Amazon's ad revenues to grow 470% by 2023, study finds

Dive Brief:

Amazon's share of global digital ad spend will reach 8% by 2023, compared to 3% last year, according to a new report from Juniper Research titled "Future Digital Advertising: Artificial Intelligence & Advertising Fraud 2019-2023." The driver: the retail giant's immense store of consumer data. During this period, Amazon's ad revenues will grow 470% and reach a total of $40 billion by 2023.
Although Juniper predicts Google's ad revenues will exceed $230 billion by 2023, the report indicates its share of global digital ad spend will drop by 1% over the next four years. The reason behind this is the growth of major competitors such as Amazon and Baidu.
Digital ad spending worldwide is forecast to hit $520 billion by 2023, the report says. This compares to an estimated $294 billion this year, for an average growth rate of 15% annually for the next five years. A key driver, Juniper says, is the growth of programmatic ad platforms and related technologies that can delivery highly targeted ads.

Dive Insight:

The new Juniper report is the latest to point to how Amazon's growth as an advertising platform is disrupting the digital media landscape. An eMarketer forecast in February projected that Amazon's share of the U.S. digital ad market will reach nearly 10% next year, while the combined share of Google and Facebook will drop for the first time in 2019. In April, Google parent Alphabet reported that its ad revenue, which showed a 15% year-over-year increase, actually represented a drop in its growth for four consecutive quarters.

The key takeaway from both reports is that Amazon's digital ad business is booming, to some extent at the expense of the previous dominant giants in that category, Facebook and Google. However, brands aren't ready to give up the reach they get with the latter options, according to a separate eMarketer report.

Not only do Amazon ads attract advertisers whose wares are sold on the site, but new research indicates that 70% to 90% of the impact from Amazon display ads drive non-Amazon sales. A key reason is that Amazon has become the first stop for many consumers looking to buy a product, so a search and resulting display ad could drive sales elsewhere.

Amazon's recent moves shows its intent to boost its ad capabilities. In May, it agreed to buy the ad server and dynamic creative optimization unit of ad platform Sizmek. Plus, there are reports that the retail giant is hiring for senior ad positions.

Meanwhile, Google is churning out new ad AI-powered ad products that are helping to drive more precise and privacy-compliant targeting, such as the intent-based Discovery ads or the Gallery ads with interactively accessible details. In May, the tech giant extended its Showcase Shopping Ads so consumers could shop across Google Images, YouTube and its Discover news feed.

Facebook's ad revenues continue to grow despite its highly visible struggles related to privacy issues and slowing usage rates. Instagram is an important driver of ad sales for Facebook, but as the overall digital market expands, the social media giant's overall share of the pie could shrink.