Amazon reaped substantial revenue benefits last year as more marketers deploy ads on the popular ecommerce platform.
The duopoly between Google and Facebook in the digital advertising realm may soon be a thing of the past. According to Amazon’s recent earnings report, the company announced that it experienced a 95% year-over-year increase in Q4 (totalling $3.4 billion) under the “other” category – which primarily consists of sales of advertising services.
Initially predicted to close the year at $2.8 billion in ad revenue by eMarketer, the research firm raised its projection to $4.6 billion back in September knowing that the ecommerce giant was gaining traction with advertisers. In actuality, Amazon completely dwarfed that forecast, generating over $10 billion last year.
Amazon made a series of big plays last year. Last fall, in an effort to remove complications in the ad buying process for brands and advertisers, Amazon consolidated its three separate advertising platforms – Amazon Media Group, Amazon Marketing Services, and Amazon Advertising Platform – into one central marketplace that appeals to both first- and third-party sellers.
Additionally, Amazon’s ability to cater its platform for ecommerce businesses in the form of Ecommerce Channel Ads (ECA) has been another key pillar of success for the company. These ads veer away from a more traditional digital advertising approach that drives web traffic to a company’s landing page or product page. Rather, they leverage Amazon’s virtual marketplace to plant ads that are highly relevant based on a user’s shopping search and direct those users to an Amazon-hosted checkout page.
A recent Kenshoo report revealed that monthly spending on the ECA format has increased fivefold since January 2018.
Despite the 95% growth in Q4 (which was larger than both Facebook and Google in their recent earnings reports), Amazon still has some catching up to do to insert itself into the same playing field as the other digital networks.
The $10 billion in annual advertising revenue pales in comparison to the $55 billion that Facebook recently posted, and even more so when lined up with the $32.6 billion that Google generated in Q4 singlehandedly.
It’s also worth noting that Amazon’s overall revenue seems to be lagging. Q4 was the lowest gain the company has seen since 2015, so while the company has been busy at the wheel, they still have their work cut out for them.
Having said that, there are some who say the duopoly could soon be coming to an end. Mobile Marketer states that Amazon is poised to take a significant slice out of Google and Facebook’s market share by the end of next year as it continues to advance its targeting ability.
Depending on what type of product you’re driving traffic to, the decision to leverage Amazon should be fairly straightforward. If you’re promoting physical goods, there’s no better time than to take advantage of Amazon’s advertising platform. With a growing base of 95 million Prime subscribers in the US alone, already on the platform with the intention of buying something, it would likely be in your best interest to start rolling your campaigns out on that channel and taking advantage of the low-hanging fruit.
If you’re driving traffic to software or SaaS, it’s probably a good idea to hold off (for now). Amazon’s biggest advantage is its ability to serve up relevant ads based on user searches, so if you’re banking on driving quality conversions for a digital offering, your money will likely be better suited on Google. Although before we completely rule Amazon out in this regard, it is worth mentioning that – much like Google – Amazon is working on growing its network of partner sites, which means from an impression and awareness perspective, there is still a case to be made for placing some display ads.
At the end of the day, a little competition in the digital advertising space is never a bad thing, as it gives marketers more versatility and opportunity to distinguish themselves from their competitors.
It’ll be interesting to see what the rest of 2019 has in store for Amazon!
