Amazon becoming 3rd-biggest digital ad platform
Amazon’s ad business will bring in $4.61 billion this year, according to a new eMarketer study, up a whopping 60% from the projection of $2.89 billion in March.
Why it matters: The new projection puts Amazon ahead of Microsoft in its share of the U.S. digital ad market. While it's still a distant third behind Google and Facebook, Amazon's share is growing so fast that some analysts argue it could one day catch up with those leaders.
The bigger picture: The news comes just weeks after Amazon surpassed $1 trillion in market value. Some analysts predict Amazon's ad business is growing so fast that it will overtake its lucrative cloud business, Amazon Web Services, in just two years.
Strong growth in product search and insight into consumer purchase behavior are what eMarketer’s senior director of forecasting Monica Peart cites as fueling Amazon's recent ad growth.
“That increased search traffic gives third-party sellers a reason to increase bids for keywords on Amazon."— Monica Peart
Between the lines: Amazon's advertising business has quickly become one of its fastest-growing business units, and it will continue to expand as Amazon invests more in video, ad sales staff and ad technology.
- The company has been doubling down on video ads and ads on its streaming platform Twitch.
- Amazon CFO Brian Olsavsky has previously told investors of accelerated growth in hiring for Amazon's ad sales and web services teams.
Sound smart: Amazon has reportedly been pitching ad buyers to buy ads on its platforms by saying that they are more "brand safe" or less risky than buying ads on big social media platforms, like Google's YouTube and Facebook.
- Both Facebook and YouTube have faced advertiser boycotts because of advertisers' concern about having their ads placed next to objectionable content, like terrorist videos.
Go deeper: Amazon's big advertising push