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Growth of Advertising Spending in Amazon

Nov 8, 2019 11:57:03 AM

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For years, online sellers and marketers have relied on Google Ads as the number one place to advertise and acquire new customers. And, why wouldn’t you? Google Ads was the best place to see the type of ROI on your marketing dollars that you wanted to see. However, in 2019 and beyond, this is rapidly changing. Other online retailers are getting into the game as well. Amazon specifically is growing at a rapid pace and quickly eroding Google’s stranglehold on online advertising. Here is what you need to know about the growth of advertising spending on Amazon.

Years of Google Domination

As online advertising has grown, Google, the world’s predominant search engine, has been the runaway leader of the category. 2017 saw the peak of the Google ad boom as it accounted for 80% of the revenue in that space. At that time, Amazon was at just 2%. Over the last few years, as advertisers have seen more benefits in the less crowded Amazon platform, that revenue has jumped significantly. Up to 12.9% in 2019. It has also cut into Google’s percentage of the market which has gone down to 73.1% in 2019 and the marketing experts at eMarketer predict that number will drop to 70% or lower by 2021.

The Rise of Amazon 

The search ad market is growing at a rate of 18%, up to over $55 billion in 2019. With Google declining, Amazon is driving much of this growth. Because of the ease of use, customization options, targeting ability, and ROI of Amazon search ads, coupled with the general growth of Amazon, these types of ads have experienced huge growth. In 2016, Amazon search ad revenue was about a quarter billion dollars. In 2017, that number went up slightly to about a third of a billion dollars. In each of the last 2 years though, Amazon ad revenue has increased by $4 billion each year. This represents 176% growth since 2017. Experts predict continued growth leading to a 16% market share by 2021.

Amazon Ad Spending in 2019

On October 25, 2019, Amazon released its Q3 revenue report. The highlight of this report was its ad sales numbers. Their ad sales grew by over 45% in Q3 which outpaced their growth in both Q1 and Q2 this year which grew at a rate of 34% and 37% respectively. Analysts believe that this is a sign that the Q4 growth rate could be upwards of 60% as the holiday period generally sees increased growth.

Benefits of Amazon Ad Spending 

Amazon ads give eCommerce sellers a range of benefits that they cannot get from Google ads. This also means that the strategies and software you need to take full advantage of these ads can differ from what you need for Google.

Targeting ability – Amazon ads give you the ability to target customers not just by demographics but also by search history and transaction history as well. This means that you are not just taking your best guess on consumer habits based on who the customers are, you are actually seeing the habits and targeting accordingly.

Compelling Digital Storefronts – When you take advantage of Amazon search ads, you also get access to free digital storefront templates. This allows you to better customize your storefront for an enhanced branded experience for your customers.  

Ad Type Options – Amazon gives you a range of search ad options that can work for your specific purposes and budget. There are Headline Search ads that show up in the top banner when people search for specific keywords. Sponsored Product ads feature individual products in search, and Sponsored Brand ads feature up to three products as well as your logo. These ads are both included at the top of customers’ search results.

Big Data Availability – Using a third-party data tool that captures Amazon analytics will help you capture tons of data on your advertising efforts. This will greatly improve your ROI on the platform. By using big data to define your target market on Amazon, you are able to spend your advertising dollars wisely and increase conversions rates.

Conclusion

If you are not already doing it, Q4 2019 is the time to jump on the marketing bandwagon and start reaping the benefits of Amazon search ad marketing. By getting in on Amazon search ads early, while it is still in a major growth phase, you will be able to create a fully optimized Amazon selling platform that will return incredible ROI on you marketing investment and help you sell more, faster.

 

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