'Google and Facebook's Ad Business Might Not Survive Amazon' (medium.com) 51
"There's a relatively new, rapidly growing player in the online advertising world," warns Medium's new consumer technology site Debugger — taking a close look at the "Sponsored Products" listed first in the results of Amazon searches.
"Given its unique business model, its history of swallowing whole industries, and its sheer size, Amazon has the potential to massively disrupt the online ad world — and forever change tech." The success of online ads depends on how close a user is to buying something... Few companies, though, are more intimately connected to peoples' buying behaviors than Amazon. As of mid-2020, Amazon controlled nearly 40% of American e-commerce, and data from 2018 suggests that it may control as much as 94% in certain categories, like cosmetics and batteries. Overall, the company is forecast to control almost 5.5% of all retail in America in 2020 — especially as Covid-19 has forced consumers to do more of their shopping online...
And the ads are cheap. For one campaign, I paid just $249 to show my ad to 1,049,000 people. Ads are cheap because Amazon has a vested interest in driving more sales. The company collects a commission of between 6% and 20% on every item sold through the site. For every product I sold through a Sponsored Products campaign, Amazon was effectively getting paid twice — once for running the ad, and again for managing the sale of my product. This likely allows them to keep ad rates lower than those charged by their competitors. Ad prices may also be low because Amazon's ad program has relatively little overhead. To understand what you mean by the query "Lunch," Google has to run a massive, worldwide data-gathering program that peers into every aspect of your online and offline life, from the websites you visit to the humidity level in your home. That's expensive. In contrast, when you type something into an e-commerce platform like Amazon, you're telling the company exactly what you want to buy — no world-spanning surveillance program needed. Amazon has recently expanded its advertising program to Twitch (which Amazon owns), giving marketers the option to target the platform's younger audience...
In building AWS, Amazon also essentially ate Microsoft's lunch, stealing an industry it was expected to dominate right out from under it. By moving into the advertising world, Amazon could well do the same thing for ad-funded giants like Google, Twitter, and Facebook. Advertising is largely a zero-sum game — the ad dollars currently flowing to Google and Facebook come largely at the expense of newspaper, magazine, and television ads. If the dollars start flowing to Amazon instead, the other tech giants could see a massive drop in their bottom lines.
That would have big ramifications for the advertising industry. But it would have an even bigger impact on tech. More than 70% of Google's revenue comes from ads. For Facebook, that number is 98.5%... [I]f Amazon decides to take on Google and Facebook directly, it could result in a fight that saps the strength of both tech giants, and ultimately kills off the emerging companies that rely on them for funding and talent. The impact on the tech industry could be massive, world-changing — and permanent.
"Given its unique business model, its history of swallowing whole industries, and its sheer size, Amazon has the potential to massively disrupt the online ad world — and forever change tech." The success of online ads depends on how close a user is to buying something... Few companies, though, are more intimately connected to peoples' buying behaviors than Amazon. As of mid-2020, Amazon controlled nearly 40% of American e-commerce, and data from 2018 suggests that it may control as much as 94% in certain categories, like cosmetics and batteries. Overall, the company is forecast to control almost 5.5% of all retail in America in 2020 — especially as Covid-19 has forced consumers to do more of their shopping online...
And the ads are cheap. For one campaign, I paid just $249 to show my ad to 1,049,000 people. Ads are cheap because Amazon has a vested interest in driving more sales. The company collects a commission of between 6% and 20% on every item sold through the site. For every product I sold through a Sponsored Products campaign, Amazon was effectively getting paid twice — once for running the ad, and again for managing the sale of my product. This likely allows them to keep ad rates lower than those charged by their competitors. Ad prices may also be low because Amazon's ad program has relatively little overhead. To understand what you mean by the query "Lunch," Google has to run a massive, worldwide data-gathering program that peers into every aspect of your online and offline life, from the websites you visit to the humidity level in your home. That's expensive. In contrast, when you type something into an e-commerce platform like Amazon, you're telling the company exactly what you want to buy — no world-spanning surveillance program needed. Amazon has recently expanded its advertising program to Twitch (which Amazon owns), giving marketers the option to target the platform's younger audience...
In building AWS, Amazon also essentially ate Microsoft's lunch, stealing an industry it was expected to dominate right out from under it. By moving into the advertising world, Amazon could well do the same thing for ad-funded giants like Google, Twitter, and Facebook. Advertising is largely a zero-sum game — the ad dollars currently flowing to Google and Facebook come largely at the expense of newspaper, magazine, and television ads. If the dollars start flowing to Amazon instead, the other tech giants could see a massive drop in their bottom lines.
That would have big ramifications for the advertising industry. But it would have an even bigger impact on tech. More than 70% of Google's revenue comes from ads. For Facebook, that number is 98.5%... [I]f Amazon decides to take on Google and Facebook directly, it could result in a fight that saps the strength of both tech giants, and ultimately kills off the emerging companies that rely on them for funding and talent. The impact on the tech industry could be massive, world-changing — and permanent.
