Share of Amazon, Facebook and Google in net digital ad revenue (Source)

For well-over a decade, it nearly went without saying that Google and Facebook (now referred to as Meta) held the lion’s share of revenues within the online advertising sphere outside of China (where both of these companies are banned from operating), however the tides have begun turning and both Google and Facebook have been losing market share within the digital ads space, with Amazon catching hot on the heels of the two market leaders. All of this begs the question however, what would be causing Amazon to be gaining so quickly, and what’s leading to the declines in market share for Facebook and Google? This article will provide an overview of the various trends contributing to Amazon’s relatively recent surge in prevalence in the digital advertising space and what it means for brands.

Amazon’s Prominence in the eCommerce Space

Within the United States, it nearly goes without saying that Amazon is the foremost e-commerce marketplace, with a 37.8% share in 2022, and their next closest rival Walmart, at a growing but still distant 6.3%, respectively. Amazon benefited during the COVID-19 pandemic that began in 2020 as lockdowns encouraged consumers to shop online and continues to attract online shoppers who frequently shop at Amazon out of habit and convenience. Moreover, Amazon is the most popular online destination for product searches in the US, surpassing Google. According to a survey by eMarketer, 63% of US online shoppers start their product searches on Amazon, compared to 25% on Google. This means that Amazon can capture high-intent shoppers who are ready to buy, and offer them relevant ads that match their queries. In this regard, Amazon can be considered to be a search engine for shopping.

Why Amazon Ads is Growing While Other PPC Platforms Have Declined

Given the vast amount of first-party shopper information that Amazon collects from its wide customer base, this provides advertisers with direct access to a range of shopper related targeting methodologies. 

One of the primary contributing factors towards the declines in market share among other sellers of online advertising inventory may be the increase of privacy features in technologies, including the blocking of third-party cookies in browsers such as Apple’s Safari and Mozilla Firefox, in addition to third-party tracking blocking such as Apple’s App Tracking Transparency within iOS; both of which pose severe challenges for companies such as Meta that collect vast amounts of consumer data through tracking methods that are inhibited by such measures. Part of these shifts come as part of increased consumer awareness of online privacy, in addition to increased advocacy for preserving personal information. With the decline of third-party advertising data produced by cross-internet tracking, first-party data is being hailed as the next-best replacement for obtaining user data for the purposes of advertising targeting. 

Unlike third-party data, which is usually attributed to the use of trackers such as cookies, first party data is generally associated with a user account that is logged in to a specific platform, such as a Google search that leads to a YouTube video (YouTube also being owned by Google and featuring linked accounts) providing potential advertisers with a comprehensive flow from media formats such as text search and video. Given the wealth of first-party data that Amazon collects from shoppers, Amazon Ads can leverage a broad assortment of targeting tactics without the need to integrate third-party data. Heading into the future, Amazon appears to be in a favorable position regarding their position within the online advertising space, as they continue to leverage not only their eponymous e-commerce platform, but additionally other owned platforms, including Twitch livestreaming and other platforms, including Amazon Music and Freevee ad-sponsored streaming.

In conclusion, Amazon is uniquely positioned to seize market share from other digital advertising leaders, including Google, Meta and Microsoft - given the growing range of product offerings provided by Amazon and the shopping-related context-relevant first party data collected by the eCommerce giant. It’s yet to be seen for how long Amazon’s growth cycle within the digital advertising space will continue, however this trend shows no major signs of slowing down anytime soon.