Currently, Google still holds the largest ad market share in the United States. However, Amazon's market share is growing at a remarkable rate and is expected to dominate even Google only in a few year's time, as reported by the new eMarketer forecast.
Amazon's advertising business has grown at an alarming rate over a few years. With its online ad business going up to 37%, making it $3 billion in the second quarter, and its digital ad business increasing up to 8.8% in 2019 from 6.8% in 2018 of the US's total digital spend. Amazon is now a contender of Facebook and even Google.
Last year, Amazon took over Microsoft, which had a 6.5% share in the ads market, and by doing so, became the largest platform for ads, second to only Google.
Currently, Amazon holds 12.9% and Google 73.1% of the total share of the ads market. This percentage is expected to grow for Amazon up to 15.9% and for Goggle to contract to 70.5% in the market by the start of the year 2021.
Reasons for Amazon's success:
The reason for Amazon's alarming success is its algorithm. Brands that display ads can bid on those ads and make them appear higher in the search results, and as most researchers suggest, people tend to make purchases from the first products that show up. This way brands that display ads via Amazon are able to sell more of their products. This attracts customers towards Amazon for advertisement purposes which results in an increase in Amazon's ad market share in the market.
Another reason for Amazon's success is the fact that Goggle surfaces its data on search results while Amazon displays them in its e-commerce platforms. Amazon is able to leverage the data it obtains from its purchasing habits and can then use it to create an exemplary advertising product. This is the reason why Amazon has been able to raise a multi-billion dollar business in such a little time and is expanding fast.
As reported by emarketers principal analyst Nicole Perrin, Amazon has been able to obtain
a massive increase in spending because on the platform advertisers can reach the customers at a time when they are willing to buy the product. Amazon also offers better targeting tools to its customers which is another reason why more and more advertisers are being attracted to it every day.
Amazon itself offers many products; therefore, its ad business is also not limited to just e-commerce. It extends to grocery products, gaming products, voice, TV, movies, and even sports products.
Some analysts believe that Amazon's ad business ought to soon overthrow its main business, which is web services. Piper Jaffary, almost a year ago, made the prediction that this could happen as soon as the year 2021.
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