There was interesting news in the mobile advertising industry a couple weeks ago. Amazon added to its lineup of smartphones that are heavily discounted as a result of lockscreen ads. Up until the release, lockscreen advertising was considered a niche market led by a few startups, but the internet giant’s expansion suggests that lockscreen advertising could be ready to come into its own category.
Amazon’s lockscreen ad supported smartphones: Moto G and BLU R1 HD
Here are the four main reasons why Amazon decided to expand its lockscreen advertising presence.
1. Previous Success with Lockscreen Ads
Since 2011, Amazon has been selling two different versions of its Kindle, and more recently, its Fire tablets. The first version has no ads on the lockscreen and sells for up to $35 more than the second version. The second version shows Amazon ads (labeled Special Offers) on the lockscreen. Amazon does not report sales of each version separately, but Laura Orvidas, Vice President, Consumer Electronics, Amazon.com has said, “We currently offer low prices supported by lockscreen offers and ads on our Fire tablets and Kindle e-readers, and they’ve been a hit—in fact, the vast majority of customers choose the lower-priced option.”
Additionally, in 2016, Amazon introduced lockscreen ad supported smartphones for the first time. Since launching with two smartphone models, Amazon has stated that these models “remain the top two bestsellers among unlocked phones on Amazon.com.” It’s no wonder that they have expanded the smartphone lineup that features lockscreen ads. Over the last six years, Amazon has successfully shown that consumers are willing to see ads on Kindle, Fire and smartphone lockscreens in exchange for value. It only makes sense that they continue to expand that success into additional smartphones.
2. Lockscreen Ads Have Higher ROAS
Amazon spends significant amounts on advertising each year with over 30% growth from 2015 to 2016 ($3.8 billion to $5.0 billion). While these figures consist of much more than digital advertising, Amazon’s goal is to keep customers happy and purchasing on Amazon.com.
That’s why lockscreen ads make sense for Amazon. The customers who purchase the lockscreen phones are existing Prime customers, so Amazon is reaching a captive audience and these high spending customers have opted in to view ads, so the experience is not intrusive like other ad units. Furthermore, the smartphone’s lockscreen is the most intimate and frequently accessed screen, thereby providing Amazon premium inventory to easily reach its core customers. Smartphone lockscreen ads provide a creative way for Amazon to improve ROAS while increasing exposure to a targeted audience with high impact ads.
3. Increase Prime Customers Through Retention and Acquisition
In order to activate the lockscreen phone, one must be an Amazon Prime customer. When considering this fact, there are two types of people who purchase these lockscreen phones. The first is an existing Prime customer who, in this case, is likely to renew her subscription to Prime each year in order to continue using her phone. The second is a new customer of Prime who was drawn in by the benefits and a discount on a new smartphone.
Either way, Amazon will profit because it improves retention numbers of Prime customers without spending on marketing or increases its Prime customer base, which has a higher revenue per user than a non-Prime customer.
4. Amazon Can Solve the Chicken and Egg Problem on its Own
What comes first, advertisers willing to spend on the lockscreen or users who are willing to view lockscreen ads in exchange for value? It’s a very difficult task to jumpstart a solution to this problem, but Amazon is one of the few players in the world who are able to do so. Amazon’s massive customer base solves the user side of the problem while its substantial advertising business solves the advertising side of the problem. According to Statista, Amazon’s ad sales in the US is approximately $920 million a year. These ad revenues are generated from merchants operating within Amazon and large brands, essentially serving as an in-house ad network to fill the inventory from lockscreen ads. In fact, Amazon’s advertising business is estimated to grow to $5 billion according to Morgan Stanley. By leveraging its existing customer base and operations, Amazon is the rare company that is able to create its own lockscreen advertising business from scratch.
Net ad sales of Amazon within the US
Do you think the lockscreen could help your business increase revenues and retention like it did for Amazon? Buzzvil can help. We’ve been in the lockscreen business since 2012 and have helped dozens of companies around the world make millions of incremental dollars each month through our lockscreen SDK, BuzzScreen.
If you’re interested in learning more, contact email@example.com for affiliate inquiries regarding BuzzScreen.
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