5 Things to Know About Amazon’s Fast-Growing Ad Biz

Search “Amazon advertising,” and the first webpage you’ll find comes from the e-commerce giant itself. The pitch? In a phrase: “Reach millions of customers who find, discover, and buy at Amazon.”

It doesn’t get much more compelling than that.

With a reported 56% of shoppers in the U.S., U.K., Germany, and France using Amazon as a point of departure for online product searches, and with Amazon’s ad biz growing more than 100% YOY and seemingly poised to pose the sturdiest challenge to Google and Facebook’s duopoly, brands looking to reach online customers—especially affluent, digital-savvy ones with dollars to spend—must take note of the emerging Third Way.

Here are five things you need to know about the most legitimate challenge to Google and Facebook’s digital ad dominance. 

1. Amazon’s advertising pitches include selling more products, driving traffic to external sites, and increasing mobile app downloads. Search on Amazon accounted for 1.1% of such spending in the U.S. in 2017, while the company took in about 3% of digital display revenue. 

2. Amazon has to catch up to the duopoly on video, but it’s working on that. Advertisers tell Digiday that they are interested in bolstering brand-awareness through Amazon advertising products, but the company has a ways to go before its video tools are of the caliber that Google and Facebook can offer. Amazon seems to be aware of the gap and has indicated plans to close it as recently as its most recent quarterly earnings call.

3. The company’s ad biz is seeing significant investment, even though it is of course not even Amazon’s main business. CFO Brian Olsavsky said Amazon is investing in tools to better the ad buying process and secure the ad industry’s holy grail: attribution. And what company could be better positioned to provide attribution for digital ads than the main digital hub for product purchases? “We’re uniquely positioned to show them the direct benefit of their advertising,” Olsavsky said, and it would be hard to argue against the claim.

4. The company now has “hundreds of thousands” of advertisers, and its ad revenue has been projected to double from this year to 2020. Yes, at the moment, Amazon’s still sitting at about 2.7% of the U.S. digital ad market. But industry experts believe that share could grow significantly by 2020, by which time Amazon will be the number-three option for digital ads, surpassing current competitors Oath and Microsoft.

5. Amazon is consolidating its platform, streamlining the ad buying experience for first-party and third-party sellers. “Four media executives said Amazon is working on a consolidated platform that will fold all campaign reporting and advertising products from the Amazon Media Group, Amazon Marketing Services, and Amazon Advertising Products divisions into one place,” reports Digiday. 

Amazon’s advertising opportunities are diverse, they’re already being used by hundreds of thousands of brands, and they’re going to get better. It’s uniquely positioned to offer insights on attribution. And it has financial resources the likes of which hardly any other company hoping to challenge Google and Facebook can muster.

Joe Zappa is Street Fight’s managing editor. Follow him on Twitter @joe_zappa.