US Online Advertising Market: Amazon Rising as the Next Google
Amazon's share of the U.S. online advertising market is increasing. According to data released by market researcher eMarketer in February 2019, Amazon increased 2% from 6.8% in 2018 to 8.8% in 2019. On the other hand, Facebook and Google, the two major companies in the online advertising market, saw their combined share fall 0.7% from 60% in 2018 to 59%. eMarketer expects their combined share to fall to 55.9% in 2020. There is a possibility that Amazon may have showed an increase in just the beginning of the year. However, Amazon's advertising revenue has been on the rise over the past few years. According to a report by U.S. broadcaster CNBC, Amazon has gained 2.7 billion USD in ad sales in the first quarter of 2019 alone.
With Amazon's advertising revenue growing remarkably, Amazon's advertising business strategy has drawn global attention. Amazon merged its advertising and marketing business divisions, Amazon Media Group, Amazon Marketing Services, and Amazon Advertising Platform into Amazon Advertising in September 2018. This decision was made because advertisers may feel confusion due to different advertising and marketing business sectors. Currently, Amazon is using a variety of advertising business strategies, led by Amazon Advertising and it can be categorized into three main strategies. It is divided into 1) M&A and forming partnerships with existing advertising companies, 2) launching new advertising platforms and 3) offering search engine optimization as a service.
In May 2019, Amazon announced a partial acquisition of Sizmek, a technology based advertising company. Amazon also announced that the customers of its advertising operations, Amazon Advertising and Sizmek, are rather consistent. Regarding this issue, Ad Exchanger, a media company specializing in advertising, predicted that Amazon will have customer data in-depth. Media in the U.S. analyzed Amazon's acquisition as a step towards challenging Google as well as the expansion of its online advertising business.
In July 2019, Amazon signed a business partnership with advertising technology companies ‘Dataxu’ and ‘The Trade Desk’ to place external advertisements on its Amazon Fire TV. Through this partnership, Amazon can implement private marketplace advertising sales. In other words, Amazon Fire TV's distributor can now sell ads directly through Dataxu and The Trade Desk. The company is now able carry out advertisements that is suitable for its channels not randomly carrying out advertisements. Amazon is expanding its reach to the TV advertising market as well.
In the future, Amazon is expected to carry out content-driven ads as Amazon’s media business sector is growing significantly. While the existing advertising market is still dominated by Google, Amazon is stepping up as a strong competitor to Google with its diversified business strategies.
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