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We’ve talked about the duopoly of Google and Facebook so far, but there’s a new player on the horizon who is more familiar with ecommerce than advertising. Amazon is gaining market share and, from a near-standing start, has increased advertising revenues by 64% in just two years.
According to eMarketer, Amazon is set to increase US advertising revenues by 50% this year and account for a little over 8% of the country’s digital marketing spend. That may sound small compared to the 37% and 22% enjoyed by Google and Facebook respectively but it also more than the combined market share of the advertising businesses in fourth and fifth spot, Microsoft and Verizon.
eMarketer is predicting a similar story in the UK where, from relatively small beginnings, Amazon is plugging away in the background to establish itself as a third force in digital advertising.
The ecommerce giant has a unique advantage over its counterparts: it not only knows what a user is searching for right now, it also knows their purchasing history. Google knows what they say they are looking for. Amazon knows what they have actually bought, providing a hotly-anticipated bridge between search and shopper marketing.
When considering the pace of this rise, it is worth remembering that Amazon now trumps Google for market share in product searches and that, typically, nine in ten purchases start on Amazon through a search on its own site, rather than through an external search or an affiliate’s site.
It is important to note here that budgets aren’t being shifted away from the duopoly in favour of Amazon, rather than new money is being brought into the market specifically for this channel. This budget tends to be redistributed from both offline budgets and non-advertising budgets. What this means is that, while some have interpreted Amazon’s rise as taking power and share away from the duopoly, it’s actually just becoming a power in its own right. This is important to note as budgets and priorities are re-aligned for the coming year.