Hogwash (Score:4, Insightful)
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And even if Amazon had a web search, nobody would use it because it would never find what you wanted, only tons of crap you don't.
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Re:Hogwash (Score:5, Insightful)
Yes, but if you had a product to sell, where would you rather advertise that product?
A: In line with a random Facebook post (probably a political post that will make the user angry)
B: In line with the other products that the user just searched Amazon for because the user is currently actively looking to buy one of the products you are selling.
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There's actually multiple workflows.
1. When you know what you want and you go instinctively to Amazon and you find advertised products based on what you searched for.
2. When you don't know you want something, and you just see it in your Facebook / Instagram Feed.
I want to address 2 for a second. I've ended up buying a lot of products based on Facebook/Instragram feeds. These 'happen' to generally websites with their own branding (often using things like shopify). For example, I'm big on plastic free packag
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It could reduce resources for "innovation" at Google. I'd personally appreciate this: Most of recent Google's recent features and new products have been unwelcome and unusable.
Re:Hogwash (Score:5, Interesting)
That's ignoring the affiliate links from people who link to amazon pages.
That said, I've noticed a large intrusion of amazon ads into shopping on the amazon site, offering amazon's own products when I already know what I'm looking for. Yes I'm looking for a USB-C cable, no I don't want a 99 cent cable from china that won't work with PD.
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You kind of missed the point, that is the whole idea, they see those adds when they are shopping, telling amazon exactly what they want, when they want it and Amazon can serve them targeted ads to buy products that make Amazon more money and the company making the product who spent a whole lot of money with privacy invasive and corruptly manipulative (the number cheer leader of mass consumption telling how greed they are and how shite we are for buying the carbon polluting products they in a targeted manner
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Re: Hogwash (Score:2)
Amazon has 22 years of my buying history and has never once shown me a viable ad.
$250 for 1 million ads shown is a lot. How many sales did that ads achieve. Did it pay for its self?
Adblocker (Score:2)
Ublock Origin, and all this unneeded stuff goes away.
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So those almost wall to wall Amazon ads on TV and in the press and the rest are a myth then?
Then again, in your small world, people may well spend all their time on Social Media and Apps but in the real world they don't.
Amazon, Google and FaceBook are fighting for one thing... Who can really become as bad as Orwell wrote about in 1984. World domination is the name of the game. Total victory or nothing.
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"in your small world, people may well spend all their time on Social Media and Apps but in the real world they don't."
You watch TV? What year is it?
I watched TV for a while and it was horrible. But we had only a little cellular internet and we were conserving it. We just muted all the ads though.
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NagrothAgain snorted derisively:
People only see Amazon's ads when they're shopping. They spend most of their screen time on social media and Apps.
You could not be more wrong.
Just as an example, the Washington Post - which Jeff Bezos owns - serves ads exclusively through amazonadsystem.com. It's not just while you're shopping that you see Amazon's ads (assuming you're masochistic enough to browse the web without an ad blocker). That domain serves ads on all kinds of non-Amazon websites - and, up until recently, you couldn't even look at WaPo without accepting amazonadsystem cookies and javascripts ...
It's a fine line for them to walk (Score:3)
It's one thing for a company like Amazon to prepare to use their super-army of lawyers fight the Federal Government's Justice Department on a monopoly case. It's another thing to fight the Justice Department+Microsoft+Facebook+Google in a monopoly case. They should walk this monopoly line carefully.
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Just consider that when you search on Amazon you already get a lot of suggested related products to your search.
The day you can buy a truck or a car on Amazon with a 3 year warranty then Google and Facebook have to resort to obscure medical ads treading the line that the Justice Department might look at.
Meh (Score:4, Insightful)
Advertising might not be "tech," even if it is on the internet.
Sweet! (Score:2)
If they don't crush (Score:2)
If politics don't crush it, adblockers will
Retailers might not survive Amazon (Score:3)
Google and/or Facebook could offer neutral ad platform without conflict of interest and attract some chunk of value added retailers and manufacturers, leaving Amazon with the commodity products.
It can happen, but does not mean it will happen.
puff piece (Score:5, Insightful)
what a load of bullshit.
Microsoft was never expected to dominate cloud infrastructure services. AWS[2006] dominated that market years before MS[2010] (or Google[2013]) even entered it. Nobody even took Microsoft's Azure service seriously for the first few years, it was an industry joke - too little, too late, too crappy. The fact that MS were able to turn that around as much as they have is a minor miracle, and only possible because they leveraged their Windows monopoly to service those few companies who wanted to run their web sites etc on Windows....and even then, the majority of Azure users run Linux VMs, because Linux dominates in the internet server market.
