Over the past few years, Amazon has been increasing its attention to advertising on its site. Advertising has become one of Amazon’s largest revenue earners and is expected to quadruple this year’s estimated $10 billion in revenue by 2023. For Amazon, advertising is a small portion of their functionality while for Google and Facebook, it is above 80% of their total turnover. This new path could be a change in the advertisement industry if it continues to grow.
Since Amazon does not depend solely on ad revenue, it can be more aggressive in the market. They also have the advantage of advertising in the same place where the consumers will be buying the products. Amazon uses past buying data and viewing history to produce ads for products a user might be interested in purchasing. When a consumer does click on an ad and buy the product through Amazon, they then make an additional 5-20% on the sale of the product along with the advertising commission.
So, what does this mean for competitors like Google and Facebook, and should they be worried?
Google and Facebook advertisements are both already well-established and widely accepted means of advertising for a lot of companies. Although Amazon may be a threat to these competitors in the future, outlets like Google and Facebook remain a leading force in online advertising.
Google Ads utilizes paid search by using keywords and text-based advertisements to draw in consumers. They offer a large audience, a level playing field, and a wide range of ad formats. They are also easy to use for companies who are putting out their first ads and are new to online advertising.
Facebook advertisements utilize “paid social”, or advertising on social networks to reach their users. Facebook finds targeted consumers through their interests and online behaviors. They offer an audience of more than 1.55 billion monthly active users, a visually appealing ad platform, and high ROI.
Since both Google and Facebook render ads in different manners, they are still both highly recommended means of online advertisement. Amazon may be hopping on the trend, but it won’t have the same reach that a company might get through Facebook and Google ads.
Interested in learning how Solstice Digital can help you implement advertisements on these sites? Contact us today!