Month: May 2019

Analysts see the slowdown as the inevitable tempering of Amazon’s triple-digit growth as the platform reaches maturity. Growth on Amazon will continue to look smaller compared to the company’s current ad revenue as the pool of ad dollars spent are already so significant. Advertisers spent an additional $4 billion on Amazon in the U.S. between 2017 and 2018, resulting in 123% growth. And marketers spent an additional $4 billion between 2018 and 2019, but that resulted in just 53% growth, per eMarketer estimates. As for the next year, eMarketer predicts that an additional $4 billion will be spent but that it will account for just 33% growth.

“We do predict that ad revenue growth at Amazon will continue to moderate,” said Nicole Perrin, principal analyst at eMarketer. “Fifty-three percent this year, 33% next year, 28% in 2021. We do see that trend slowing, but we’re expecting robust growth and [Amazon to] stay solidly in third place in terms of digital ad sellers.”

The slower growth isn’t due to Amazon losing its luster with buyers — quite the contrary — but that marketers are no longer in the honeymoon phase with its primary ads business, which is based on search, through paid search ads or sponsored product ads.

For Merkle clients, spend on sponsored products ads accounts for 85% of the search spend on Amazon but only grew 19% year over year in Q1. In Q4, it grew just 15% year over year.

“It is a pretty significant slowdown from what we saw in the earlier quarters of 2018,” said Andy Taylor, director of research at Merkle. “It does seem related to the Amazon search business starting to come into maturity.”

In the early days of a platform like Amazon, marketers will often ramp up spend to learn as much as they can about it. As that platform matures and marketers learn how to navigate it more effectively, there is a focus on return on investment and making sure the dollars are being spent in ways where they are bringing in profits for marketers.

Amazon accounts for a much smaller percentage of the advertising pie compared to the duopoly. When it comes to where marketers are spending digitally, Amazon makes up 8.8% of the total digital ad spending (up from 6.8% last year), per eMarketer’s estimates, while Google and Facebook account for 59.3%.

“Year-over-year growth rates are slowing in line with what you would expect for a maturing platform,” wrote Kevin Packler, vp and director of Amazon Services at The Tombras Group in an email. “I wouldn’t say that a brink is being hit with Amazon, budgets are still increasing and there’s a steady progression of new options from Amazon advertising.”

It’s clear offering more options to marketers as the platform matures is something Amazon is focused on. Video ad units are being tested currently, and just this week, Business Insider shared Amazon’s pitch deck to get brands to tap into its OTT offerings.

“We’re reaching a point in time where they need to diversify the ad formats that they offer media agencies because there’s only so much we can spend within one channel, particularly in those highly competitive categories,” said Bruce Kiernan, managing partner and head of commerce in the U.S. at Wavemaker.

What’s key will be showing that the diversified offerings are just as impactful as search. Marketers also want Amazon to offer better tools and to share more data, but that’s a common refrain with Amazon, as the company’s ad business growing pains are well-documented.

Eric Heller, evp of marketplace services at Wunderman Thompson Commerce believes Amazon’s ad tools and outside ad tools to use Amazon are getting better, which could account for some the dip in ad revenue as buyers are spending more efficiently on the platform.

“Amazon remains the honey dish on a table full of ants,” said Heller.

The post ‘A maturing platform’: Why Amazon’s ad revenue is growing slower appeared first on Digiday.

BuzzFeed said it’s getting people to watch more than one episode of other programming, too. The average person who watches one episode of “Unsolved,” which focuses on unsolved mysteries and often runs for 30 minutes per episode, watches more than five episodes per month, said Maycie Timpone, director of social media for BuzzFeed.

“In YouTube’s ecosystem, if users are able to discover a show and start watching it, they’re going to latch onto it and watch multiple episodes,” said Timpone. “We want to encourage that behavior and give people something they’ve clearly demonstrated that they want.”

To do so, BuzzFeed is focused on creating a video series for each one of its nine key verticals, which include Tasty, Nifty, BuzzFeed Animation and Pero Like, which is focused on Latinx viewers.

Some shows have already launched. For instance, for BuzzFeed’s gaming vertical, Multiplayer, the company released a video series called “The 100-Baby Challenge,” in which host Kelsey Impicciche tries to give birth to 100 “Sims” children in as few generations as possible. Released in December, the series, which has 18 episodes running over 30 minutes each, is about to cross 1 billion minutes in total watch time on YouTube, according to BuzzFeed. The average watch time on the show is 13 minutes per episode, the company said.

BuzzFeed isn’t exclusively focused on long-form series for YouTube, Timpone said. The company is still producing shorter formats that run between three to five minutes per episode; but if there is a format that requires a longer running time, BuzzFeed will do it.

“We want to make the best content we can and get the highest retention that we can — but that doesn’t mean we want episodes to roll on forever,” Timpone said.

YouTube remains the primary platform for BuzzFeed’s serialized programming — mostly because YouTube has the scale and rewards programming that people spend a lot of time with. But BuzzFeed is also producing shows for other platforms. BuzzFeed’s morning show “AM to DM” was renewed by Twitter earlier this year.

On Facebook Watch, BuzzFeed is producing four series as part of a funding program for shows produced by publishers and starring influencers. These shows include “Hair Flick” for the As/Is vertical, “Edible History” for Tasty, an untitled animated series for The Good Advice Cupcake and “Mi Quinceañera Come True” for Pero Like. These shows are funded by Facebook but BuzzFeed retains ownership over the intellectual property.

BuzzFeed is also increasingly distributing individual series across YouTube, Facebook and Snapchat. “Worth It,” for instance airs on YouTube and Facebook, but BuzzFeed cuts a Snapchat version, too. The publisher will do that with other YouTube series going forward, Timpone said.

“I don’t think we are seeing [audience behavior for binge and repeat viewing on Facebook and Snap] to the extent we are seeing it on YouTube just yet,” Timpone said. “But those platforms are making changes so that sort of behavior happens more naturally.”

For BuzzFeed, the focus with its serialized shows is programming that centers on talent — both homegrown stars and outside stars such as YouTuber Hannah Hart — and identity-driven programming. Pero Like, for instance, caters to the Latinx community and has more than 3.6 million followers across Facebook, YouTube and Instagram. Multiplayer is for female gamers and has 9.6 million subscribers on YouTube.

“If you talk to them, these creators will say that growing up when they were watching traditional linear TV, they did not see themselves in the content they were watching,” Timpone said. “We want to give them the opportunity and people are responding to that.”

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