When our sons were younger -- somewhere between the ages of 8-10 -- one of their favorite cartoons was called Pinky and the Brain. The show's two main characters are genetically enhanced lab mice who reside in a research facility. Brain is the mastermind -- a highly intelligent, self-centered schemer. Pinky is his hapless, feeble-minded accomplice.
Each show contains this signature exchange between the two:
Pinky: "What are we going to do today, Brain?"
Brain: "Same thing we do every day, Pinky. Try to take over the world."
I can imagine that similar conversations take place at Amazon's headquarters.
"What are we going to do today, Mr. Bezos?"
"Same thing we do every day. Try to take over the world."
In Amazon's case, the latest takeover conquest may be the advertising industry. According to a recent edition of the Benedict Evans Newsletter, Amazon sold close to $40 billion of advertising last year -- bigger than Prime, bigger than the entire global newspaper industry, and probably more profitable than AWS.
And while there is some dispute about whether ads on Amazon are really advertising, rent, or something else, you can't deny the incredible influx of revenue to the tech retailing giant and the impact it has had on "traditional" advertising outlets. The fact is that eight of the top ten global media owners by ad revenue are tech companies, with Amazon in fifth place behind Alphabet (Google), Meta (Facebook), Bytedance (TikTok) and Alibaba.
Evans then asks the following compelling questions: "So, what are the ads doing for Amazon? Some people think they're degrading the experience – certainly, it's hard to shop without wading through them. But you could also ask whether this is ‘advertising' or ‘marketing' – indeed, you could ask the same about Google's search ads. Is paying for placement an ad, or trade dollars, or end caps, or a slotting fee? Does that distinction break down? Does it matter?"
From my perspective, the bigger story is the transition away from "media advertising" to "retail advertising." Are high-traffic websites or popular social media apps going to permanently alter how we -- producers and consumers -- understand advertising? Does it scare you that Walmart had $2.7 billion of ad revenue last year while the New York Times had $523 million?
We are in the midst of a period of enormous upheaval in the media and entertainment industry. The "truths" about the industry we once considered irrevocable are being dismissed. What once was fantasy is now fact. And companies that can't or won't adapt will face the same fate as Blockbuster and Sears.
In the words of another of my sons' favorite fictional characters: "There's been a great disturbance in the force.">