Can Amazon Eat Into Google and Facebook’s Ad Share?

Can Amazon Eat Into Google and Facebook’s Ad Share?

In terms of the current digital advertising landscape, Google and Facebook maintain a stranglehold on the market, dominating digital ad spend with 33% and 16.2% shares of total revenues respectively.  Meanwhile, evolution in shopping behavior means the web and a number of key players are transforming themselves into digital storefronts, effectively presenting themselves as advertising platforms.  As the customer journey continues to evolve, Amazon is notable for its unique position in taking advantage of not only the shopping opportunity but the associated advertising opportunities as well.  Some have started to question whether Amazon might one day pose a threat to the two behemoths of the digital advertising space – especially because of the recent market trend towards product-oriented advertising.

Amazon potential

With almost 200 million visitors per month, Amazon stands to benefit greatly from its huge search volume along with its low-funnel, high-value product search traffic.  From an e-commerce advertiser’s point of view, the position of ‘close-to-ready-to-convert’ customers counts for a lot.

Advertisers are generally attracted to Amazon, firstly, because of its well-designed native e-commerce ad experience that really resonates with consumers.  Secondly, there is an unrivaled customer base that contributes to a differentiated ecosystem from other platforms, especially in terms of product review.  This membership-style ecosystem translates into a very fast-transacting and product-focused environment which advertisers view as extremely valuable and unique.  Third, a large growth market exists due to the wide variety of advertisers on Amazon, from the very small to the very large.

Specific threats that Amazon poses to Google and Facebook’s digital advertising market share are twofold. The first is mobile search, an area where Amazon has the potential to be extremely relevant to advertisers: mobile search has been a main driver of the overall growth of paid search and the fastest growing segment.  Second, Amazon is in a unique position as holder of end-to-end conversion transaction data, including information on how products sell, how much they sell for, what the margin is, how long the shipping time was, and what the customer satisfaction was.  Amazon benefits from being the last touch before the sale (so-called ‘Last Touch’ or ‘Last Click’ Attribution), which is precisely where advertisers prefer to focus their ad spend.  Neither Google nor Facebook can offer the same proposition at this specific point of sale.

Work in progress

While excited about Amazon’s potential, some advertisers see the current audience targeting as being limited or lacking in sophistication, and in no way comparable to the granularity offered by Facebook from either a behavioral, audience or affinity standpoint. 

Google and Facebook have also excelled at providing advertisers with easy-to-use interfaces and detailed reporting capabilities.  Currently advertisers on the Amazon platform struggle to scale up campaigns due to the challenges and limitations of the functionality of its advertising interface.  To answer these concerns, Amazon ideally needs to improve upon methods for buying media and scaling campaigns, as well as enabling the optimization of budget pacing and creation of holistic reports on product performance.  

Product-first, one-stop shop

Looking forward there are a number of opportunities for Amazon to capitalize on, for instance, lead generation verticals on non-physical products (such as travel or financial services ads currently appearing on Facebook and Google).  In addition, paid search practitioners are becoming very interested in the potential of video and voice search via Amazon Alexa, Google Assistant, or Apple’s Siri, although admittedly it is still early days.

Overall, we are beginning to see a shift in thinking beyond campaign-focused advertising to product-first advertising in cross-channel terms.  Amazon is strongly placed to make a tangible impact on the dominant market share held by Google and Facebook because of its role as a one-stop shop for advertisers, engaging the right audience in cross-channel product visibility.  Benefitting from its huge data set derived from its position of being closer to the sale than other social platforms, Amazon is unique in understanding audience targeting and the affinities of people at this particular point of the sales funnel.  As the customer journey evolves, so too might Amazon in becoming the digital advertising giant of the future.

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