If AWS stole anyone's lunch in that market, it certainly wasn't Microsoft - it was companies like Rackspace, as well as a host of smaller hosting providers, many of whom never really made the transition from co-located servers, dedicated rental servers, and virtual private servers to cloud-computing style VMs on demand.
also bullshit. internet ads are cheap because they have a shitty success rate. The average click-through rate is around 0.2%, and the conversion rate is a tiny fraction of that.
Re:puff piece (Score:5, Interesting)
Beat me too it. Yeah, talk about an utterly clueless hack calling themselves a journalist concocting a story and calling it "history".
AWS[2006] dominated that market years before MS[2010] (or Google[2013]) even entered it
You're dead wrong about Google. It was charging for cloud services back in 2008, and precursor services like Google Storage and Gsuite years before then. In fact, my disgust for Google Cloud Services was that they had the market for so many years, and then just let Amazon eat their entire business with AWS, following the Compuserve model. Google didn't try to copy Amazon's cloud business; its more the other way around.
Azure started out as a late to the party joke, but Azure is aimed more as a desktop as a service, while AWS is more of an infrastructure as a service. I wouldn't write off Azure yet. Its kinda pathetic that Google became Xerox, while IBM never was a player. But Google could still give AWS a run for its money, if it only could get its head full of advanced degrees out of its ass.
Re:puff piece (Score:4, Informative)
Possibly wrong about the year, but google was faffing about for over a decade with all sorts of stuff that falls under the excessively-vague "cloud" umbrella bullshit term these days. Amazon was first to market with cloud infrastructure services as an actual product that worked and that you could buy. It's why they got to define several of the de-facto standards like the EC2 API and S3 storage.
As is standard for google-built/bought/operated services & projects, they got bored of most of them and shut them down.
Nobody really took them as a serious competitor to AWS until around 2015 or so. More seriously than MS, but that's not saying much. They had some good and interesting cloud infrastructure technology, but they always seemed half-hearted and disinterested.
I got the year 2013 from Cloud-computing comparison [wikipedia.org].
I checked wikipedia before posting because I like to make at least a minimal effort to verify facts before posting about them. Even for my own vague recollections of an industry I worked in and around from 1991 to 2013 - from ProNet (the first commercial ISP in Australia, providing usenet news and internet e-mail over dialup lines to our Xenix servers as well as on Telecom's Discovery 80 & Viatel via AUSTPAC, and later with SLIP and PPP connections), until I worked for the Australian Govt funded Nectar Research Cloud [nectar.org.au] using openstack and related technologies, run out of unimelb). I'm out of the industry now, but it's still one of my interests.
ah, okay. In Cloud Computing [wikipedia.org], it says that google launched the beta of Google App Engine in April 2008 and, a few paragraphs later on the same page, it says:
IIRC, early GAE/GCE wasn't greatly similar to AWS, but evolved to be more similar over time.
BTW, Google also came out with an excellent HA clustering system called Ganetti [ganeti.org] in 2007 (originally GPLv2, but changed license to BSD after google abandoned it and "chucked it over the wall" in 2014). It was nowhere near as scalable as openstack (and was a different class/kind of virtualisation system entirely - openstack is a rough clone of AWS features and capabilities, while ganetti is a brilliant small to medium scale HA clustering system), but It had some great features that I missed when I moved on to working with openstack. With a little effort, it could be made to work with ZFS and iscsi instead of DRBD.
Re:puff piece (Score:4, Informative)
Microsoft was never expected to dominate cloud infrastructure services. AWS[2006] dominated that market years before MS[2010] (or Google[2013]) even entered it. Nobody even took Microsoft's Azure service seriously for the first few years, it was an industry joke - too little, too late, too crappy. The fact that MS were able to turn that around as much as they have is a minor miracle, and only possible because they leveraged their Windows monopoly to service those few companies who wanted to run their web sites etc on Windows....and even then, the majority of Azure users run Linux VMs, because Linux dominates in the internet server market.
I think you're mistaken: you can run windows on AWS or Google, so you don't need to use Azure.
I've not used Azure myself. but from what I've heard of it, it doesn't surprise me it did so well and it doesn't sound much like abuse in this case.
AWS, the philosophy is a bit... here's some cheap machines, no fuck you they're cheap. Also some services. But mostly we're cheap.
Google, the philosophy is, well, google. We're google, we're the best (because we're google) so everything we do is the best and we do it the right way. Python2 (ok not any ore but you get the idea)! Also no documentation! and good luck anyway because you can't actually use google services you need second rate knockoffs that we don't use or debug but make for public use. Also deprecated. Oh look a squirrel.
I gather Azure is pretty expensive, but you can attach a Visual Studio debugger to a running instance of a service (not a random server, but the serverless crap they all offer), rather than cobbling together a solution with some logging framework (stackdriver woo! Down the rabbit hole!) and printfs. And apparently well documented with actual up to date documentation. If that's true, it's not really a surprise it's doing well.
