Thursday 24th May 2018

Ad-vantage Amazon? Tech titans duel over advertising dollars

The e-commerce giant is about to begin trialing an ad network that will rival the Google Display Network.
Jason Smith
by on 17th May 2018 | Leave a comment
Amazon image

Amazon is about to begin trialing an advertising network that will put it in direct competition with The Google Display Network, an ad network that accounts for $15 billion of Google’s $95 billion in annual advertising revenue.

Amazon’s new network will be available to merchants that sells products on Amazon’s marketplace and, according to a report on Bloomberg, a group of select merchants will begin testing the service on behalf of the e-commerce giant later this month.

The tussle between the two tech titans has intensified over the last few months, particularly after Amazon began pulling its spend from Google’s product listing ads (PLA) and announced “other” revenues, which are predominantly from its advertising services, of $2 billion in its Q1 report (which is an increase of 139 percent year-on-year).

According to Merkle and during periods throughout 2018, Amazon also maintained a 25 percent impression share on Google’s product listing ads (the figure was as high as 40 percent in 2017).

Its loss could be hard felt, not only from a commercial perspective but a content perspective. However, some online commentators have also suggested its withdrawal could afford other merchants advertising through PLA the opportunity to capitalize on lower advertising rates.

The new network will also afford more opportunity for Amazon’s merchants to target customers through the duration of their buying cycles; as it stands, Amazon’s advertising offering is limited to promoted placements on its own website.

Part of the problem Google faces is that 38 percent of UK consumers and 29 percent of U.S. consumers start a product search at Amazon.com, according to PricewaterhouseCooper’s Total Retail Survey 2017 and UPS.

Meanwhile Amazon, which reported net income of $1.6 billion on revenue $51 billion in Q1, has become more invested in several verticals over the last few years, including groceries and video streaming.

While it’s rivalling Apple in the race to be the first organization worth $1 trillion, many commentators have recently taken to highlighting that Apple has generated more net income in 3 months ($13.8 billion) than Amazon has in its lifetime ($9.6 billion).

Despite the validity in the comparison, one thing’s for certain: its rivals in the advertising space likewise generate enviable levels of net income.