As Amazon Takes The Third Position In The Digital Ad ‘Triopoly’, What Should Marketers Be Watching?

October 15, 2018

Amazon has passed both Bing and Yahoo, as well as the more recently formed Oath in ad spend, seemingly in the blink of an eye.

It’s been a few weeks since eMarketer released 2018 projections for ad spend on Amazon, and more notably, characterized the company as number three in the digital ad “triopoly”. There’s been no shortage of news surrounding Amazon since the release of eMarketer’s analysis, including this week’s coverage around advertisers moving as much as 50 to 60 percent of their search advertising budgets out of Google and into Amazon. Though Amazon’s modest 4.1% piece of the digital ad spending pie seems small compared to Facebook and Google’s combined 57.7%, what we simply cannot ignore is both the rate of consistent growth in ad spending on the marketplace giant, and conversely, the slowing rate of investment in the duopoly.

“The product options on Amazon are endless, so you need to have a strong presence all around. Lean into media before that ad space becomes too crowded and too competitive.”
– Noelle Marra, Director of Strategy

While the announcement itself is significant, there’s a lot more to unpack in terms of the implications for marketers. We’re looking more specifically at: the history leading up to Amazon’s current lightning bolt surge in advertising, its path to forging ahead, and what marketers should be doing as a result.

From Infancy To A Booming $4.6 Billion Ad Business

If you were advertising on Amazon in the early days, say, 4-5 years ago, you may remember the clunky invoice-less process. You were probably paying with your corporate AmEx, and you may have been a smaller mom and pop shop-type player, because at the time, that’s who was focused on advertising. As the platform, and interest in advertising grew, Amazon started to create the levers that made it possible to more seamlessly participate in advertising opportunities. Flash forward to today, and Amazon has passed both Bing and Yahoo, as well as the more recently formed Oath in ad spend, seemingly in the blink of an eye. How? To put it short: A relentless focus on what today’s customers want, and in turn, what today’s marketer needs in order to reach and convert them.

The growth is, however, not without challenges – at least, from the advertiser’s point of view. While the ROI is there for the taking, many still struggle with the platform’s ad offerings, which is why you see more specialty agencies or Amazon and other Marketplace-specific solutions emerging across the landscape. And it’s smart. Does anyone remember the long distant days when Facebook ranked number three in the group of advertising giants? Just like in those days, there is no better time than the present to start running advertising programs on Amazon. Yes, everyone is focused on the big growth story, but the reality is that it’s more worth it to test on Amazon today, while it still trails behind Google and Facebook by quite a bit, and while the competition isn’t quite as fierce. Media presents a great opportunity to have more authority when high-intent consumers are searching on Amazon, and allows you to be memorable and the first thing they see.

“There isn’t a better time than now to start marketing with Amazon. With their obsessive focus on the customer, expect to see more advertising opportunities with intelligent engagement integrated across their platforms. They are not far from it today, and it will be here faster than you think.”
– Ty Sharpe, Director of Digital Marketplaces

This all being said, there are categories we’d consider to be more competitive and where advertising spend has surged significantly – like, Home & Grocery, for instance. Competing here requires clearly exemplifying your product differentiation. And for any category, shifting spend substantially before taking the time to really understand your customers’ needs is never advised. But, if you have a great partner in place to help support onboarding, education and management of the programs, and it makes sense for your business strategy, take advantage of the opportunity today!

Amazon Keeps Moving & Shaking (& Disrupting!) – Search, Display, DSP

Today, some call Amazon the “new Google” for product search, which is likely why advertisers are taking a much more critical look at their Google spend than they have in the past. For consumers that want to shop across grocery, apparel and electronics (AND catch a Thursday night football game), starting and ending on Amazon is a more seamless experience than going through an ad on Google to a brand’s site. Actual sales are more important than just capturing search intent, right? That notion in itself is extremely disruptive to Google.

Something else we’ve learned over the last year is that it’s absolutely critical to maintain close watch of Amazon’s presence on Google. In fact, in nonbrand searches for certain product categories, we’ve actually seen Amazon leverage Google paid real estate to drive to product pages on their website with more ads, meaning that they are essentially subsidizing their own spend on Google. This is particularly significant for brands and/or retailers that do not yet have product on Amazon – if Amazon is bidding (and quite possibly winning) on Google in your category, you’ll need to maximize your bids to ensure you aren’t losing traffic to them. And by that same token, it may further incentivize you to sell on Amazon and even develop an Amazon-specific product strategy, especially if consumers in your category are spending a lot of time there.

Forging Ahead – What Else Will Fuel Amazon’s Ad Growth?

Amazon has been moving quickly and swiftly in the advertising realm, recently changing their previously separate offerings into one complete Amazon Advertising platform. But to confidently own the projected 7% of US digital ad spending by 2020, we know Amazon is working to boost the ad offerings in other key areas. For one, Amazon is making significant head winds in the TV and original content space, which will help boost their positioning in the Connected TV landscape. Just last week, it was announced that Amazon will be introducing a free, ad-supported video service on Fire TV, with plans to “lure more brands by allowing marketers to access its proprietary data to help target video advertising.” Given all the moves with Amazon Prime Video and its broader CTV offering, it leaves us wondering whether Google will be able to do something as spectacular with YouTube.

Amazon has also been testing video ads within the mobile search results (currently in beta), as well as more branded content options in general, like these newly enhanced product pages we’ve seen:


These offer incredible storytelling capabilities for brands, and we don’t doubt that while effective, they likely cost a pretty penny.

Amazon becoming number three in the ‘new triopoly’ is serious business. We hope this provides some great insight and key action items for marketers grappling with the news, and with their strategies coming into 2019. 

And Ty Sharpe
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