As most business owners involved in online marketing know, every online platform will try to sell you ads. Whether it's Google, Facebook, LinkedIn, YouTube, eBay, etc., most online platforms sell ads to promote your profile or products on that platform. With this in mind, it makes sense that Google and Facebook are the highest sellers of ads. However, according to new estimates from eMarketer, Amazon is set to become the No. 3 ad seller in the U.S., which has several implications for online marketers.
According to eMarketer, Amazon will more than double its online ad sales this year. If the estimate holds true, it will move Amazon up the ranks past Oath and Microsoft to take the No. 3 position behind Facebook and Google. Though Amazon may be in third place, it accounts for only 4.1 percent of online ads, which is far behind Facebook's 20.6 percent or Google's 37.1 percent of the market share.
It may seem odd to take note of Amazon, since it's already a widely known platform. However, considering that it's only one of many online shopping and advertising sites, its growing share of the ad market is remarkable. Both Google and Facebook have business strategies that revolve around advertising sales. The fact that Amazon, whose main source of income is e-commerce, is the third largest ad seller highlights the value that business owners are seeing in advertising on the platform.
One of the reasons Amazon is seeing an increase in ad spending on the platform is likely related to the growing number of third-party sellers using it. Since Amazon is already one of the world's largest online shopping portals, many sellers realized it's easier to list their products through Amazon, and give it a cut of the sales, rather than try to directly compete against the giant. The increase in third-party sellers has made ads attractive to Amazon sellers who want to stand out from the growing number of other Amazon sellers.
There's good reason to assume that Amazon will continue to eat away at the market share for online ads in the future. As more people buy and sell from Amazon, more third-party sellers join, which leads to more ads being bought. If the ads work and more items are sold via Amazon, more third-party sellers will join and the process will start anew.
According to an eMarketer analysis, Amazon ad revenue is expected to increase by more than 50 percent per year through at least 2020. In contrast, Google and Facebook could see their share of the market shrink from 57.7 percent in 2018 to 55.9 percent in 2020, while Amazon's share is expected to grow from 4.1 percent to 7.0 percent.
Business owners and marketers involved in e-commerce should consider giving ads on Amazon another look if they haven't been using the platform. Amazon has made several changes to the ad buying process to make it easier and more effective. It has plans to make the process easier still in the future. Earlier in September, it announced that all ad buying and reporting would fall under a new "Amazon Advertising" banner, and many ad products will be consolidated and renamed to make the experience even better for advertisers.
And with potential for growth in online video ads, partnerships (like the one Amazon recently signed with the NFL), and the growing voice-search market via smart speaker products like Amazon Echo, Amazon will have a lot to offer advertisers in the future.
For more news about changes in the online marketing industry, read this article about changes to Facebook fact-checking for certain pages.