Advertisers are pouring money into Amazon’s burgeoning ad business, and Amazon wants more with a new ad product it’s testing: video ads in search results.
The ads are in a limited beta test right now and have come up in discussions between the online behemoth and ad industry, according to two separate sources who have had those meetings. Those meetings began over a month ago, said one of the sources, but Amazon didn’t publicly announce the product until last week when they made a post intended to drum up interest in the trial.
The format is called “Video in Search” in the post, which revealed that video ads must be 90 seconds or less and contain audio. Ads are shown below the fold in search results and will either drive shoppers to a product page or directly to an Amazon Store or a custom landing page, according to the post. The ads will only be seen by people searching Amazon on either an iPhone or a iPad.
Some of Amazon’s biggest advertisers, including Procter & Gamble, are already testing the new format, which requires a budget of $35,000 or more to get started, according to Amazon. Gillette is running video ads for its Arc 5 razor in search results, per a listing seen by Digiday. Home furnishings company Lamps Plus is also trialing the format, as reported by Digiday.
The ads are sold through Amazon Media Group, the in-house sales team that sells the limited video inventory Amazon has made available. While video ads are sold on IMDB.com Twitch, the Fire TV platform, Amazon.com along with Prime Video’s live sports, the formats have trailed those for search and display.
It’s left some advertisers with the opinion that Amazon is a channel for direct-response budgets rather than brand budgets. Brand advertisers like Lego and Pernod Ricard, on the other hand, want to buy more video inventory on Amazon given it’s essentially become the de facto search engine for shoppers further down the purchase funnel.
Two agency executives interviewed for this article agreed that in-stream video pre-roll ads work well to raise brand awareness, while targeted video ads on Amazon’s owned and operated sites drive people to purchase. Videos in search results could fit somewhere in the middle.
“From our campaign results, we’ve seen just how significant mobile is for the Amazon shopper — the large majority of traffic is from mobile, said Jack Shillito, head of digital at e-commerce agency Precious Media. “For example, in Germany, many shoppers will browse and research products on mobile during the day, add them to their basket, and then they might complete the purchase in the evening on a different device, i.e., desktop.”
If lucrative video ads became part of shopper searches, it could be a critical pivot for Amazon’s advertising ambitions. Amazon does not break out mobile within AMS performance reporting, but it serve less units per query, said Connor Folley, former Amazon executive and founder of search ad platform Downstream. As Amazon shoppers continue to shift toward mobile, it reduces ad inventory. Charging a premium for that inventory on a cost-per-thousand basis equates to more dollars per eyeball and a greater return on those ads.
The problem is Amazon hasn’t done a good job of carving out its mobile inventory to date. In the first half of the year, for example, just one-fifth (20 percent) of Amazon’s U.S. ad revenue came from mobile-only buys, according to marketing analysts at Standard Media Index.
“Integrating more [premium] inventory into search will help Amazon to take more brand dollars, which is really key to exploiting the huge total addressable market available between brand and trade marketing, said Folley. “Unlike YouTube or Facebook, Amazon search engine results page is where the most traffic is, so if you’re going to sell on a CPM basis, this is where you’re going to have the eyeballs to make it a compelling offering for brands while best preserving the customer experience.”
Video ads should attract more advertising spend, but how much will depend on performance.
“Smaller brands will have a hard time with the $35,000 spend threshold as well as the overhead of producing high-quality video,” said Kevin Packler, vp and director of Amazon services at The Tombras Group. “However, for larger brands in competitive spaces, video ads offer a unique and compelling way to stand out from the competition.”
Digiday contacted Amazon for a comment and will update the article once they do.