As Amazon.com keeps growing and expands into new lines of business, the company is turning its sights on the golden goose of two Silicon Valley rivals: digital advertising.
Google and Facebook dominate the lucrative business of selling digital ads, but experts say Amazon is positioning itself to snatch market share.
“They have made the determination to take the advertising business seriously,” said Rob Norman, chief digital officer for GroupM, an arm of advertising powerhouse WPP.
Driving Amazon’s digital advertising advances are the company’s efforts to make it easier for customers to buy ads on Amazon websites, combined with a growing awareness in the business world that Amazon can offer advertisers a huge audience of consumers who are eager to buy, experts said.
“Many (advertisers) had resisted it for a long time but are starting to realize that you need to be on Amazon, as you are on the other platforms,” said Forrester Research analyst Samantha Merlivat.
By the end of 2017, Google and Facebook had 63 percent of the U.S. digital ad market and 54 percent of digital ad revenue worldwide, according to eMarketer. That leaves little for others. Nationally, the next-biggest U.S. revenue share will go to Microsoft, with only 4 percent of the total.
Globally, Chinese e-commerce giant Alibaba comes directly behind Google and Facebook, but with less than 9 percent of the market, according to eMarketer.
Amazon’s current share is 2 percent nationally and less than 1 percent worldwide.
But as advertisers have followed consumers from the printed page to the electronic screen, digital advertising has boomed, and promises to continue to be a huge moneymaker. Worth $228 billion globally and $83 billion in the U.S., the market is expected to grow 27 percent domestically and 34 percent globally over the next two years, eMarketer reported.
And with digital advertising relying on data-driven targeting of specific consumers, Amazon is uniquely poised to disrupt the status quo, experts said.
“Facebook knows your interests, Google knows your intent and Amazon knows what you do commercially,” said Pivotal Research analyst Brian Wieser.
Wieser believes eMarketer’s estimate of Amazon’s digital ad market share is too low, but he said guessing is hard because Amazon doesn’t make it clear in its financial reporting how much revenue comes from advertising.
Amazon runs advertisements from other companies in a number of locations on its websites, including ads on search-results pages, on pages for specific products for sale, and on its home page, from companies including Sony, Comcast and Wells Fargo. It also sells ads on other Amazon sites, including Digital Photography Review and the movie-focused Box Office Mojo.
Amazon did not respond to a request for comment.
But the company appears to have reached a tipping point of sorts, and could start taking market share from Google and Facebook, eMarketer analyst Monica Peart said.
