Amazon’s advertising rates soared during the epidemic, and its advertising revenue in the United States will exceed $20 billion this year

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Tencent technology news on June 10, industry research organization marketplace pulse released the latest report, saying that Amazon’s advertising rate in May jumped more than 50% year-on-year, indicating that the online retailer’s profitability should continue to maintain in the coming summer sales promotion “prime day” and holiday shopping season and other busy periods.
In a report, marketplace pulse said that the rise in advertising rates may provide an impetus for legislators and regulators to ask Amazon to pay higher taxes, and push businesses on e-commerce platforms to raise prices as they struggle to cope with higher transportation costs and other inflationary pressures.
The surge of online shopping caused by the epidemic has triggered more fierce advertising competition on Amazon. According to emarketer, a market research firm, global shoppers are expected to spend 578 billion dollars on Amazon’s advertising this year.
As sales move from stores to websites, big brands such as Procter & Gamble and Gloucester are spending billions of dollars in advertising budgets on Amazon to maintain its dominance. They are competing with small brands, which are hard to break into physical stores with limited shelf space, but if they pay to appear on Amazon, they have a chance to compete online.
According to the data provided by marketplace pulse, the per click cost of Amazon’s search ads was $1.16 in May, up from $0.75 in the same period last year. This makes Amazon’s average advertising cost per sale more than 30% of the product’s price, up from about 20% a year ago.
According to emarketer, Amazon’s advertising revenue in the U.S. alone will exceed $20 billion this year, continuing to erode the market share of alpha’s Google. Google is currently a leader in digital advertising.
“Advertising rates will continue to rise over time,” said juozas kaziukenas, founder and CEO of marketplace pulse. Smaller brands are trying to enter the market, and when they face established companies that are willing to pay to protect market share, the cost of doing so will be higher and higher. ”
The competition from the financial rich aggregation platforms is also more fierce. These aggregation platforms are acquiring Amazon popular brands, hoping to become the Digital Frontier consumer brand group. Companies such as thrasio, perch and branded have announced more than $2 billion in debt and investment financing to buy and expand Amazon’s brand, and advertising is a key tool for growth.
Even at a higher price, Amazon’s advertising is a more cost-effective deal than other forms of digital marketing, such as Facebook’s instagram and Google, because shoppers on the appliance store’s website are ready to buy, says Ryan gnesin, chief executive of Amazon’s aggregator, elevation brands. Elevation brands has 20 brands and is currently buying another five.
“So far, we have found that Amazon is the most efficient and profitable way to bring traffic to our products,” gnesin added He said higher rates make his company more selective in choosing which companies they are willing to buy, depending on their reliance on advertising sales.
Global policymakers are eager to collect more taxes from Amazon as part of a concerted effort to target multinationals, including large technology companies. The OECD has to get about 140 countries and regions to agree on a plan that could include targeting Amazon’s most profitable business units, such as advertising.
Many Amazon businesses say rising advertising rates force them to raise prices and be more cautious about their budgets. “We’re just more critical about keywords, not aggressive,” said chuck gregorich, a Wisconsin businessman who sells craters and outdoor furniture on Amazon He expects Amazon to raise prices by as much as 10% this year to make up for higher shipping and advertising costs.
Former Amazon businessman Jason Boyce said Amazon must be careful not to push prices too high, which means it may lose its reputation among shoppers because of competitive prices. Boyce now advises online sellers through his company, avenue7 media. “Selling products on Amazon is becoming very expensive, and the long-term risk is that businesses are taking inventory to Wal Mart and target, where they can sell at a lower price,” he said´╝ł Tencent technology reviser / Jinlu)