Amazon knows everything about you

When the Seattle City Physical Therapy Center wanted to attract new patients, it targeted online advertising to people living or working near their offices who recently bought knee pads on Amazon.

When a financial services provider wanted to promote its retirement counseling business, it sent ads to people aged 40-50, who recently ordered a personal finance book from Amazon. When a large credit card company wanted new customers, it focused on people who used cards from other banks on the retail site.

Advertisers have found these people through Amazon’s advertising services that use what the company knows better than anyone else: our buying habits .

“Amazon, in fact, has a simple database - they know what I buy,” says Daniel Knijnik, co-founder of Quartile Digital, an Amazon-based advertising agency that oversees the advertising of clinics and retirement services. For the advertiser is just a dream.

Amazon's commercial, once a limited offer for a company, can now be considered the third pillar of its business, along with e-commerce and cloud computing. According to Morgan Stanley, the Amazon advertising business is worth about $ 125 billion, more than Nike or IBM. At its core, ads on Amazon.com are placed, for example, by manufacturers of toilet paper or soap, who want to appear alongside the search results for the relevant products on the site.

But many ad agencies are excited about another area of ​​advertising that is less obvious to many consumers. The company has been steadily expanding its business of selling video or display advertising - square and rectangular banners on Internet sites - and is approaching the positions of the leaders in this industry - Google and Facebook.

In addition to knowing what people are buying, Amazon also knows where people live, because they provide shipping addresses and information about their credit cards. He knows how old their children are from their rosters, and who has a cold now, thanks to cough syrup ordered by two-hour express delivery. In addition, the company is expanding self-service opportunities for advertising agencies and brands to more effectively use the accumulated data on customers.

“This is where the insane scaling of their business begins,” says John Denny, vice president of CAVU Venture Partners, which invests in consumer brands such as Bulletproof coffee and Hippeas baking chickpeas.

Large online advertising networks offer various ways to target customers. A brand that sells sneakers for women may turn to Google to find people who, according to the company, are women and are interested in running based on their search and browsing history. The company may turn to Facebook to search for people from the women's running group.

Many Amazon features similar to Google or Facebook, for example, offer ways to target users based on their interests, search, and demographic features. But the Amazon advertising system can also get rid of many guesses by simply showing ads to people who buy women's sports T-shirts on Amazon.com.

Advertisers have long been targeted campaigns in the Amazon advertising network. Many do this by working directly with Amazon employees who place their orders on their behalf. This option was historically focused on major brands, because requires minimal promotional commitment. Over time, Amazon has provided more advertisers and their agencies with access to the self-service system to launch their own targeted campaigns on Amazon websites and beyond.

Self-service users can choose from hundreds of automated audience segments. Some of Amazon’s targeting options depend on certain indicators of customers, such as “buyer of products on the international market” or people who have bought acne remedies in the past month, or demographic data, such as “having children between 4 and 6 years old”.

Just Cheese, a brand managed by Specialty Cheese in Rizville (Reeseville), Wisconsin, produces crispy, low-carbohydrate, dry cheese bars used as a snack. Using algorithms to analyze the effectiveness of advertisements on the Amazon website, the advertising agency Quartile Digital drew attention to the fact that people who were looking for keto-snacks and cauliflower pizza, eventually bought a lot of cheese bars. Thus, Quartile showed advertisements targeted at Amazon customers who bought these two specific product categories. For three months, Amazon showed ads on websites over six million times, resulting in almost 22,000 clicks and over 4,000 orders.

This 20 percent conversion rate is the sale to every fifth person who clicks on the ad is “amazing,” says Mr. Knijnik. "This is such a powerful targeting that only Amazon can give you."

Like other ad networks, Amazon uses cookies and other technical tools to track customers from its site on other sites. They told the company that the person who recently bought a book on diet now reads news on CNN and can be sent to this site with a protein bar ad. Amazon does not tell advertisers who this user is, but shows its advertising on behalf of the brand.

Last year, Amazon released a tool similar to those used in some other ad networks. This tool embeds a piece of computer code, known as a pixel , in ads that are shown on other sites, and tracks exactly how this ad placement leads customers to view a product on Amazon or buy it directly.

In addition to buying habits, consumers provide Amazon with other information that it uses to target advertising. For example, the Amazon website has a “Garage” section, where customers can provide information about the make and model of their car to make sure they buy the right parts. In 2015, Amazon used data from this section to help the auto insurer target specific customers, according to a case study on its website. Brands can now self-advertise to drivers who own an Acura MDX, unlike people with Acura TL, through the Amazon advertising portal.

Amazon is slowly developing ways to allow brands to target their customers and customers, as other advertising networks suggest. Advertisers can upload their own customer lists that Amazon associates with its database, and then show ads to customers similar to the list previously downloaded.

Mr. Denny from CAVU Venture Partners pointed to one of his company's companies, One Brands, which sells protein bars on Amazon. The company can reorient customers who have viewed the product page with cake-flavored bars, as well as the so-called similar audience, which allows One Brands to find consumers whose shopping behavior, determined by Amazon, is similar to people who have bought bars before.

He not only finds these customers, but also automatically shows different ads to different people depending on their buying behavior. People who do a lot of product research can see an ad with positive product reviews, while those who signed up for regular deliveries of other products in the past could see an ad offering a discount for those who "sign up and save."

“Early tests show that it’s insanely effective,” says Mr. Denny. "They can do it, and no one else can even come close to this result."