We have seen it before: once Amazon decides to go after a market, it almost always ends up dominating it. This pattern seems to be in play now in digital advertising. In the short time since it began making concerted efforts in the online ads space, Amazon is expected to take the #3 spot by the end of the year, right behind Google and Facebook, the two established giants.
There are good reasons why retailers, in particular, are eager to advertise on Amazon – from the size of its 100+million audience of Prime shoppers and their “ready to buy” disposition to its formidable cross-channel reach. But Amazon advertising is beginning to also attract the likes of Verizon, AT&T and Geico, which do not sell directly on its retail platform. Geico, for example, ran six times as many display ads on Amazon in 2018 compared to the same period last year.
eMarketer estimates that US advertisers will spend $4.61 billion on digital ads with Amazon this year, putting it ahead of Microsoft and Oath and representing an estimated 144.5% growth from last year in its advertising revenue (boosted by tax-related reclassification of some revenue). The jump gives it a 4.1% share of the US digital ad market, which is still dwarfed by the nearly 60% combined market share of Google and Facebook.
To truly challenge the status quo, Amazon needs to improve its media buying experience, which has been subpar compared to that of its biggest competitors. The work is already under way, with the company growing its agency development group and introducing a newly consolidated platform that will fold all campaign reporting and advertising products from the Amazon Media Group, Amazon Marketing Services and Amazon Advertising Platform divisions into one place. It also began testing (with direct sellers only) a new Amazon Attribution tool, which lets advertisers compare whether ads on its sites are more effective than those on its rivals. And, as we mentioned in an earlier post, Amazon is experimenting with its “Video in Search” ad format.
"No matter what your decision is on working with Amazon, you need to have Amazon within your marketing strategy”
Todd Bowman, senior director for Amazon and eRetail at Merkle