Amazon: #3 in Digital Advertising

According to research firm eMarketer Amazon is projected to be #3 in the top U.S. digital advertising sellers in 2018. This year the company is expected to generate $4.6 billion in U.S. ad revenue, surpassing some of the largest tech companies such as Verizon Communications Oath and Microsoft Corp. However, it is important to note that a large part of Amazon’s spike in growth is due to recent accounting changes affecting the estimates for 2018.While Google and Facebook are still very far ahead of everyone else - controlling around 58% of the United States digital advertising market - Amazon is playing catch up. This year alone Google and Facebook will bring in about $64 billion combined. eMarketer estimated that Google will make $39.92 billion in 2018, while Facebook is estimated to make $21 billion. Still considered an infant company compared to that of Google and Facebook, Amazon is slowly on the rise.

How Amazon is Paving the Path for Themselves

The rankings with the largest amount of ad dollars:

1. Facebook: Estimated to generate around $21 billion in 2018.
2. Google: Will generate about $39.9 billion this year.
3. Amazon: Will rake in around $2 billion for 2018.
4. Snapchat: Projected to reach $1 billion for the first time in 2018.
5. Twitter: Projected to bring in about $1.1 billion.

Amazon is projected to have a 2.1% share of mobile ad markets increasing mobile ad revenues by 242% to $1.61 billion in 2018. One of the main drivers for Amazon’s digital advertising growth is that advertisers know people are on Amazon to shop, not just browse and read posts from family and friends. This knowledge allows advertisers to create ads that are also suggestions for these shoppers.eMarketer is predicting that Amazon Advertising will grow at 50% per year through 2020 when they will reach around 7% of the U.S. digital advertising spending. Although Amazon will have 4.1% market share for 2018 it is still far behind Facebook with 20% and Google with 37% of market share. While the divide of digital advertising between the three companies seems to be narrowing Google and Facebook still run the show with their duopoly.

Search traffic from customers looking for items on Amazon’s site has also helped to boost its ad business. This has caused third-party sellers to spend more on keywords for Amazon. Amazon also allows non-sellers to buy ads, making a broader appeal to all advertisers for their products. Not only are these advertisers selling their products, but people who want to target Amazon customers such as authors are also advertising on the site. By the end of 2018 Amazon will have consolidated all ad buying and reporting under Amazon Advertising for their ad buyers. This will help to eliminate the confusion of the items advertised and the difficulties of buying those advertised products.

Advantages of Amazon Advertising are:

1. Consumers Shop: Many consumers don’t view the ads on Amazon as ads, but as suggestions. This gives advertisers an advantage to blend in with the website.
2. Captive Audience: With millions of Prime subscribers and non-subscribers there are many people viewing the ads daily. While this is much less than Facebook and Google the ads are viewed by actually consumers likely to buy creating quality over quantity.

One of Amazon’s most profitable businesses has been Amazon Web Services (AWS). Amazon currently holds the number 1 position in cloud infrastructure as AWS is a cloud computing platform. Much of this potential to continue to grow plays a part in that consumers now go directly to Amazon for the products they want to purchase instead of Google.While Amazon may not surpass Google and Facebook as a digital advertising platform, as long as it continues to take away market share from the two giants it will continue to grow. The company looks better than ever now that they have dominated the e-commerce world, leads in cloud computing and has a flourishing digital advertising business. Constant growth in all of Amazon’s businesses will continue to grow the digital ad platform it has created for itself. Let us know what you think about Amazon running the show in your comments!