Amazon.com Inc.’s ad business, Amazon Marketing Services, is expected to grow 59.5% this year to $4.61 billion, according to a new forecast released Wednesday by research firm eMarketer Inc.
That would give Amazon a 4.15% share of the U.S. digital ad market. It would also mean that the retail giant’s ad business has leapfrogged over Oath and Microsoft to become the third-largest ad platform in the United States, behind Google and Facebook, which are expected to control a combined 57.7% of the market (Google accounts for 37.1% and Facebook 20.6%).
However, Google and Facebook’s combined share is shrinking; last year the pair controlled 59.1% of the U.S. digital ad market, as the overall digital advertising pie grows and smaller players, including Amazon, capture a growing share.
One reason behind Amazon’s growing U.S. market share is thanks to the large share of consumers who start their product searches on its platform. An Internet Retailer/Bizrate Insights survey conducted in March found that 54% of consumers said they visit Amazon first when looking for a product online, outpacing the 15% who turn to Google first.
“That increased search traffic gives third-party sellers a reason to increase bids for keywords on Amazon,” says Monica Peart, eMarketer’s senior director of forecasting.
Unlike most other digital ad platforms, a large share of Amazon’s ad business is oriented to desktop ads. However, the retailer’s mobile ad business is growing quickly; Amazon is projected to grab $1.61 billion in net mobile ad revenue this year, which would be a 242% jump over 2017. That would give Amazon a 2.1% share of the U.S. mobile ad market.
The new forecast comes in the wake of Brian T. Olsavsky, Amazon’s chief financial officer, noting during the retailer’s second-quarter conference call with analysts in July that Amazon Marketing Services is generating billions in revenue and starting to “make an impact on gross profit.” Hundreds of thousands of advertisers have bought the retailer’s ads, he said, noting that Amazon vendors, sellers, authors and third-party advertisers are using its ads to drive “brand awareness, discovery or, ultimately, purchase decisions on our site.”
EMarketer also adjusted its forecast in reaction to Amazon recently changing its classification of some advertising services as revenue rather than as the cost of sales.
Amazon is No. 1 in the Internet Retailer 2018 Top 1000.Favorite