Amazon will double its share of the total digital ad spend in the next two years, according to a survey of some of America’s top ad buyers. The findings, and recent moves from Amazon, suggest the ecommerce giant could one day compete with the digital duopoly of Facebook and Google, which still dominates.
In late 2018 investment bank Cowen polled 50 senior US ad buyers, together representing $14 billion in ad spend. The results suggests Amazon’s share of advertising budgets will double from 6 per cent in 2018 to 12 per cent in 2020.
Over that same period Facebook’s share will fall from 20 per cent to 17 per cent, as privacy concerns bite the social media giant, according to respondents.
Overall the digital duopoly’s share of the ad spend will fall from 77 per cent to 71 per cent, based on the surveyed ad buyers. While that’s still dominant, Cowen notes it will be Amazon siphoning off most of the losses.
Amazon is focusing more and more on its advertising strategy, positioning itself as a viable alternative to any backlash against Facebook or Google over privacy and brand safety. Its advertising business is already growing faster than that of Facebook or Google and it continues to aggressively hire marketing talent.
Famously consumer obsessed, Amazon is also trying to make the process of buying ads on its platform easier. Last year it streamlined its ad business, merging Amazon Media Group, Amazon Marketing Services and Amazon Advertising Platform divisions into one place, according to Digiday.
The ad buyers surveyed by Cowen — nearly half of which already advertise on Amazon — believe Amazon also has a strong ROI (although it still trails Google significantly). That and the ongoing privacy debate plaguing tech giants, particularly Facebook and Google,
The increased spend will, Cowen says, come from other digital platforms, TV and trade budgets as Amazon outpaces market growth. Facebook will take the hardest hit — over one third of the ad buyers said they plan to reduce spend on the platform because of the social media giant’s privacy concerns.
Overall, over the next five years Amazon’s advertising market share will double, significantly outpacing the industry’s growth rate, according to Cowen, making them at least a growing threat in a market long dominated by just two companies.
Gartner, who marked Amazon as a “new wildcard” in digital advertising last year, says the company has the potential to become a leader in digital advertising on par with Google and Facebook.
But the continued growth in the market means Google and Facebook will remain dominant for the the foreseeable future.
“There’s still room for growth in digital advertising category as more TV and traditional media budgets migrate to digital so I don’t think it’s a zero-sum game yet,” Gartner analyst Andrew Frank told Which-50.
“In some ways I believe Google and Facebook benefit from a more competitive market, given some of the chatter about antitrust —as exemplified by the term ‘duopoly’.”