Amazon will be the “big winner” in the digital advertising world for 2019.
That’s according to a new report from eMarketer that shows Amazon continuing to take digital advertising market share from Google and Facebook.
eMarketer projects that Amazon will see its U.S. ad business grow by more than 50 percent this year while its market share increases to 8.8 percent.
Google and Facebook are still firmly entrenched atop the digital ad spend rankings, but for the first time the combined share of the duopoly will drop in 2019, according to eMarketer.
eMarketer also noted that U.S. digital advertising spend will exceed traditional ad spending in 2019 for the first time, increasing to $129.3 billion. By 2023, digital will account for 66 percent of total media spend.
Amazon’s big new business
Amazon has quietly built a multi-billion dollar advertising arm that generates revenue by charging companies to promote their products on Amazon properties.
Advertising drives a majority of revenue for Google and Facebook, which charge advertisers to have their marketing content appear on search results or news feeds.
Amazon employs a similar strategy, but instead with its online marketplace and other platforms, giving vendors, authors, and others a way to reach potential customers. One of its main competitive advantages is the data it has on purchasing habits. It’s also replacing Google as the de-facto destination for product searches.
Last year, Amazon reported $10.1 billion in revenue for the “Other” category, which “primarily includes sales of advertising services, as well as sales related to our other service offerings,” according to financial statements. Amazon does not break out specific financials for advertising.
It reported $2 billion in revenue for the category in Q1; $2.2 billion in Q2; $2.5 billion in Q3; and $3.4 billion for the most recent quarter, which was up 95 percent year-over-year.
Advertising is one of Amazon’s fastest-growing business. For comparison, Amazon’s online store sales grew 14 percent and Amazon Web Services sales grew 46 percent year-over-year for the fourth quarter.
Last year, eMarketer reported that Amazon surpassed Microsoft in digital ad spend market share.
“Amazon offers a major benefit to advertisers, especially CPG and direct-to-consumer [D2C] brands,” eMarketer forecasting director Monica Peart said in a statement. “The platform is rich with shoppers’ behavioral data for targeting and provides access to purchase data in real time. This type of access was once only available through the retail partner to share at their discretion. But with Amazon’s suite of sponsored ads, marketers have unprecedented access to the ‘shelves’ where consumers are shopping.”
Given the company’s activity in various industries, Amazon’s ad business goes further than just e-commerce, extending into movies, TV, gaming, voice products, live sports, and even cardboard boxes — Verizon is placing ads on Amazon packages, The New York Times reported. Grocery purchasing data from its acquisition of Whole Foods can give Amazon more insight into brick-and-mortar advertising strategies. Amazon also allows sellers to buy ads for products not offered on Amazon.