When investing, it's always a good idea to spread the wealth. Whether you invest only as much as can be insured, or you use different financial managers with unique areas of expertise, your goal is to maximize your capital. Everyone gets a piece of the pie, and within portfolios there's still more diversification.
When it comes to digital marketing, advertisers are wise to spread their budgets around, but the places to spend in an effective way have dwindled. Over the past few years, fewer and fewer players in online advertising have a piece of the pie--especially those trying to protect consumer information--and advertisers looking for the best conversion rates have increasingly directed their ad budgets to a handful of companies where privacy practices and protections are less than stellar.
While the ad eco-system is still far-flung, there are three standard stops: Facebook, Google and now, increasingly, Amazon.
The by now familiar privacy fails at Facebook (think: Cambridge Analytica) and Google (think: the most secretive company on Earth), have not touched Amazon, which has yet to have any epic fails, or even much in the way of mass consumer grumbling. The operative word here is yet.
Meanwhile, the dings and indignities visited on the surveillance economy (i.e., Facebook and Google) have prompted industry-wide rethinking about privacy and online advertising. While consumer information is everywhere for sale despite the introduction of significantly more protective measures in Europe this year (GDPR) there has been, and continues to be little incentive to protect that particular asset.
In this setting, where the ad industry continues to ply an unpopular practice, it makes sense that Amazon has been turning heads. As a retailer, Amazon is already in the business of providing a portal to consumers looking to buy, where products vie for attention and commerce happens. They are one of the few places where a consumer's algorithm is a welcome piece of digital reality, since it helps people find deals on products they will most likely want to have. Amazon is advertising's natural habitat.
Having passed the trillion-dollar mark, Amazon is expanding big time into digital advertising. According to the New York Times, Amazon's ad revenue "surged by about 130 percent to $2.2 billion in the first quarter, compared with the same period in 2017."
The retailer has a staggering amount of granular information about its hundreds of millions of customers, and even more data on the 100 million subscribers to Amazon Prime. All of that is exceedingly attractive to advertisers. Equally attractive is the opportunity to avoid some of the more storied pitfalls associated with online advertising.
Digital advertising has historically involved many participants, and it was and is sometimes still not entirely clear to an advertiser precisely where its digital assets may appear in relation to other content. The most famous example of this came last year when YouTube (owned by Google) ran ads for AT&T and Johnson & Johnson alongside objectionable content--content promoting racism and/or terrorism. Understandably, it was an issue for those companies, which pulled all advertising in March 2017 (AT&T still hasn't returned). While Amazon does sell music and movies, the likelihood of this sort of SNAFU happening is small to nonexistent.
There are other win-wins for Amazon. With the purchase of Whole Foods, food and beverage companies are ramping up their advertising in order to get screen time before Amazon/Whole Food's 365 brand products pop up.
So while it all makes perfect sense that this is Amazon's moment in the digital ad space, it is also common that this "darling of the ad industry" status will change at some point. The new status is born of new systems and uses for the treasure trove of personal information in Amazon's possession, and that increases the potential for data disaster.
Both data compromises and dumb mistakes are certainties in this age of cyberinsecurity. Breaches are the third certainty in life. It only stands to reason that the more information a retailer the size of Amazon amasses, curates and deploys, the more likely that information--or some fact associated with it--will go walkabout.
The cycle of data disaster hindsight being 20/20 is not in any way disrupted by the entrance of a new online ad lion. We are still in search of a cultural shift, and the only certainty in the meanwhile is more stories of failure that will almost certainly dwarf the likes of Cambridge Analytica and Equifax.