Wondery Will Make Amazon an Even More Formidable Force in Advertising

“Anytime Amazon acquires anyone, there’s an extra added buzz—particularly when it’s something in the media/marketing/entertainment world,” said Collin Colburn, senior analyst at research firm Forrester. “The other thing is that this area of podcasting has been extremely acquisitive and consolidating.”

Indeed, in the last year, we’ve seen SiriusXM acquire podcast app Stitcher, the New York Times buy podcast studio Serial Productions and Spotify purchase sports podcast network The Ringer—and sign a deal with comedian Joe Rogan.

Per Chelsea Gross, senior principal at research firm Gartner, the Wondery deal demonstrates Amazon intends to now compete in audio as a more significant player. In addition, its podcast library helps build out Amazon’s Prime-exclusive content—and potentially convince new members to take the plunge. And, noted Forrester researcher Sarah Dawson, podcasts give Prime members another reason to stay in Amazon’s ecosystem.

Amazon helps cement a big year for audio

But the deal itself also indicates the predictions about audio marketing in 2021 are already spot on.

“Anytime you have big players like this getting into it, that’s usually a good sign of momentum and interest on the part of advertisers,” Colburn said.

Gross agreed audio marketing is “definitely an area that we’re seeing a lot of growth from the clients that we work with and an area that they’re seeing pretty significant return on investment.” That’s in part because audio marketing includes host-read ads that “[come] across more as a friend as opposed to this heavily messaged piece of media,” she said. But it’s also because of programmatic insertion of highly personalized ads based on user behavior, which is right up Amazon’s alley.

“If Amazon’s able to gather and put together browsing history or purchase behavior with some of the advertising indicators, I definitely see how this could be really powerful,” Gross said.

Amazon currently offers audio ads on Amazon Music in the U.S., U.K. and Germany. But a new podcast library suggests potential for even more audio inventory. (In regards to podcast ads, an Amazon spokesperson said the Wondery deal is not closed and, “There are no changes to share.”)

At the very least, listener data can help Amazon refine its targeting capabilities and zero in on what products listeners are most likely to buy, said David Erickson, principal of digital marketing consultancy E-Strategy Media and co-host of the Beyond Social Media Show podcast.

A full-funnel option

According to Guru Hariharan, CEO of ecommerce optimization platform CommerceIQ, Amazon already owns the bottom of the purchase funnel—in which consumers know what they want and are ready to buy—thanks to advertising options like sponsored products. Now, however, with more content, he thinks Amazon has a shot to own the entire funnel at a time when more retailers are becoming media companies to compete for brands’ ad dollars.

That’s because Amazon is poised to win a bigger share of top-of-the-funnel advertising—in which brands try to generate awareness among consumers early in the purchase cycle—which he said is “still very young” in retail with no clear winner.

“The beauty of this acquisition is that brands now have a way to control the full funnel and measure attribution,” Hariharan said. “It’s a CMO’s dream to see which ad dollars are attributed to sales, so connecting top-of-funnel and bottom-of-funnel is magic for brands.”

Gross agreed there’s potential for vertical integration, like complementing audio ads with product placement in search ads, which “makes [Amazon] even more formidable from a media standpoint.”