Amazon.com Has Aggressive Plans To Take On Google And Facebook

Must Read

Windfall! Online Grocery Market In India Looks Set For Purple Patch Ahead

Silver linings are clearly in short supply in the pandemic fuelled world that we have come to...

Apple Store In India: More Of Disappointment Than Excitement?

Apple has started making moves to strengthen its presence in India. With the launch of Apple online...

Facebook’s Chasm Of Distrust: An Ever-Deepening Divide

Facebook, the world's most popular social media platform has failed measurably as it is voted as the...

Amazon.com Inc. (NASDAQ:AMZN) just doesn’t seem to be running out of the ground to set foot in – its more recent, ambitious foray being the $200 billion online advertising industry. What stands out, however, is that Amazon.com’s nimble, bold move into a territory dominated by giants Google (Alphabet Inc. (NASDAQ:GOOGL) and Facebook Inc. (NASDAQ:FB) could very well pose a competitive threat for both dominant players.

The surprise 60% YoY jump in Amazon’s online advertising sales is a clear indication that Amazon is serious about the online advertising business. The global e-commerce behemoth has set up a Google-like set of advertising tools and services that will help Amazon to mint billions of dollars. Google and Facebook together take up close to 6o% of the digital advertising market share in the United States alone, with other players in the space such as Microsoft and Yahoo! garnering just about 3.8% and 3.1%, respectively. Amazon’s 1.3% market share, and $1.3 billion revenue from its “other” businesses, including online advertising, may seem insignificant in comparison to Google’s $80 billion advertisement revenue; but it does call to question what Jeff Bezos and his team have their sights set on.

Amazon digital sales share in the US 2016

E-commerce still brings in Amazon’s major revenues, but it looks like the company is now shifting its attention towards amassing more revenues from digital advertising. The company possesses the advantage of an advertising middleman and boasts of a massive database of consumer shopping patterns, tastes and preferences, and a healthy relationship with a multitude of vendors. Played right together, these factors could help Amazon boost its growth in online advertising revenues considerably. The company also already has in place its Advertise with Amazon model, wherein targeted advertisement are pitched at customers as they shop. This model of paid product placement is helping vendors and merchants reach out to the right audiences across the vast online market space. This edge that Amazon possesses over rivals Google and Facebook is a massive one and could make online advertising a larger contributor of revenue for Amazon in the coming years.

Advertisements

Looking at the online advertising industry from a macro-perspective, it is currently a rather lucrative space. As per PWC’s findings, the global Internet advertising revenue will reach $260.4 billion by the year 2020, and will see a surge in growth at an estimated 11.1% CAGR. This boost in online advertising growth will have Mobile advertising as one of its key drivers for the period, while the Internet will still continue to dominate. Companies operating in the online advertising space are keen to derive maximum benefit from this growing industry, and we could, no doubt, expect online advertising to make a significant impact on our shopping habits, through the year 2020 at least.

Global spending on digital advertising is also something to closely keep an eye on, with forecasts estimating a whopping 335.48 billion USD spent in 2020, on digital advertising alone. Television advertising is still the most sought after, but with a projected growth of over 13% in internet advertising spendings for the year 2017, it seems clear that the digital space is taking over as the preferred medium for advertisement. Further, mobile internet advertising, which is a growing sub-sector of the industry, is forecast to have an estimated $247 billion in spending by the year 2020. Video and paid search will be key growth drivers in this mobile advertising sub-sector.

Google, with over 40% of the US market share in digital advertising, may not see Amazon’s stealthy entry into its territory as a threat yet, but it would be unwise to rule the company out as a threat altogether as well. Despite its comparatively minuscule advertising revenues in the digital space, Amazon managed a $1.2 billion net advertising revenue in the year 2015, which really stood out against the company’s low margin sales revenues from its e-commerce. The revenues that Amazon could generate from a profitable online advertising model will also contribute significantly to its bottom line in the long-term. Of course, competition is going to be pretty fierce, with Google continually innovating on newer ways to retain and grow its existing market share, and Facebook harnessing the power of video in drawing in and engaging more audiences. Will Amazon’s behind the scenes efforts at making a significant impact, in an industry heavily dominated by two of the biggest tech giants, play out right for the company? I suppose we will find out soon enough.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest News

₹90 Crore Per Hour: That’s What Mukesh Ambani Added To His Wealth During COVID Era

Today the "IIFL Wealth Hurun India Rich List 2020" was released and guess who kept maintained his...

Can Tata Super App, With the Backing of Walmart, Take On JioMart?

In August, Tata Group, in a move to likely counter the offerings of the Jio umbrella, declared that they are in the...

The Raining Discounts Are Coming As Flipkart And Amazon Gears Up For Festive Season Sale

The festival season is about to begin and eCommerce majors in India Amazon and Flipkart are aiming to make the most of...

Amazon, Google And Microsoft Are Extreme Angry With TRAI

The big three of the tech industry - Amazon, Microsoft And Google - seems to be quite annoyed. Cloud...

New Android Malware Steals Your Banking Credentials And Let Hackers Access Your Smartphone

If you are an active user of banking apps on your Android smartphone, you must pay close attention to it.

An IT Service Help Desk Is Essential To Drive Business Growth

There's no debate about the fact that an IT service desk, when properly run, leads to both short-term and long-term business growth....

In-Depth: Dprime

Will ‘TikTok By Microsoft’ Be A Winner?

For the last two years, TikTok has been in the public eye for all sorts of reasons. First, it was the exploded...

Facebook Subscription Model: Looking Beyond Ad Dollars?

Seldom do job listings create a stir this gripping. However, when the job listing in question is a stealth post from Twitter,...

Will The Online Food Delivery Market in India End Up Becoming A Two-Horse Race?

It's pretty much evident that the food delivery space in India is all set to get riled up soon enough as one...

More Articles Like This