The importance of online marketing in a pandemic is becoming paramount. However, at the same time, the search-based advertising market is undergoing serious transformations. Search engines usually consider this niche of online advertising. In this case, Google consistently holds a leading position with a market share of more than 90% (StatCounter). However, if we shift the focus of consideration from search engines to “selling platforms,” then the situation has changed dramatically in the last couple of years.
The primary metric for studying the market from this perspective is net US search ad revenue share. The slide shows the dynamics over the past four years, in which Google is still taking the lead. However, immediately after, it is Amazon, and it is precisely on which you need to pay attention. Amazon accounts for nearly 50% of all online commerce in the US, providing businesses with a popular platform and detailed user data (Laurent & Reagan). Now the company has taken to the online advertising market, and its actions could lead to hardship for other Silicon Valley giants, as well as a change in the way they do business online.
Amazon’s share of the US digital advertising market grew to 10.3% in 2020 from 7.8% in 2019, Google’s market share, in contrast, declined from 31.6% to 28.9%, Facebook ( FB) showed more modest growth: from 23.6% market share in 2019 to 25.2% in 2020 (eMarketer Editors). Amazon’s digital advertising business in 2020, according to data from eMarketer, grew even more than the company’s e-commerce and cloud computing. Although this Amazon business has a much smaller share of the US digital advertising market than Google and Facebook, analysts sound good growth forecasts until 2023 (eMarketer Editors). Amazon took a share of the search advertising market from Google, as Americans were looking for products to buy not through the Google search engine but directly on the platform where these products can be purchased. Advertisers, for their part, have also seen the odds of higher conversions on the Amazon platform.
Amazon has a large amount of data about customers: what they want, what they buy, what they ask the voice assistant Alexa, what they look at the video service. This is unique data that no other corporation can provide. Unlike Facebook and Google, Amazon has actual data about the purchases of users on its own website. This allows Amazon to provide brands with detailed information, better target audiences, and more accurately target ads on other sites. According to Piper Jaffray, Amazon’s advertising business is starting to increase profit; by 2021, it may become larger than its current core business – cloud services (Tae). If in 2017 Amazon received 5 cents from every dollar spent on an ad in the United States, then in 2020, the company will take 15 cents.
Advertising agencies are learning to work in the Amazon ad network, as it is different from other platforms. Much of Amazon’s advertising business is tied to the company’s store, where brands pay to be listed as “sponsored products” in search results. Marketers can use Amazon video ads, TV slot spots in sports, ads on Amazon Fire TV devices. Amazon also helps brands advertise on other sites.
Despite the important role of Facebook and Google, advertising on Amazon in the United States makes it possible to get as close as possible to the consumer at the moment when they want to buy something. Experts predict that Amazon’s share of the US digital ad market will surpass 10.5% this year, and 20% in 2022, thanks to solid revenue growth (eMarketer Editors). Thus, we are witnessing the rapid development of a new and essential player in the online advertising market.
Works Cited
Thomas, Laurent, and Courtney Reagan. “Watch out, Retailers. This Is Just How Big Amazon Is Becoming.” CNBC, 2018.
eMarketer Editors. “Amazon’s Share of the US Digital Ad Market Surpassed 10% in 2020.” Insider Intelligence, 2021.
Kim, Tae. “Amazon’s Advertising Profits Will Surpass Its Cloud Computing Income by 2021: Piper Jaffray.” CNBC, 2018.
StatCounter. “Search Engine Market Share Worldwide.” StatCounter Global Stats, 2021.