Concerned about Amazon's Growing Digital Ad Business? Turn to Email

How close is Amazon to the walled gardens? The company is predicted to reach $40 billion annually in ad revenue by 2023 — right behind Facebook’s $55 billion in 2018. And per Juniper Research, Amazon’s ad business is expected to grow more than 470% over the next five years. It might not catch Google or Facebook to crack into one of the top two spots, but its rapid growth has turned the digital ad duopoly into a triopoly.

Amazon’s rise as an advertising force means there are simply fewer ad dollars available to those outside the walled gardens. When Google and Facebook reigned as a true duopoly, publishers still had a reasonable percentage of the overall online ad marketplace to share. Now, marketers who might have spread ad dollars across Google, social, and publishers will likely move that latter group’s spend into Amazon ads as a way to reach that same audience where they are making purchase decisions. This is especially the case for CPGs and retailers.

To stay competitive with Amazon, publishers need to think holistically about new income streams and strengthen predictable ones, like subscriptions. On all counts, email can help.

Subscriptions and Email

Subscriptions as a source of revenue got lost in the shuffle as publishers became more digital. For years, publishers have given away their inventory: outsourcing traffic to platforms like Facebook, Google, and Twitter — and hoping they would deliver better-performing ad revenue. But this has proven to be a losing battle, with third-party distribution contributing a small fraction of total digital revenue for most publishers.

As Amazon emerges as an ad powerhouse, publishers are reverting back to what works. Per a Reuters study, 52% of publishers said subscriptions and memberships would be their main revenue focus in 2019 versus relying on ad monetization. In fact, The New York Times has publicly stated they are looking to grow their online subscriber base to 10 million by 2025.

But how can publishers win new subscribers? Just adding a paywall to the website and hoping readers opt-in to paying for content they are used to getting at no cost on Facebook or Twitter isn’t going to work. They need to entice readers. This is where a publisher’s first-party audience data is so critical — and email is a good place to start.

Publishers pursuing subscription models who have developed their email newsletters and properties have a distinct advantage here. Using the insights that a robust email system provides, publishers can determine the propensity of each potential subscriber to purchase a subscription (who opens, who reads on other devices, etc.).

The email address’s significance for publishers isn’t just a way of sending email: It’s the key to marketing and identity in this mobile world. When publishers use their email newsletters as a tool to drive their subscriptions campaign, they’re able to continue that campaign to a known person with consistent messaging, and dynamic paywalling, wherever that person is paying attention, including across mobile devices.

New Inventory via Newsletters 

However, publishers shouldn’t just rely on subscriptions, as ad revenue will always be important. Many publishers are opening up their email inventory for third-party advertisers to bid on via programmatic advertising platforms, which creates an incremental, recurring revenue stream.

Why does it work? Although email is an older technology, it remains a highly effective and impactful channel for marketers. An Adobe study on email marketing found people still spend hours on the channel each day, with the average consumer checking work email 3.1 hours per weekday and personal email 2.5 hours per weekday. Furthermore, those email newsletters are a fraud-free, logged-in channel that represents a direct relationship with a publisher’s audience — a relationship that is not susceptible to the subtle algorithm shifts that can wreck the best laid-out marketing plans on other platforms. And these emails ads can be personalized based on what the email opener is interested in, according to the publisher’s first-party data.
With this, publishers can partner with retail and CPG marketers to run non-competitive, targeted, and personalized email ad campaigns. For the recipient, it’s all about relevancy. People only tend to get annoyed by advertising when it doesn’t seem relevant to them. But if publishers can connect readers with a brand that really speaks to them, that has a product or service they care about, it’s actually a pleasant experience and produces a good ROI for the brand, and good revenue in turn for publishers!

Amazon may be turning the online ad business into a triopoly, but publishers have the opportunity to go back to a business model where they keep control over their audience and data and still offer value to brand advertisers.