It's easy to see why search advertising is one of the most effective ways to reach customers--they literally tell you what they're looking for. Which is why it's pretty much the platinum standard of online advertising. For over a decade, Google has dominated the market--but that's starting to change.
The U.S. search advertising market is growing, yet Google is falling behind. Sure, it still has a substantial lead, but a new study by eMarketer forecasts that while the overall market will grow as much as 18 percent this year, Google's share is shrinking.
Amazon, on the other hand, currently owns 12.9 percent of the search ad market, a share that's expected to grow to 15.9 percent in the next two years. That's impressive, especially when you consider that it means Amazon not only is beating Google but is also growing at a faster rate than the overall industry.
That's astonishing given Google's dominance over the past decade. Not only does it own the largest share of search advertising, but that share makes it the most dominant digital advertising platform--period.
Amazon is already the third-largest advertising platform overall, and the second-largest search ad platform, mostly because of its dominance in online shopping. And advertising now represents a substantial business for Amazon, already contributing over $10 billion.
That may not seem like much for a company that brings in over $230 billion a year, but with Amazon's share of a growing market continuing to increase, it doesn't take long for it to start to make a real difference.
Especially because every purchase a shopper makes as a result of Amazon's search ads results in additional revenue for the company in the form of commissions or other selling fees. Of course, it's only fair to mention here that Amazon has faced criticism that it manipulates search results to highlight its own products based on profitability.
Amazon already represents almost half of all online purchases in the U.S., meaning not only that its search advertising is a powerful tool for businesses that sell on the shopping platform, but also that it represents a huge opportunity for the company to beat Google where it matters most. In fact, Amazon is uniquely suited to continue shortening Google's lead because it offers a far more captive audience.
While both companies have faced scrutiny over antitrust and privacy concerns, each has such massive reach that it's unlikely either is going anywhere anytime soon. That makes the battle all the more interesting as the search ad market continues to shift away from the 800-pound gorilla, in favor of an equally powerful competitor.
That's because people come to Amazon to shop, and shoppers who use the search function are ready to buy. That means that appearing high in those results is important for sellers who are willing to pay a premium to get their products in front of eager buyers.
Amazon may not be overtaking Google anytime in the near future, but it has all of the pieces in place to be a real threat to the search giant's long-time seat on the digital advertising throne. And while Amazon is the smaller player right now (at least in this market), this battle is definitely no David versus Goliath. This battle is more like a Clash of the Titans.