Amazon – the Challenger to the Duopoly

As per a recent eMarketer forecast, Amazon is likely to rise up in the rankings of the top U.S. digital ad sellers in 2018. This will take Amazon to the No. 3 slot owing to an acceleration in ad revenue growth.

Amazon is expected to clock USD 4.6 billion in U.S. ad revenue, exceeding Verizon and Microsoft. Amazon is now trailing Google and Facebook, albeit by a huge margin, with an estimated market share of 4.15%. Amazon’s strong performance is also backed up by its strong organic growth in ad revenues besides the accounting changes at Amazon. The accounting changes involve reclassifying some advertising services from cost-of-sales to revenue.

The key reason for Amazon’s attractiveness to advertisers is owing to the digital giant’s ability to provide visibility into the impact of their ad buys on purchases. Unlike Google and Facebook, Amazon to its advantage owns the purchase data, however, the duopoly of Google and Facebook still controls about 58% of U.S. digital ad market, amounting to approximately USD 64 billion.

Another key factor playing in favor of Amazon is the increased search traffic as consumers look for products on its site. This has incentivized the marketers to spend more on Amazon keywords. Additionally, Amazon has enabled advertisers to buy ads even if they are not selling products through Amazon.

In 2017, Amazon has also acquired Whole Foods, as its one of the first investments in brick-and-mortar stores, enabling it to acquire huge amounts of consumer data.

Amazon is well poised to threat the duopoly in the next few years with its aggressive and innovative strategy to take on the digital market.

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