EMarketer: Amazon’s share of US digital ad market hits 10% for first time

Dive Brief:

  • Amazon’s share of the U.S. digital advertising market last year surpassed 10% for the first time as marketers sought to reach homebound consumers as they shopped online during the pandemic. The 53% growth in the e-commerce giant’s ad business to $15.73 billion pushed its market share from 7.8% in 2019 to 10.3% last year, per information researcher eMarketer emailed to Marketing Dive.
  • Amazon’s U.S. ad business this year will grow another 30% and exceed $20 billion for the first time, eMarketer said in a revised forecast. The researcher estimates Amazon’s ad business will continue to swell, surpassing $30 billion by 2023 as marketers buy ads on its e-commerce site. Its streaming platforms including Amazon Fire TV, Twitch and IMDb TV also are seeing significant growth in video ad revenues.
  • Google’s ad business is most threatened by Amazon’s growth. The search giant’s market share will slide from last year’s level of 29% to 27% by 2023 even as its digital ad business expands. Amazon’s search advertising is set to expand to $14.53 billion this year, putting the company on track to boost its market share to 19% from 13% in 2019, and to exceed 20% by the end of 2022, eMarketer predicts.

Dive Insight:

Amazon’s expected growth in digital advertising is a sign of the e-commerce company’s power to reach consumers when they’re most ready to shop. The pandemic led to a surge in online shopping that has made these ad networks more significant for marketers. Amazon is well positioned for continued ad growth as packaged goods companies shift their trade spending, which in a brick-and-mortar setting typically includes coupons, preferential shelf display locations and co-advertising, to its platform.

“As consumers shift more spend online, trade spending and shopper marketing will rapidly follow, with the bulk flowing to Amazon,” Eric Haggstrom, eMarketer senior forecasting analyst at Insider Intelligence, said in a statement. He cited Amazon’s recent 10-year deal with the NFL to be the exclusive broadcaster of “Thursday Night Football” as a key driver of growth in viewership and ad revenue for Amazon Prime Video.

E-commerce channel advertising, which includes search and display ads on its retail properties, makes up about 89% of Amazon’s ad business, eMarketer estimated. The remainder comes from ads on its video platforms and ads sold through its demand-side platform for ad placements outside of its digital properties. This year, Amazon’s share of the nearly $24 billion e-commerce channel ad market will reach 76%, far exceeding second-place Walmart with 6.5% of the market, eMarketer estimated.

As Amazon pushes deeper into the digital ad market, Google and Facebook have responded by expanding their e-commerce capabilities. Google not only has evolved Google Shopping to drive traffic to retailers, it also has undertaken programs like its recent partnership with grocery chain Albertsons to offer information to shoppers. Facebook has added more shopping features to its social network, and to apps including Instagram, Messenger and WhatsApp. However, Amazon’s strength in e-commerce gives its a major advantage, per eMarketer.

“Both companies have a long way to go before catching up with Amazon in the world of e-commerce, but they recognize that they stand to lose digital ad business to the e-commerce giant,” Nicole Perrin, eMarketer principal analyst at Insider Intelligence, said in a statement.

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