While still far away from the likes of Facebook and Google in terms of ad revenue, Amazon is making continued progress on its ad business.
Buried within Amazon’s Q3 earnings report yesterday evening in the “Other” category, is a 122 percent year-over-year increase in sales, totaling $2.5 billion, which can largely be attributed to Amazon’s ad growth.
A new report from Third Door Media which surveyed 700 digital marketers showed that of those currently advertising on Amazon, 80 percent plan to increase their ad spend on the platform in 2019.
Fifty-five percent of those surveyed said that their additional budget allocation to Amazon will be incremental, but respondents from smaller businesses will likely be shifting their budgets from channels like Facebook and Google to double-down on their Amazon investment. For marketers, Amazon offers a more direct pathway to consumers who are primed to buy.
“They have people who are in a shopping mind-set, so that’s valuable for Verizon to be seen as a resource within that mind-set,” said John Nitti, the chief media officer at Verizon to The New York Times in September.
In September 2017, eMarketer projected that Amazon would garner $3.19 billion in ad revenue by 2019. These new numbers show that Amazon is currently on-track to become a major player.
A Survata study in 2017 found that 49 percent of consumers’ first product search takes place on Amazon, with only 15 percent saying they would directly interact with their preferred retailer. Twenty-eight percent cited that this is due to Amazon’s user experience, 27 percent said the primary reason was the variety of products and selection, and 25 percent cited competitive pricing as the key reason.
Despite these gains in ad sales, Amazon shares saw the largest decline in over four years, at -10 percent due to an a small deceleration in growth in Amazon’s retail focuses. In spite of this, the retail/technology/advertising giant’s revenue is up 29 percent year-over-year.