Niche sites 'can learn from Amazon and Alibaba' on ads

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E-commerce sites such as Amazon and Alibaba pose a unique threat to established classifieds and marketplaces.

According to Sinead Ward of AIM Group's Classified Intelligence Report, the two have information far more compelling than the online search habits and "who you are as an individual" data held by Google and Facebook: "They know what people buy."

But she says Amazon's success in the ad business reveals an opportunity for marketplaces to better monetise their audiences through display advertising that few are embracing, "and even fewer are doing successfully".

Ward says the 'other' segment in Amazon's half-year accounts - made up primarily of its advertising business - brought in US$4.2 billion, up 135 per cent on last year.

Jack Ma's China-based Alibaba told investors last year it now derives 60 per cent - or US$12 billion - of its revenue from the Alimama advertising platform. Locally it takes about a third of the advertising spend, just behind Google and Facebook and well ahead of local rivals Baidu and Tencent.

AIM Group analyst Tom Marling attributes the speed of its success to heavy investment in ad tech, including the acquisition of AdChina which

operates a supply side, demand side and data management platforms.

Ward quotes Gideon Hornung of Publicis Groupe, on how well Amazon understands its audiences, Nick Falloon, executive chairman of Australia's Domain property site, and Davor Vilusic, general manager of ad tech firm Audience 360 among others. Vilusic says classifieds and marketplaces don't need to be as diverse as Alibaba or Amazon to run a profitable display ad business. "Niche sites can be lucrative too," he told Ward.

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