Would Kmart buy ad space inside a Walmart?
Probably not. But isn’t that the brick-and-mortar analogy to this:
That’s right, Amazon now places product ads from external websites on their product pages as a CPC ad service. Here’s my question: is this the most valuable CPC ad space for CPG manufacturers on the internet today?
I actually don’t know the answer to that question, but I suspect it’s so. After all, buying ads for “baseball” on Google is as likely to serve to someone looking for information as to someone looking for an actual baseball. But people surfing Amazon are pretty clearly in the market for purchase, which makes these ads ultra-valuable.
It’s easy to see why Amazon would do this. They position themselves as the low-cost, low-hassle, large-selection merchant. To meet these goals, they need to know what their competitors are offering and for how much. By hosting these ads, Amazon gains frictionless access to competitor offerings and pricing information. In essence then, Amazon’s competitors pay Amazon for the privilege of providing Amazon with competitive intelligence. And these merchants are willing to do it because Amazon, more than any other portal on the internet, is where people go to do commerce.
