As digital devices proliferate more and more into people’s homes and lives, consumers’ digital habits are changing at a very fast pace. They are spending more time than ever, hooked to these devices. These digital consumers crave experiences that are personal, unique and uncluttered. Companies are exploiting this opportunity to increase their bottom line through targeted advertisements and messaging using various digital channels. The worldwide digital ad spending is estimated to reach $327.28 Bn in 2019, dominated by the duopoly of Google and Facebook as the leading digital ad sellers. As the market continues to exhibit healthy growth, digital ad spend will account for approximately half of the overall global ad market by 2020.

Currently, Google, Facebook, and Alibaba as the leading digital ad space sellers. The three companies will account for 61.2% of the total global digital ad market in 2019. Owing to noteworthy growth attributed by the global digital ad market, e-commerce companies have also started to focus on this segment as an alternate revenue source. One of the leading e-commerce giant – Amazon is focusing on making inroads in this space by leveraging its existing e-tail presence and its customer base. Amazon is gaining in advertising when the public perception of Google and Facebook has soured. It is well known how Amazon dominates the world’s retailers, but the world is waking up to see the prowess of Amazon in the advertising business.

Source: eMarketer, 2018 and 2020 estimates from Cowen Report

It is expected that Amazon could double its ad revenue among top US ad buyers by 2020.

Amazon is nurturing its ad business by capitalizing on the huge database of its customers on its shopping portal to provide targeted ads based on consumer buying behavior, and their tastes and preferences. Consumers in recent times are also increasingly searching for products and product-related information on e-commerce platforms instead of search engines. Owing to this, many companies operating in the consumer goods market are moving their search and digital ad budgets from Google to Amazon. Amazon will also grab some share from Facebook ads because many marketers use Facebook ads to sell products on Amazon and now they have the option to showcase their ads directly on Amazon platform.

Course5 Intelligence (Course5) has carried out an analysis to provide insights on how Amazon is striving to disrupt the digital ad market. The study also covers different business models adopted by the top players to stay competitive and retain market share. While all the players have their own advantages in their business models, this study highlights the advantages Amazon has over its competitors. While these players battle it out in this place, there is one more avenue that these players may exploit in future – voice search/shopping, which could be the new battleground considering the focus and penetration of voice assistants/speakers in recent times by these players.

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Amazon’s Emerging Ad Business Model

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Find out why e-commerce site Amazon is becoming the go-to space for consumer search, and thereby for advertisers. What’s the emerging digital ad scenario? What’s the future? Could voice search/shopping be the next battleground?

 

By Kiran BS and Pratiksha Goswami with contributions by Kiran Nandavarapu

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