Amazon Tests Contextual Ad Network
The online retail giant has experimented with other forms of revenue in the past few years, including its search engine A9.com, instead of focusing solely on e-commerce.
"It shows Amazon is continuing to diversify its business model and leverage the network they have," said Ellen Siminoff, president/CEO of search marketing firm Efficient Frontier, Mountain View, CA.
Though Amazon has not formally announced the test, a company spokesman confirmed in news reports that Amazon is testing a program to distribute third-party contextual ad links to its network. Amazon has not released the name of the third-party provider. Company officials did not return calls for comment.
"Margins in the advertising business are much larger than in the e-commerce business," said Josh Stylman, managing partner at search marketing firm Reprise Media, New York. "They have got a preeminent affiliate network on the Web, so it's not surprising that they would think of ways to work with publishers."
Amazon's move into the market indicates how lucrative contextual ad services can be, Siminoff said. The next step could be a paid ad service, similar to Google AdWords, she said.
"I wouldn't be shocked. Amazon is really smart," she said. "It likes to deploy things at scale."
Even with Amazon's power, Stylman cautioned that the company has to build a network of advertisers for a contextual service to succeed.
"Without a backfill of advertisers, it is hard to get distribution," he said. "With a new player, even if you're someone as ubiquitous as Amazon, that's challenging."
Christine Blank covers online marketing and advertising, including e-mail marketing and paid search, for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters