Amazon’s Ad Revenue Rises, but Only Casts a Shadow on Google
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Amazon’s Ad Revenue Is Growing
Amazon ($AMZN) is experiencing growth in ad revenue. And, is Google ($GOOG, $GOOGL) paying the price for it? If you examine the past year, Amazon got many major ad agencies to bolster their expenditure on it, because it just kept ramping up its business. You would have noticed the banners on top of its search results as well as the sponsored listings getting more common. Its “other” revenue categorization has increased by more than twice in 2018, touching $10.1 billion. This category mainly includes advertising.
And all this advertising growth for Amazon seems to be costing Google. Quoting a report on The Wall Street Journal, Motley Fool analyst Adam Levy states that most of the increased budgets spent on Amazon advertisements were once spent on Google ads. And there were some big ad agencies that shifted their spending to Amazon ads.
Why the Rush to Amazon?
What makes Amazon’s ads so sought after? People searching for stuff to buy usually search on Amazon first rather than on Google. That’s a remarkable phenomenon and one of the rare circumstances where something else gets ahead of Google. In fact, Amazon is reported to have had between 41% and 54% of the share of searches on products. So it has a greater chunk of product searches.
So Amazon has proven to be a great place to research products, and it’s preferred even more than Google for this. It isn’t hard to see why, since it has got detailed information on various products plus reviews. These factors make it easier for consumers to make buying decisions faster and in a more informed manner. Searching on Google would only get a consumer a list of ecommerce sites to enter and check out. With Amazon though, you can directly get to the product information and have a virtual appreciation of it. So advertisers see more value here and therefore prefer to get their products higher up in the product search listings of the ecommerce giant. That would make consumers consider that product.
Google Not Significantly Affected
But Google investors don’t have much to fear, since the eMarketer research firm is quoted by Levy as stating that the search engine giant still makes up 78% of the search advertising market in the US. In fact, its revenue from search ads is expected to rise 17% by the end of 2019. But if Amazon’s search ads keep growing, Google’s search advertising market share could reduce to around 71% by 2020.
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