Inside Online Advertising
By Diggers Realm

Amazon Looking To Enter Online Contextual Advertising

It looks like Amazon is looking to get into the contextual advertising game to compete with the likes of Google AdSense, YPN and Microsoft AdCenter. While they already have their categories they don't have a true advertising system.

They've been contacting publishers asking if they'd like to beta test their program. I personally wouldn't do it yet because of the potential loss of guaranteed revenue, but I'm more than happy to see others jumping in as it ups the competition.

This thing seems to have come out of the blue. There was no grumbling or rumors of it and I wonder how robust it is. I'm not a big fan of Amazon as a publisher, mainly because I make very little money from it and the commissions are tiny.

Since it is contextual, by the TOS of other systems, you wouldn't be able to run Amazon's new program alongside them.

Chris Beasley at Sitepoint

On the phone last night it was explained to me that this is more or less an Adsense clone, meaning third party sponsored links, not Amazon links. It is known that Amazon currently get’s sponsored links for their own sites from Google, but apparently they wish to take out the middleman and break out on their own. The fact is that while Amazon has a high gross revenue, they have really thin profit margins, whereas Google and even eBay have much better profit margins. So I think there is probably a little bit of business jealousy at work here, and rightly so. Amazon realizes that if they want to compete as a major Internet destination, not just an ecommerce site, they need to capture a larger chunk of the online advertising revenue. It’s kinda funny, 5 years ago people were speaking about the death of online advertising, and now its huge.

It is kind of funny in a way. I don't know why anyone would ever call online advertising dead. While it may wane at times I think it will always exist.

I also agree with Eric Giguere who has this to say:

The biggest problem I see for Amazon in all of this is attracting the advertisers. Google's AdWords program has been running for a long time now, and has a huge army of advertisers willing to use it. With both Yahoo! and MSN jumping into the fray, advertisers are going to have at least 4 major ad networks to choose from if Amazon also jumps in. I think they'll be the underdog in that fight, for several reasons:

  • they're late;
  • they have to distinguish themselves from the other three;
  • they're a competitor to many retailers.

If Amazon gave me a guaranteed monthly amount that ensured that I wouldn't potentially lose money while beta testing their "quickly produced solution" I would think about it. I don't really see any reason to be their guinea pig with it though. Like I said above, I have barely made anything from Amazon over the past few years, what makes me think I'd make much from them on this with a limited advertisers network? The ads are probably going to be stale like I experienced with Yahoo. Ads with limited relation to the content being provided. Vonage ads on content about terrorism or an election.

I'll take a wait and see approach.

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Posted on Fri Feb 10, 2006 at 12:17 AM | Permalink | Email This | Blogroll IOA! |


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