Will Amazon Cut All The Waste From Audio Advertising?

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Advertising Age reported that Amazon has rolled out audio advertising.  While the test advertisers and their agencies weren’t blown away, the key to understand is that, compared to Spotify, Pandora and IHeartRadio, the targeting that Amazon can bring to audio advertising will DRAMATICALLY increase what brands and manufacturers are willing to pay for it.

Sure, some brands want the reach and tonnage with simple demographic and psychographic targeting. Spotify, iHeart and Pandora deliver targeting that already beats the old broadcast radio targeting which was essentially geography, daypart and format.

Others will use lookalike models and third-party data to target the audio ads.

Imagine, if you will, a manufacturer of children’s toys.  Ordinarily, finding parents with the right age children in a media buy (display, video and audio), is challenging.  The media plan typically has a lot of waste, both online and off, except for Search (PPC) and some audience-focused campaigns that use third-party data sets (which will be harder to use as the third-party cookie dies a slow death).

Along comes Amazon and says: “would you like to target all shoppers who have bought diapers, formula, children’s books 0-3 years, high-chairs, diaper wipes and… etc.?”

All of a sudden a CPM of $35 for a targeted audio ad doesn’t seem outrageous.

The spend levels for such targeted audio advertising won’t be particularly high, but they represent are yet another “Trojan Horse” nosing its way into the overall media plan and the planners will likely supplement the highly targeted buy with concentrically less targeted media (based on KPI effectiveness and efficiency) until the budget is used up.