Amazon’s digital advertising business in 2020, according to data from eMarketer, grew even more than the company’s e-commerce and cloud computing. Although this Amazon business has a much smaller share of the US digital advertising market than Google and Facebook, analysts are sounding good growth forecasts until 2023.
Amazon’s Digital Advertising Business (AMZN) has received a new high growth estimate for 2020 from experts from global research firm eMarketer.
Amazon shares, largely unchanged since early 2021, rallied in early trading on Wednesday (at the time of writing).
Analysts at eMarketer have given investors further confirmation of the strong growth of the e-commerce giant in the US digital advertising market: amid a boom in online sales, Amazon’s ad revenue growth has outpaced growth in its core segments, e-commerce revenue and cloud computing company AWS.
According to eMarketer, Amazon’s U.S. digital ad revenues rose to $ 15.73 billion last year, up 52.5% from 2019. This strong performance suggests that Amazon is strengthening its position as # 3 player and continuing to take market share away from the leaders.
Amazon’s share of the US digital advertising market grew to 10.3% in 2020 from 7.8% in 2019, Google’s (GOOGL, GOOG) market share, by contrast, declined from 31.6% to 28.9%, Facebook ( FB) showed more modest growth: from 23.6% market share in 2019 to 25.2% in 2020.
The eMarketer experts explained this by the fact that Amazon took away the share of the search advertising market from Google, since the Americans were looking for goods to buy not through the Google search engine, but immediately on the platform where these goods can be purchased.
Advertisers, for their part, have also seen the odds of higher conversions on the Amazon platform.
Commenting on the research findings, Nicole Perrin, principal analyst at eMarketer, said: “This is one of those situations where the pandemic has accelerated what was happening anyway.”
At the same time, analysts of the firm believe that this trend will continue – Amazon will capture an increasing share of this market, and Google will lose.
Forecast for Amazon: The company’s share of the digital advertising market in the United States will increase to 10.7% this year, with further growth to 11.9% in 2022 and 12.8% in 2023.
Google Prediction: U.S. digital ad business share will decline from 28.9% in 2020 to 26.6% in 2023.
“You can see Amazon gaining share, Google losing share, and Facebook steadily growing slightly,” Perrin said, referring to the companies’ share of the overall digital advertising market. “The main reason for this is because Facebook does not provide search ads, and this is where Amazon really competes.”
Marketinfo.pro’s article “Amazon Advertising Business Shows Leap of Growth in the 2020s” noted another key advantage of Amazon’s advertising business over Facebook and Google, in addition to being the leader in e-commerce in the United States.
These are lower risks: while Facebook faces ad targeting risks due to Apple Software Updates (AAPL), and Google incurs high traffic acquisition costs (TACs) each year as the company has to pay other tech makers to its search engine was installed in their devices by default, Amazon is more independent.
Amazon runs digital ads on its own marketplace, video streaming service Prime Video, and its other services. At the same time, the company has the ability to track ads from impression to conversion.
According to Cowen’s estimate, Amazon’s ad business could generate more than $ 85 billion in 2026, reaching Facebook’s revenue levels over the next six years.