Amazon brings its ads into mobile apps

FT.com

August 27, 2013 7:29 pm

By Barney Jopson in New York

Amazon is strengthening its presence on mobile apps by offering developers incentives to carry advertisements for its products in their applications, as online shopping via smartphones booms.

Under a programme announced on Tuesday, app owners can earn a commission fee of up to 6 per cent from Amazon when users buy a product that they have promoted on their app.

The move highlights how mobile devices have become the fiercest battle ground in ecommerce, but it is also a reminder of how Amazon – famed for its pioneering inventions – has been slow to innovate in the area.

Sucharita Mulpuru, an analyst at Forrester Research, said: “I would have thought that Amazon would have done this two or three years ago.”

Given that website owners have been able to earn money by posting Amazon advertisements since the late 1990s, she said: “How hard is it to take what you’re already doing and apply it to apps, which are the fastest-growing way people are accessing content?”

The Amazon programme is for apps that run on devices using Google’s Android operating system, including Amazon’s Kindle Fire tablet. The online retailer is also rumoured to be developing a smartphone of its own.

Ms Mulpuru said most app developers had “eyes full of gold” as they looked for additional ways to make money, but added that not every app would fit naturally with the ability to buy products with one-click from Amazon.

Amazon suggested its new plan would appeal to developers whose apps specialise in areas such as nutrition or fitness, as they could choose to promote vitamins or sports equipment available on Amazon.

Rebecca Madigan of the Performance Marketing Association, which represents businesses that host online adverts, said Amazon’s move was “fantastic” for developers, but added: “I think [Amazon is] playing catch-up with the rest of the world.”

She said online advertising businesses such as Commission Junction and Rakuten’s Linkshare had enabled their corporate clients to have product advertisements incorporated by app developers for at least a year.

Amazon said app developers had three options: they could promote a single item, showcase a category of goods on Amazon, or bundle the purchase of physical goods with the purchase of digital goods – for example, giving a customer an online version of a board game when they buy an old-fashioned one.

Mike George, vice-president of Amazon’s app store, said: “Developers now have the ability to create an even deeper connection between their app and the products customers value and purchase through Amazon.com.”

Analysts say shopping on mobile devices is a big part of Amazon’s growth. Amazon’s sales increased by 22 per cent year on year in the past quarter, but it made a $7m net loss that underlined questions about its long-term profitability.

Separately on Tuesday, Twitter said it had appointed its first head of commerce – Nathan Hubbard, an entertainment executive – as it tries to turn its social network into a new way for online retailers to reach consumers.