When a chain of physical therapy centres wanted new patients, it aimed online ads at people near its offices who had bought knee braces recently on Amazon.
When a financial services provider wanted to promote its retirement advisory business, it directed ads to people in their 40s and 50s who recently ordered a personal finance book from Amazon.
And when a major credit card company wanted new customers, it targeted people who used cards from other banks on the retail site.
The advertisers found those people by using Amazon’s advertising services, which leverage what the company knows better than anyone: consumers’ online buying habits.
“Amazon has really straightforward database — they know what I buy,” said Daniel Knijnik, co-founder of Quartile Digital, an Amazon-focused ad agency that oversaw the ads for the clinics and retirement services. “For an advertiser, that’s a dream.”
Ads sold by Amazon, once a limited offering at the company, can now be considered a third major pillar of its business, along with e-commerce and cloud computing. Amazon’s advertising business is worth about US$125-billion, Morgan Stanley estimates. At its core are ads placed on Amazon.com by makers of toilet paper or soap that want to appear near product search results on the site.
But many ad agencies are particularly excited by another area of advertising that is less obvious to many consumers. The company has been steadily expanding its business of selling video or display ads — the square and rectangular ads on sites across the web — and gaining ground on the industry leaders, Google and Facebook.
In addition to knowing what people buy, Amazon also knows where people live, because they provide delivery addresses, and which credit cards they use. It knows how old their children are from their baby registries, and who has a cold right now from cough syrup ordered for two-hour delivery. And the company has been expanding a self-service option for ad agencies and brands to take advantage of its data on shoppers.
“That is where the insane scale can happen for the business,” said John Denny, a vice-president at CAVU Venture Partners, which invests in consumer brands like Bulletproof coffee and Hippeas chickpea puffs.