Amazon increases digital ad market share at Facebook and Google’s expense
Former CEO of WPP advertising group, Martin Sorrell, famously said that Amazon “kept him up at night”. He was referring to the platform’s potential as an ad space, and also to the way that the retail giant may refuse to “play ball” with existing providers. Digital advertising is, currently, still a two-player game between Google and Facebook (which Sorrell described as “frenemies”) – but Amazon is making in-roads into the market.
Amazon’s share price has appreciated by 64% so far this year
SOURCE: Yahoo Finance
According to research firm EMarketer, Amazon’s online ad business is growing far faster than expected. Previously, they forecast that the ecommerce giant would see $2.89 billion in ad sales this year – now, they’ve revised that figure to be $4.61 billion. That represents around 4.2% of the total digital ad market. This increase is due to an accounting change at Amazon, but also increased demand, EMarketer says.
The extra market share comes at the expense of the two heavyweights in the market, Google and Facebook. In 2017, these firms held 59% of the digital ad market between them – this year, it’s dropped to 58%. Monica Peart, an analyst with EMarketer noted that Amazon offers something different from its rivals: while Facebook and Google are great for brand building, Amazon is closest to customers at the moment of purchase. In other words, if they’re on the platform, they’re already looking to buy. She added: “Advertisers are looking for a third option that ties purchase data directly to the advertisement.”
Timothy Seward, CEO of ecommerce marketing firm ROI Revolution, concurs. And he added that Amazon’s move into groceries is sending ad spend up, as big brands like Coca Cola – who may not make huge sales online – are buying up space simply so they can maintain brand awareness as retail shifts further online. He said: “Amazon isn’t just a web store, it’s also a marketing channel. All of the major brands usually sold in Walmart and Kroger have to be on there.”
Dominion holds Amazon in its Global Trends Ecommerce Fund.
If you would you like to receive the Newsfeeds daily, please click here to sign up now!Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
- Click here to print this story: Print
The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.