According to Pacvue, an ad management platform for Amazon, the cost per click of advertising on Amazon was up 23% on Prime Day, year-over-year. This is a very big deal for several reasons. Most obviously, it means that more advertisers are competing for good slots. That’s good news for Amazon, which has dramatically increased ad inventory in the past 4-5 years, but this means that much more inventory hasn’t even kept up with demand. Continue reading “Amazon’s cash gusher – compulsory advertising on Marketplace”
Jeff Bezos made waves this week that investors should “take a seat” and that Amazon would be ploughing all its profits into the business to address COVID-19. Cue investors fainting, an immediate 5% stock price downturn. But Amazon’s approach is entirely to be expected: in what universe would Amazon NOT invest to meet a new opportunity?
In the first Bezos letter to shareholders in 1997, Bezos said: “We believe that a fundamental measure of our success will be the shareholder value we create over the long term… We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions… We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages.”
And Amazon executed. It effectively spent all of its profits between 2002 and 2018 on investments mostly on its unmatched logistics network, transforming it from this: