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Amazon Is Now The #3 Digital Ad Platform In The U.S. Behind Google And Facebook, Says eMarketer

Jeb Su

According to a report published yesterday by eMarketer, Amazon will more than double its U.S. digital advertising revenues this year, overtaking Verizon's Oath and Microsoft to take third place, but still far behind the Google-Facebook duopoly.

The research firm estimates that U.S. advertisers will spend $4.61 billion on Amazon’s platform this year, accounting for 4.1% of all digital ad spending in the country.

A relatively small number for the Seattle-based tech giant which is forecasted to post more than $230 billion in revenue this year.

In 2018, 58% of the U.S. digital ad spending, estimated at $111 billion, will go to the Google-Facebook duopoly: 37.1% ($41 billion) for Google and 20.6% ($23 billion) to Facebook.

Although, Google and Facebook are expected to totally dominate the U.S. digital advertising market for the years to come, eMarketer expects Amazon's digital ad business, recently renamed Amazon Advertising, to grow at a very rapid clip, at more than 50% per year through at least 2020, when the e-commerce giant will reach 7% of all U.S. digital ad spending.

Atherton Research's Take

During Amazon's second-quarter earnings call last July, CFO Brian Olsavsky confirmed that advertising is "now a multi-billion dollar business" with hundreds of thousands of emerging and established advertisers: Amazon vendors, sellers, authors as well as third-party advertisers who want to reach the e-commerce site's customers.

Olsavsky also said that Amazon's priorities in advertising will be to improve the overall usability of its advertiser tools, help make smarter recommendations for customers, automate the activities that the advertisers need to do, and provide measurement capabilities so that advertisers understand what outcomes they're driving on Amazon properties.

We also believe that Amazon's advertising business has 3 big advantages over the Google-Facebook duopoly's that will spur its already rapid growth:

  1. That's where shoppers go to buy: Consumers that go on Amazon are most likely there to buy. Moreover, ads that Amazon put in front of them are often seen as suggestions rather than real ads
  2. A huge and captive audience: Amazon has more than 100 million Prime subscribers or millions more that shop there without a subscription. That's still less than the billion-plus users on Facebook, but in this case, quality trumps over quantity.
  3. A safe environment: There's less risk for advertisers to have their brand associated with anything bad unlike with Google, Facebook or YouTube.
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