articulated in an editorial by Geoffrey Manne:
Common sense tells us that many consumers search for music on iTunes—they don’t just buy it there—but that search business is effectively invisible to regulators. The same goes for books and retail goods on Amazon. Online retailers collect, collate and present troves of information about their products, and users eagerly consume, and search for, it directly.
These are undeniably a marketer’s most sought-after searches: those initiated by likely customers. Informational queries, on the other hand, which are Google’s traditional bread and butter, aren’t particularly valuable to advertisers. In fact, only about 30% of Google’s searches even trigger any advertising.
This dynamic has enabled Amazon to begin positioning itself as an important player in advertising, building an ad network called Amazon Sponsored Links. The retailer figures it has so much data on users that it will be able to target ads much better than Google, which now identifies Amazon as its primary competitor.
Mobile and social media have transformed search, too. Today we spend more time staring at our phones than even our TVs, and many users interact not through websites in their browsers, but through apps. Mobile has conditioned us to seek instant gratification—immediate, accessible and localized search results. This revolution has migrated to the computer, which has itself become “app-ified.” Now there are desktop apps and browser extensions that take users directly to Google competitors such as Kayak, eBay and Amazon, or that pull and present information from these sites.
Years ago when there was a website I wanted to visit I had to memorize the full extension of its URL. Today, I rarely use the input bar for direct websites. On most occasions I go to google and search for what ever website I need or put a few words into the task bar and find what I am looking for because it is again directly linked to Google as a search engine.
ReplyDeleteThe face of Google has changed over time. When you go to search for something, it is common to see three or four links directly at the top that are related to your search but are marked as advertisements. Sometimes this can be annoying but other times it can be of big help. Although there may not be any clear advertisements within the direct search engine of Google, they are by no means facing a sharp decline in ad dollars that would signal a cause for worry. Since Google acquired YouTube, they have found new ways to incorporate advertisements within search and content. Now when you want to watch your favorite YouTube video you must sit through a full thirty second advertisement or at least fifteen seconds of it in order to move on to the video you wanted to see. In some cases, depending on the length of said video, advertisements can interrupt the viewing process. To say that Google is lacking in their ability to capitalize from advertising capabilities would be a gross understatement.
Jeff Bezos, the founder of Amazon, has created a valuable service that offers competition among many firms but I don't believe that they will be able to capture the market share of Google anytime soon. In a way you can see the two companies as complimentary services. When ever I need a text book for a class, I search Google. Who is often the first website suggested? You guessed it, Amazon. Amazon has continued to expand their product offerings beyond books in the past year, from groceries to cloud storage. Yes they are a potential threat to Google and have the makings for being a strong competitor but for now I still see them as complementary services and don't expect consumers to rely on Amazon anytime soon for their search engine capabilities.
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ReplyDeleteSucceeding in the face of competition requires that you first find a way to create an advantage and then figure out how to protect that advantage (Froeb ET all, pg. 125, 2014). What about Facebook? If we are speaking about competitive advantage and the internet, how can we not mention this phenomom? Facebook has plenty of competition but seems to stay way ahead of it. Whatever happened to Myspace, it still exists but I don’t know anyone there. I know that both Instagram and Snap Chat are popular, but those outlets seem to be more in with the younger crowd. Is that the key competitive advantage for Facebook? I guess so, the young people are in tune with it and so is the older crowd. My kids and their friends have accounts for Instagram, Snap Chat and Facebook, but my friends and I stick to Facebook solely. To me Facebook is so intuitive and filled with loads of the information I want, no need to go further. Is it possible that Facebook’s competitive advantage is its appeal to the middle age crowd? Do me favor, don’t tell my kids; they will drop Facebook and I will never know where they are!
ReplyDeleteJG
Froeb, L.M., McCann, B.T., Ward, M.R. & Shor, M. (2014). Managerial Economics: A Problem Solving Approach. Mason, Ohio: Southwestern Cengage Learning.
Amazon is constantly searching to be the next huge giant in any market. It’s competing with Wal-Mart with e-commerce and now Google with advertising. I think it’s a very smart tactic for Amazon to enter into advertising. Companies are becoming very crafty with advertising by using Search Engine Marketing (SEM). I’ve witnessed this myself and at first thought it was a coincidence that the very same boots I was searching for in Google now appear as an advertisement in my FaceBook feed. But after the third time, I thought, now look at this. I didn’t know whether to be upset by the invasion or impressed.
ReplyDeleteWith the amount of products Amazon has to offer whether it’s through independent sellers or directly through Amazon, they can target a wide range of potential customers. Amazon is a one-stop shop for everyone. I personally like the feedback you can get from their website and the option to buy a product at different prices, which Google doesn’t have. I’ve had to contact their customer service a few times and the experience was very good.
Winkler, R., & Bensinger, G. (2014, August 22). Amazon Prepares Online Advertising Program. Retrieved October 30, 2015, from http://www.wsj.com/articles/amazon-preps-a-challenge-to-googles-ad-business-1408747979
Very presented article with great insight on the topic. I really appreciate you sharing this article. Keep on sharing!
ReplyDeleteAmazon always seems to be one step ahead of the competition as it relates to their use of customer data. Amazon’s customer data base is one of the web's best known sales tools. Amazon has gone one step further by launching Amazon Media Group. AMG is an ad network that uses Amazon’s customer data to allow advertisers to target specific audiences across its owned and affiliated sites and devices.
ReplyDeleteAmazon Media Group offers display ads across Amazon’s owned-and-operated sites including Amazon.com, IMDB, and other popular and high traffic areas. Additionally AMG offers advertising across its devices like; Kindle and Kindle Fire. If a brand already sells products on Amazon, these items are promoted through advertising, which links to a product-detail page. AMG is then used to boost awareness of products that are new to Amazon.
If a particulate brand does not have products on the platform, it can still use Amazon Media Group to gain insights into how its audience is spending time on Amazon, and target them with relevant ads. AMG is now actively engaging with agencies to drive uptake of the advertising services.
Consumers typically prefer services that are free, supported by relevant advertising, compared to paying a fee or subscription for such a service. Amazon has a track record of delivering that relevance and so AMG is in a great position to expand its advertising capabilities on devices such as the Kindle line. Both online, and through mobile devices, Amazon is attempting to secure its position as a global media player, and attempting to give other sources such as Google, Yahoo, Facebook and Microsoft all the competition they can handle.
Burt, T (May, 2015) Amazon takes on Google, Facebook with new advertising platform for mobile app developers. Retrieved from: http://www.fiercecmo.com/mobilemarketer/story/amazon-takes-google-facebook-new-advertising-platform-mobile-app-developers/2015-05-15
In the blog “Google’s Competitive Disadvantage,” we discover that Google is being threatened by an unexpected competitor – Amazon. Google is primarily a search engine company that makes profits through advertising. They sell to marketers by sharing information about consumer search behavior.
ReplyDeleteThis is where Amazon comes into play. The company has an even greater volume of data specifically on consumer buying behavior and inquiries. Contrast this with Google where only about 30% of the data gathered relates to consumer behavior. At Amazon, they have a spotlight on market activity.
How did this happen? We know from Froeb et. al. (2016) that firms gain competitive advantage when they can either deliver a product or service at a lower cost or deliver a better product or service at the same cost. (pg. 126) This is what Amazon did. They can offer a better product to marketers by using their unique, superior asset – the data they gather on consumer purchasing behavior.
From there, Amazon can maintain its economic profit because it possesses market power. Few other firms can enter the market at the scope of Amazon and it’s brand and unique knowledge through data gathering keep it firmly rooted.