Possible, a digital advertising firm owned by WPP, has acquired Marketplace Ignition, a consulting firm that helps brands develop their Amazon marketing and e-commerce strategies.
Based in Atlanta, Marketplace Ignition is a six-year-old consulting firm that employs about 35 staffers and works on behalf of companies such as Hallmark Cards and kitchenware maker Lifetime Brands. Terms of the deal weren't disclosed.
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Possible said it bought the firm to help it keep up with the growing demand from marketers who want help navigating Amazon and its growing advertising business.
The demand from brands seeking help dealing with the e-commerce giant has exploded and goes far beyond retailers that have been most affected by the rise of Amazon, said Shane Atchison, Possible's chief executive.
"In the last 18 months, consumer packaged-goods companies have become less fearful of channel conflict and begun to get more aggressive at selling directly through Amazon," he said.
Although Amazon's advertising business is a fraction of Google's and Facebook's, it is growing quickly. Marketers are buying ads on Amazon's sites as well as using Amazon and its data to buy ads around the web. In the past few years, Amazon has launched several search advertising products including "Product Display Ads," which feature product images and text related to people's searches and direct them to Amazon product pages.
EMarketer predicts that Amazon will generate $1.81 billion in world-wide ad revenue this year, while Google and Facebook pull in about $73.75 billion and $36.2 billion, respectively.
In a note to investors last month, Morgan Stanley said Amazon's ad revenue could reach $5 billion by 2018.
Ad executives have speculated for years that Amazon would eventually challenge the tech giants' dominance in online advertising because of the vast amounts of data it collects about consumers, including their shopping habits and purchase histories. As its ad revenues continue to grow, Madison Avenue is paying closer attention.
Some executives welcome the competition. Marketers have developed a "habit" of spending money with Google and Facebook, said Mr. Atchison. "It's a two-horse race and we all know you need three horses to have a marketplace. A duopoly is not good for anybody," he added.
During WPP's earnings call in March, CEO Martin Sorrell said "the threat to Google is clearly on search from Amazon."
But there's still a long way to go. Google is expected to have almost 78% of the $36.6 billion U.S. search ad business this year, while Amazon is expected to grab 2% of the market, eMarketer estimates.
Marketplace Ignition offers clients a wide range of services, from helping brands figure out their packing and distribution for Amazon to creating the advertising that appears on the site. That includes devising the right key words needed for brands to optimize their search ads on the platform.
The company recently worked with tinfoil maker Reynolds to create product pages that were optimized for search on Amazon, and it also helped the brand create ads that appear on Amazon Marketplace.
Although brands and agencies have developed deep skills sets that help them manage Google search, Amazon's ad products are unique to the platform and require different approaches, said Eric Heller, CEO and founder of Marketplace Ignition. Mr. Heller said he is selling his company to Possible in the hopes that he can scale the business faster by having access to Possible and WPP's clients.
Marketplace Ignition's staffers that are located in Seattle will be moved into Possible's Seattle outpost, which has a dedicated e-commerce practice that it started in 2013.
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(END) Dow Jones Newswires
May 09, 2017 07:14 ET (11:14 GMT)