Amazon hopes for major expansion of its online ad business

The internet retailer would entice advertisers by giving them the one thing they want the most: user data. Two contacts told CNBC that Amazon was willing to share more info than rivals like Facebook and Google if an advertiser was willing to spend enough. And when Amazon already has both extensive knowledge of buying habits and a huge volume of online traffic, its offers could be tempting.

Amazon hasn’t commented on the apparent scoop. It has every reason to want to grow its ad efforts, mind you. Facebook and Google dominate the online ad world (more than 70 percent between the two, Pivotal estimates), and Amazon could seize on that by becoming a third major option that increases competition and forces prices down. Would-be advertisers might flock to Amazon simply to keep its ad rivals humble.

We’d add that Amazon may want to diversify its sources of income. Even with its growing cloud services, Amazon is still heavily dependent on its store (including Prime subscriptions) for revenue. A large ad business could give Amazon a cushion if the store struggles, and could help fund some of Amazon’s experiments, such as delivery drones.

Comments are closed.