Will Amazon Take Over the Digital Ad Space?

Recently there was a report from CNBC that mentions the digital advertising budgets that have been altered for some businesses. These businesses are deciding to direct much of their spending toward Amazon ads over other digital advertising platforms. The report says that these businesses are using about half of their budget for Amazon which was once used for Google search ads. This new report speaks loudly on the behalf of how Amazon is performing and growing when it comes to their advertising platform.

Some of these key findings include the fact that Amazon is now the third-largest digital ad platform. The only other platforms in front of Amazon is Facebook and Google. This says a lot about how Amazon has been performing recently per this past year. An example of this is the fact that Amazon is growing at a swift rate which happens to be 5X faster than Google.

With this knowledge you might be wondering how long Amazon will stay behind Google and Facebook. This will all depend on two major factors. One is user behavior and the other is how it will change over time. To show you a sneak peak into what this will most likely look like, we will present you will the following data. Read along to find out what is predicted to happen.

In order to answer the above question another question was asked from a large number of internet users dwelling in the United States, United Kingdom, and Canada. This question was: "Have you ever bought a product based on an ad you saw online?"

Those who responded saying that they did in fact purchase something after seeing an online ad, 30.2% said that they made these purchases due to the ad they specifically saw on Amazon. That is a much higher percentage then of those who said they were inclined to purchase something because of an ad they saw on Google or elsewhere online.

To give you a better picture on what these results look like when someone searches for something here are some visuals. These results are from a search for "best dog food" on Google and Amazon. Pictured below is that of Google's search results:

Below is Amazon's search results:

With both Google and Amazon the products being sponsored are leading the way with their success rates, but Amazon is coming in hot with their purchase rates because people are on their site to usually do one thing: buy. With Google the selling percentages are lower because people are not always searching their platform to buy, but rather attain information about a product.

Another factor that could add to the Amazon ad success rate could be that users searching it’s platform expect to see a list of the products available for purchase. When a user is searching on Google, this is a different story, because they might assume the results that turn up will be more focused around information rather than availability. This makes Google's ads less helpful for for both those kinds of users, those looking for information and those looking to make a purchase.

If Amazon does in fact triumph in being the lead ad platform, it is going to take time to get there. The chart below from eMarketer is a prediction that the ad revenue from Amazon will grow by around 50% per year and through the year of 2020. This means their market share should be bumped up from 4% to 7% by then.

Although this predicted future for Amazon's ad platform will represent a huge growth, the expansion between Amazon and that of Google and Facebook's digital ad revenue will still be a seemly large difference. This growth for Amazon's digital ad spend will be rather gradual, it is possible it could become a much bigger competitor with Google and Facebook if it can scale it’s video ad offerings.

Another prediction coming from eMarketer is the increase of ad spend that is supposed to grow by 30% by the end of this year and 25% of that will be coming from Facebook. Do note the number from Facebook is only measured along side of other social media networks, such as Snapchat and Twitter, not broader platforms, such as Google or Amazon.

Even though Amazon's ad platform growth is predicted to grow slowly, it should be considered an important platform to utilize for small and medium sized business and their marketers. The best way to see where your brand and associated products would flourish best, would be to check out where its largest or most engaged audience is coming from. Once that is figured out, then use this information to see where it would fit into as an Amazon marketing strategy.

There is also a feature that comes with advertising on Amazon which allows for search engine optimization, much like Google or other platforms. It is especially helpful when the targeted audience is known. There is a site called Keywordtool.iothat can aid businesses in finding useful keywords to better target what their users are searching for.

Whether or not these ad platforms work out to the exact percentages as predicted in the coming year or thereafter, understand that it is all helpful when it comes to the businesses digital advertising budget. Who becomes the lead advertising platform will all come down to which one provides the best return on investment for themselves and the user experience for marketers. At the end of the day this information should be to help your business better position its ad spend.