SAN FRANCISCO (Reuters) - Amazon.com Inc is trying to grab some of the billions of advertising dollars spent each year by consumer packaged goods companies including Kimberly-Clark Corp, as the world’s largest Internet retailer seeks new sources of revenue growth.
Lisa Utzschneider, vice president of global advertising sales at Amazon, called the consumer packaged goods, or CPG, ad market a “huge opportunity,” during a speech on Tuesday at the ad:tech conference in San Francisco.
U.S. CPG industry online ad spending will approach $5 billion by 2015, double last year’s level, according to estimates by eMarketer, an Internet market research firm.
“There are millions of moms researching products and buying online,” she said. “Moms have $2 trillion dollars of annual spending power.”
Amazon began selling ads for other companies on its websites about six years ago and now runs campaigns that also appear on its Kindle devices. The effort has picked up steam in the last year, putting the company in closer competition with online ad leader Google Inc.
Utzschneider said Amazon launched ad businesses in France and Canada this week, adding to teams the company already has in the U.S., United Kingdom, Germany and Japan.
“We have been watching Amazon’s progress on its advertising opportunities closely and believe them when they say that they are just getting started,” said Ben Schachter, an analyst at Macquarie Securities.
“The key is being able to use massive amounts of personalized shopping data to better target ads,” he said. “Given Amazon’s knowledge of users’ buying habits, they are very well positioned to deliver on the potential of better targeted, and therefore more valuable, advertising experiences.”
CPG is an attractive area to focus on because companies in the sector spend heavily on ads. Kimberly-Clark spent $686 million on advertising in 2011, down from $698 million in 2010.
Utzschneider said only about 4 percent of customers purchase a CPG product from Amazon.
“CPG marketers love that opportunity,” she added.
Amazon recently ran an ad campaign for Kimberly-Clark diapers called Huggies Slip-ons that ran across Amazon websites and its Kindle devices.
Amazon included an offer in some of the ads for $2 off plus a 20 percent discount on Amazon’s subscribe-and-save program. Amazon also embedded customer reviews in some of the ads, Utzschneider explained.
The ads made consumers 30 times more likely to find out more about the diapers and 13 times more likely to buy them, she said.
The ads that ran on mobile devices helped double sales of Huggies Slip-ons via such devices during the campaign, she added.
Reporting By Alistair Barr; editing by Gunna Dickson