"Oh look out!" (Score:3)
Re: "Oh look out!" (Score:1)
Check this parent post in 10 years for prophesy.
Re: "Oh look out!" (Score:2)
Why is there a crowd of Amazon drones here, proclaiming its grandness and future dominance? Does Amazon deliver something to smoke with every packet or what?
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They will get there. Amazon is out to become the last retailer standing. When you have to buy from them then they'll just push the other brands aside in favour of their crap.
As Abba sang,
"The Winner Takes it All."
Bezos will win.
Well (Score:3)
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Those ads most likely go through Google.
Do people really buy due to G or FB ads ? (Score:1)
Re:Do people really buy due to G or FB ads ? (Score:4, Funny)
How many cars can a person buy and after years of not buying a car thru them why would they keep trying ?
Well in fairness that's better than their other strategy.
Oh hello good sir! I see you recently purchased a washing machine. Clearly you are the sort of discerning gentleman who buys washing machines. Would you consider adding these ones to your burgeoning collection?
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The point is not getting you to buy via those ads. But to make sure you recognize the brands. You're more likely to buy from brands you're familiar with. So after having seen an ad for them for the 100th time, you're more likely to buy from them. It's that simple.
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Search differences redux (Score:4, Interesting)
When people search on google (or a search engine), they're searching for a solution.
When people search on amazon, they're searching for a product.
There's a world of difference between the two types of searches, and the buyer is in a different phase of the process for different kinds of search.
google searches are relatively overpriced, because most of the time the buyer isn't ready to buy quite yet...but it's the only time where you can insert your product into someone's search space. Is that worth more? I guess it depends on the advertiser.
94.5% of all retail in America is non-Amazon (Score:3)
" Overall, the company is forecast to control almost 5.5% of all retail in America in 2020"
That means 94.5% of all retail in America in 2020 is non-Amazon. And companies want to influence how this is spent--so they will be advertising on Google, Facebook, etc. And of course retail is a minority of the economy: Services is huge. Or homebuilding. So if you want to advertise a hospital or a housing development--you are not going to do it on Amazon.
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im doubtful about these stats to be honest. Retail probably includes far too much so that Amazon doesn't look like too much of a duopoly with ebay.
Re: 94.5% of all retail in America is non-Amazon (Score:2)
I think Amazon wants you to think it is bigger than it is.
Remember: They make their money with the "cloud" business.
Not with selling stuff.
Circumvents blocking as well (Score:4, Interesting)
Re: Circumvents blocking as well (Score:2)
uBlock Origin & co filter by other properties too. Like position on the page (structure), URL path, etc.
Then again, I just blocked all of Amazon itself in my firewall. Just added it to where Facebook/WhatsApp/Instagram/TikTok/Microsoft/Google/Apple already were. Done. Can't reach them from my wifi. At most, you will get Goatse. :)
And DoH is completely blocked too. The HTTP requests must go somewhere... So much for preventing net filters, dear Mozilla.
Amazon's recommendations (Score:2)
Re: Amazon's recommendations (Score:2)
YouTube has the same problem.
You just watched a video and it recommends the same content but posted on another channel. Or, even worse, it recommends literally the exact video you just watched! With the damn red line that says you watched it all right below the thumbnail!!
So it *knows* I've already seen it! WTF!
But I think it can all be explained if you follow the money.
YT an Amazon a the corporate equivalent of psychopatic whores with zero self-respect or conscience. They will literally swallow your diarrh
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Weird. How can you guys even use Amazon. (Score:3)
Around here, using Amazon is a taboo. Equivalent to buying some product that you know will destroy nature and humanity.
But I had a look into it, and ... How the hell can you even use that thing? Its search is clearly an active enemy of the searcher! It is almost impossible to actually find what you are looking for!
I cannot filter by category, let alone any other properties, and when I switch from "Show those that Amazon makes the most money from first" to "Show the ones with the lowest price first", I get literally thousands of pages of accessories for the thing instead of the actual thing! Like that is not deliberate and by design...!
Only with a LOT of Family-Feud-Fu is it possible to enter search terms that give me what I want, even sorted by lowest price! And you can see it fighting you every step of the way.
Even if I had no problem with Amazon's true Rockefeller-like evilness (I know managers that work there. Not out of choice.) ... It is simply unusable! Even if I wanted, I could not use that.
So how the hell do you guys just use it? Especially those who haven't coded a search system before and can't overcome that search's hostileness.
Or is it all just lies? Because I know for a fact that Amazon makes its money from the "cloud" business. Not from deliveries.
Good to read (Score:2)
"... the potential to massively disrupt the online ad world "
I hope they die in a ditch.
Not new (Score:1)
What Nonsense (Score:1)