Amazon quietly retires CPM ads

Amazon, seems to have stealthily moved into retirement of its CPM Ads. CPM Ads were first launched in 2014 and was an early form of display advertising for Amazon. According to TechCrunch, it allowed smaller web publishers that were part of Amazon’s affiliate program to run banner and other ads on a cost-per-impression (CPM) model on their sites.

While no clear reason has been given as to why Amazon decided to cut CPM ads, Prashant Kumar, founder of Entropia says it is probably because Amazon, more than any other media giant, is extremely well placed to offer lower funnel outcomes.

“So it is only natural that it seeks a new and differentiated ad offering for itself – something that would allow it to take on Google and Facebook,” he added.

“It just shows the company is putting ad revenues as a key priority in the coming years. These revenues are by and large going straight to its bottom line, which is very useful for them at this life stage,” he said.

He added that the move however, does not indicate a final nail in the coffin for CPM ads altogether as CPM ads still play a big role in building awareness and desire (with sales happening offline later). However, Amazon’s key advantage is last mile, as it wants to know who bought which product and wants to better understand the journey that led to purchase.

Amazon seeks to offer that journey as an advertising option better and better.

Siddharth Surana, chief digital officer of India and SEA of Havas Group added that specific to Amazon, CPM Ads it does not have much implication for advertisers as it was primarily used by sellers of products on Amazon.

“All publishers including the likes of Google and Facebook look at eCPM (effective CPM) to calculate their yield. So even when they sell on CPC or other metrics, they are still calculating the yield which is effective CPM for every 1000 ad impressions,” he said.

While CPM is a large part of media activation and will continue to be so in the foreseeable future, other buying metrics come into place for managing specific marketing/business KPI or associated risks.

The big focus should be on driving higher quality with metrics such as viewability and ad-fraud.

Meanwhile Jacqueline Loh, VP, Marketing & Ancillary, Scoot added that the move does not discount the role CPM ads play in today’s overall digital media ecosystem as they have a different purpose than Native and Content.

For Scoot, a large part of its media spend is in display because it “drives efficient results both to generate search and web landings as well as being an integral part of our retargeting strategy”, Loh explained.

“We utilise display, content, and native in different proportions in different markets depending on the business goals for that period, as well as the medium- to long-term brand objective,” she added.

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