Dive Brief:

• Amazon's revenue from search ads will jump 65% to $11.7 billion by 2021 as the e-commerce giant takes a bigger slice of Google's market share in the U.S., eMarketer said in a forecast shared with Marketing Dive. Google's share will slip to about 71% by 2021 from 73% this year as internet users turn to Amazon to start product searches, boosting its share of U.S. search ad revenue to 16% from 13% for the comparable periods.
• Amazon is the only company whose share of the U.S. search market will grow over the next few years, having already surpassed Microsoft to be the second-biggest ad platform for search. EMarketer forecasts that Microsoft, Verizon Media and Yelp also will lose market share to Amazon.
• While Walmart, Target, eBay and Pinterest generate revenue from search ads, their combined market share is less than 4% of the total, eMarketer said. The U.S. search ad market will grow almost 18% this year to about $55.2 billion, the researcher predicts.

Dive Insight:

EMarketer's forecast is the latest to underpin Amazon's rapid advertising ascendency and how that could impact Google on the critical search front. Google's ad revenue growth rate has slowed in some recent quarters, and Amazon has seemed particularly capable of drawing away more dollars from high-spending categories like packaged goods.

Amazon's key advantage over rival search platforms is reaching consumers when they're ready to make a purchase, Nicole Perrin, principal analyst at eMarketer, said in the forecast. Amazon has also improved its measurement and ad targeting tools to beef up its marketing muscle.

The ad-tech side of the business will be important to watch as Amazon and Google further butt heads. Amazon earlier this year acquired Sizmek's ad server and dynamic creative optimization solution to bolster its ad platform. Though Sizmek entered bankruptcy, its ad server was one of the few units that created real competition with Google's DoubleClick.

It's clear that Amazon is ramping up a pitch for brand dollars to capitalize on its momentum and new tech capabilities. Earlier this month, it held an inaugural AdCon conference, its first event specifically for brands versus ad agencies. Some 400 attendees saw sessions that highlighted how Amazon's ad platform can be used for brand awareness in addition to direct sales, with formats like video ads in search in the spotlight.

Faced with Amazon's growing encroachment on its search ad business, Google has recently expanded its e-commerce efforts to appeal to shoppers. The company this month redesigned its Google Shopping portal with a price-tracking tool that alerts consumers of price cuts. Google this year also added new shoppable ad formats to Shopping, search and YouTube.

In the broader category of U.S. digital advertising, Amazon's growth threatens Google and Facebook, transforming their current "duopoly" status into a "triopoly," Forrester said in a report last month. Media and ad agencies will benefit from Amazon's emergence as the third major digital ad platform, although they must develop expertise in running campaigns on its properties, the researcher said.

Google parent company Alphabet reported $32.6 billion in ad revenue in Q2 2019, a 16% year-over-year gain that was lower than Amazon's 37%. However, Amazon doesn't provide a breakout of ad sales, including search ad revenue. Alphabet's results marked a slight reversal in a four-quarter decline that saw its yearly ad growth rate plunge from 24% in Q1 2018 to 15% in Q1 2019.

Amazon will announce Q3 results on Oct. 24, while Alphabet reports quarterly earnings on Oct. 28.