Marketing Madness

Amazon Turning to Advertising to Boost Profits

Amazon is one of the largest and best-known Internet companies in existence with billions in annual sales. Many people are surprised to learn that despite their popularity, they really aren’t a very profitable business. The founder, Jeff Bezos, has been reinvesting virtually all of the money that comes in back into the business, which is what has allowed Amazon to really perfect their logistics, making them extremely efficient.

In fact, the online sales portion of the company doesn’t technically make any money at this point. It is the popular Amazon cloud services that helps to keep them in the green each year. Even with that, however, Amazon is only boasting about a 1% overall profit. Bu that may be about to change.

Amazon has been telling their investors that they will be moving heavily into advertising, and the investors are loving it. Many are predicting that this move will push their stock up to $2000 or more per share (which, incidentally, would make Amazon the first company with a $1 trillion market value). Advertising can be an incredibly profitable move for a company like Amazon, which is already well-positioned to jump in with both feet.

Without significant investment, they could immediately become competitive with Facebook and Google, which have long dominated the digital ad industry.

For marketers, a large Amazon ad network will open up many new opportunities and essentially flood the market with lots of new ad slots to be filled. This could drive the prices down for ads, at least initially. The growth of digital ads overall, however, would fill those spots and return the prices to their general upward trend quite quickly.

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Pesach Lattin

Pesach "Pace" Lattin is one of the top experts in interactive advertising, affiliate marketing. Pace Lattin is known for his dedication to ethics in marketing, and focus on compliance and fraud in the industry, and has written numerous articles for publications from MediaPost, ClickZ, ADOTAS and his own blogs.

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