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A cottage industry of agencies want to be advertisers’ go-to Amazon expert.
Amazon is the third-biggest digital advertising company behind Google and Facebook. Amazon made $13.5 billion from advertising in the first three quarters of 2020, up from roughly $9.3 billion in the year-ago period.
As Amazon’s ad business has grown, dozens of agencies — many founded by former Amazon employees — have popped up to help advertisers buy ads and sell products on the website. Amazon itself recommends many of these agencies through an online directory.
E-commerce analytics firm Profitero estimated that there are now closer to 130 or 150 North American Amazon agencies now, up from 100 in 2019.
“The Amazon ad agency landscape is large, fragmented and quickly growing — there are very few barriers to entry preventing anyone from starting their own shop,” said Bryan Wiener, CEO of Profitero.
Read more: Inside Amazon’s advertising business, which is $13 billion and growing
TV and digital advertising is typically handled by an advertiser’s media team, but Amazon ad spend is handled by specialists who also manage retail operations. That gives Amazon-focused agencies a leg up over the large holding companies that have e-commerce advertising arms but do not handle retail areas like forecasting, replenishment and setting up product pages, said Travis Johnson, global CEO of Amazon agency Podean.
“It’s too much nitty-gritty for the big agencies to employ expertise in that space, and agencies tend to focus on the advertising side of things,” he said. “The person who owns the budget needs a lot more than advertising to be successful on Amazon.”
Amazon’s structure can also be difficult for marketers to understand without an agency to handle communication with the company. Johnson said that it’s typical for marketers to deal with separate teams within Amazon for onboarding advertisers, search advertising, display advertising, and refunds and chargebacks.
The pandemic has also sped up the pace that brands are hiring Amazon agencies as e-commerce sales and inventory management challenges have grown.
Lauren Picasso, CEO and founder of sports drink brand Cure Hydration, recently hired its first agency. Two-year-old Cure Hydration sells on Amazon, Shopify, Thrive Market, and in retail stores like Walmart and Whole Foods. 40% of Cure Hydration’s sales come from e-commerce.
Picasso said that the coronavirus has cut the amount of inventory that Cure Hydration can send to Amazon from three months’ worth to one. Amazon has also taken longer to check-in products, leading to Cure Hydration’s products being out of stock during the pandemic.
Read more: Ulta Beauty is pushing into advertising as it chases a piece of the $17 billion e-commerce ad business
“We needed to bring on an agency with Amazon expertise — we wanted someone to help us figure out the right cadence of shipping inventory, we wanted some help building out a dedicated brand store, and wanted someone with expertise in Amazon marketing,” she said.
Picasso hired Seattle-based commerce agency The Stable to handle advertising, design work for a branded store, and operational work.
“It’s all primarily ex-Amazon employees, which I …read more
Source:: Business Insider
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