Amazon's Programmatic Strategy and Its Rollout in Japan

Amazon is finally entering the programmatic advertising space, where major platforms like Google and Facebook have recently focused their efforts, and is launching a full-scale operation in Japan. How does Amazon view the programmatic market, and what kind of expansion does it envision in Japan? Ryota Murayama of Dentsu Digital Inc. Business Bureau spoke with Seth Delay, Vice President of Advertising Sales at Amazon.

 

Murayama: Programmatic delivery has finally gained attention in Japan, about two to three years behind the US, and has reached a point where it receives a certain level of recognition from advertisers. On the other hand, issues like brand safety, ad blocking, and the inherent complexity of the system itself have also surfaced. Please explain Amazon's approach to this programmatic market, which continues to expand despite these challenges, and Amazon's competitive advantages.

Delaya: Demand for programmatic advertising is steadily increasing. Both advertising agencies and advertisers clearly have strong interest in it because it's a data-driven advertising method and because it allows them to gather various data about the target consumers even after the ad is delivered. It even feels like it's become somewhat of a buzzword.

However, it's also a highly complex field due to the presence of numerous players—technology companies handling delivery systems, media outlets, platform companies, and others. The current reality is that it's difficult to understand exactly how programmatic delivery works.

Amazon places the utmost importance on the trust of its users. While meeting demand is crucial, if we engage in programmatic advertising, it must enhance the experience for consumers using Amazon devices—whether our retail site, Kindle or Fire tablets, or devices like Echo, the hands-free voice-activated speaker delivering music and news sold in the U.S.

 

Murayama: Regarding Amazon Advertising Platform (AAP), which can be considered Amazon's DSP*, I believe its most significant feature is the ability to perform highly precise targeting of Amazon customers. Could you share some potential effective use cases?

Delaya: At Amazon, we aim to enhance the shopping experience by delivering ads that are highly relevant to customers. The same applies to AAP.

Enhancing affinity inevitably translates into improved ad performance. For example, ads displayed on Amazon sites can incorporate e-commerce functionality—adding elements like coupons, product review information, and "Add to Cart" buttons—which can increase click-through rates by 20–30% compared to standard ads. For hair care products, coupons usable on the first purchase are particularly effective.

For advertising agencies, this means higher ad click-through rates; for advertisers, increased product sales; and for consumers, more advantageous shopping. We aspire to create a product that delivers benefits to everyone.

Murayama: Could you share some success stories from the US, where it was released earlier?

Delayya: While AAP is often thought to direct traffic only to Amazon sites, it can also lead to landing pages outside Amazon. Here's an interesting example: A coffee maker ran an AAP campaign. They sold products both on their own website and on Amazon, but the campaign directed users to their own site. As a result, sales on their site increased, but surprisingly, sales also surged significantly on Amazon—the site they weren't directing users to.

Consumers trust Amazon. Even after leaving the Amazon site, they often return to check prices or product reviews. This is a prime example of AAP delivering mutual benefits to both the advertiser and Amazon's customers.

Another key feature of AAP is its ability to expand the target audience. For example, with shampoo ads, the target audience is typically limited to shampoo users. Using AAP's look-alike feature allows us to identify similar user profiles—such as people who bought shampoo overlapping with those who bought coffee—enabling highly accurate audience expansion.

 

Murayama: Beyond the programmatic space, Amazon has released highly regarded products from advertisers, including search-linked ads. Could you discuss products outside the programmatic domain, future product directions, and what you expect from Dentsu Inc.?

Delaya: Search-linked advertising within Amazon, recently launched in Japan, is one of the key pillars of our business. Consumers choose Amazon first when searching for products. They know it offers an overwhelming range of products and reliable information, including reviews from actual buyers. They highly value Amazon's site content itself as a media platform, not just for purchasing. Paid search allows us to effectively connect with these consumers.

We offer not only service products but also customized solutions. In the US, we've already built a strong track record, and these solutions are well-established as services. For example, during the "Minions" movie premiere campaign, we branded the cardboard boxes used to ship Amazon products with special wrapping. We're also seeing growing success stories in Europe and Japan.

Amazon isn't just about selling products. It's an exceptionally well-suited place for companies to promote their brands and solve marketing challenges. Whether in the programmatic domain or not, we at Amazon excel at building data-driven solutions at a global scale. Dentsu Inc. handles promotions for an overwhelming number of advertisers in the Japanese market, and we sincerely hope we can learn together and grow together.

*DSP: An advertising delivery tool used by the demand side (advertisers) in web advertising. It provides functions to help advertisers maximize advertising effectiveness.