddle to Amazon’s.

If your brand is established, ensuring your visual identity is featured might not be a concern. Everyone already knows the Bose logo and can identify a Kitchen Aid stand mixer from across a room.

But if you’re looking to build up market share in your sector, every opportunity to build consumer recognition of your brand counts. Letting Amazon’s branding take center stage might not be suitable for you.

Along the same lines, Amazon is a price-competitive environment. It’s often the cheapest product that gets added to a consumer’s cart. Products that are not clearly differentiated in the market or premium offerings might not thrive in the Amazon marketplace.

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In the end, whether or not the tradeoffs that come with Amazon advertising are worth it needs to be examined on a case-by-case basis. What’s sensible for your organization might not be the best choice for even your competitor, let alone someone in a different sector or industry.

What’s most important is that you do not rush into any new advertising strategy without fully considering the pros and cons. Don’t let Amazon advertising FOMO cloud your judgment. Take the time to assess the ROI and weigh the negatives against the potential upside. Then, only if it makes sense, should you join the rush on Amazon ads.

If you need help weighing both sides, we’re happy to help, contact us!