EMarketer: Amazon's ad business to grow 50% as it gains on Facebook, Google

Dive Brief:

Amazon's U.S. ad business is projected to grow more than 50% this year, with its share of the digital ad market expected to reach 8.8% this year and nearly 10% next year, according to new eMarketer forecasts shared with Marketing Dive. EMarketer raised its projections for Amazon after its Q4 earnings report.
The combined digital ad share for the digital duopoly of Google and Facebook will drop for the first time this year, according to the report. Google's share will drop to 37.2% this year from 38.2% last year. Facebook's share, including Instagram, will total 22.1% in 2019 compared to 21.8% last year. Meanwhile, Microsoft (which also includes LinkedIn), will fall from 4.1% to 3.8%, while Verizon will fall from 3.4% to 2.9%
Total U.S. digital ad spending will increase 19.1% to $129.34 billion this year, accounting for 54.2% of total U.S. ad spending. Mobile makes up more than two-thirds of digital ad spend for an expected total of $87 billion in 2019. The share of traditional ad spending will decrease from 51.4% last year to 45.8% in 2019.

Dive Insight:

As Amazon continues to grow its ad business, the new eMarketer report shows that the e-commerce site is encroaching on digital duopoly of Facebook and Google, which have dominated the digital ad space. Amazon surpassed Microsoft in 2018 as the No. 3 digital ad platform last year, and the gap is widening, as Microsoft’s share continues to drop.

While Amazon's share has a ways to go before surpassing those of the duopoly, indications are that its ad business will continue to grow. Amazon dominated Google on product searches from 2015 to 2018, with Amazon growing from 46% to 54% and Google declining from 54% to 46%, according to Jumpshot research. With this in mind, some marketers are shifting up to 60% of their search budgets usually allocated for Google to Amazon. Among brands that sell on Amazon, 57% are also advertising on the site, and 97% report seeing value, according to a Feedvisor report. About half of brands spend more than $40,000 on advertising on Amazon, and 38% spend more than $60,000. Advertisers report investing in the site to attract new customers, drive brand awareness, generate leads and drive sales.

Marketers have been attracted to Amazon because of the site's popularity with shoppers and the ability to target consumers at various stages during their shopping sessions. Amazon also offers a wealth of data on consumer shopping habits. To capture these marketers, Amazon has continued to roll out new ad products to attract advertisers. Recently, the company launched Amazon Live, a QVC-like section of its site, and Amazon Moments, a self-service loyalty offering. It has also made a push for exclusive sales partnerships with outside brands, which now outnumber its private label offerings across most product categories.

The eMarketer report is the latest to underscore the growth of digital, which now exceeds traditional ad spending. Digital is also projected to make up two-thirds of total media spending by 2023, according to the report. The Interactive Advertising Bureau recently called 2018 a “landmark year” for digital advertising. Marketers invested $75.8 billion in digital during the first three quarters of 2018, a 22% increase over 2017 and marking the highest-spending first three quarters of a year on record.