Amazon Could Lead In Search Ad Business By 2020
05 Apr 2018
Amazon’s fledgling advertising business could grow to around $20 billion in 2020, according to Alex DeGroote, a media analyst at Cenkos Securities.
The analyst told CNBC that today Amazon only owns about $3 billion of North America’s advertising market, which represents about 40% of the global total or around $200 billion — but by 2020 he expects Amazon could have an $8 billion share in North America and $20 billion globally.
Search will become the company’s stronghold because of the “massive amount of products it lists on its platform.”
During the 2017 fourth-quarter earnings call, Amazon CFO Brian Olsavsky called advertising a “key contributor” to its North American sales growth.
Visual images that highlight searches support Amazon’s growth. In a study from Hanapin Marketing, more than 70% of respondents said they use the platform the most for their shopping needs. Perhaps that’s because 89% cross reference other deals online while shopping.
Consumers are 80% more likely to click on an ad from a brand they don’t know, which works in Amazon’s favor, 87% said ads related to their location are more likely to be clicked on, 81% said ads with a star rating, and 46% of ads with a phone number.
About 50% are more likely to click on an ad with image, while 39% said they are more likely to click on text ads. Ads with motion are preferred by only 11% of respondents.
Amazon may need to do some learning. About 65% of those participating in the survey say they are most likely to appreciate an ad in Google, Bing or Yahoo than social.
Some 76% say that ads add to their experience in search platforms, and 64% said they would rather not see ads sometimes, but not all the time, with 25% stating they want to see ads because it has helped them discover new things.
Amazon also has been stronger on desktop and laptops than on mobile devices like smartphones and tablets. About 77% of those participating in Hanapin’s study use their desktop or laptop to make purchases that cost more than $300, with only 13% saying they would only buy in-store. Some 48% cited they never click on ads in a mobile app.