Amazon is growing its share of the digital advertising market

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Global ecommerce giant Amazon is chipping away at Google’s lead in digital advertising. Its share of the American market reached 10.3% in 2020, a year that saw the one-time bookseller’s total revenues rise 38% to $386 billion.

  • According to a new report from eMarketer, Amazon’s 10.3% share of US digital advertising spend in 2020 puts it in third place in the US market. Google is first with 28.9% and Facebook second with 25.2%.
  • Although still some way behind the Duopoly, Amazon is expected to keep inching closer. eMarketer’s forecasts show the world’s biggest online retailer with a digital ad market share of 10.7% for 2021, 11.9% in 2022 and 12.8% in 2023.
  • In search advertising, Amazon is stealing share from Google directly. Google is predicted to hold on to 56.8% of the U.S. search ad market in 2021 – but Amazon’s search ad business will grow to $14.53 billion in 2021. This pushes its share to 19%, up almost 6% since 2019. Amazon is expected to achieve a 20% market share by the end of next year.
A good year for Amazon

Global ‘stay-at-home’ measures drove spending online in 2020 and Amazon benefitted more than most. On top of double-digit ecommerce growth, Amazon’s advertising business grew 52.5% to reach $15.73 billion.

  • Ecommerce revenue in the US was up 10% in the first three months of 2020; growth in the UK was 50%. eMarketer suggests that, during the pandemic, brands increasingly turned to Amazon to help them reach this rapidly expanding online customer base.
  • Almost 90% of Amazon’s ad revenue came from advertising that appeared on the company’s e-commerce platform. Ads for brands and sponsored products appearing within search accounted for a large percentage of that revenue.
  • “For advertisers with goods to sell in the marketplace, Amazon ads were a key performance lever throughout 2020,” said Nicole Perrin, eMarketer principal analyst.

New normal

Although the dramatic increase in search ad revenues was driven by the shift to online shopping during successive lockdowns, eMarketer predicts it will last. “This is one of these situations where the pandemic accelerated something that was happening anyway,” Perrin said.

Amazon is winning share largely from Google, as Facebook currently doesn’t do search advertising. eMarketer’s digital ad market share predictions are for Facebook to stay stable, Google to lose share and Amazon to gain.

Changes to digital ad targeting, largely initiated by Google, could also push more ad spending to e-commerce channels. As it gets harder to target individuals and track ad performance without third-part cookies, first-party purchase data will become an important conversion metric.

Fight back

Google and Facebook are not likely to give up ground easily, however. Facebook is looking at how to introduce ‘shoppable’ display advertising formats that would compete directly on Amazon’s home turf. And Google owned YouTube introduced a new direct response ad format to make video ads more “shoppable”.

“Both companies have a long way to go before catching up with Amazon in the world of ecommerce, but they recognize that they stand to lose digital ad business to the ecommerce giant,” said eMarketer’s Perrin.

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