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A Foolish Take: Marketers Are Boosting Their Spending on Amazon's Ads

By Leo Sun - Updated Apr 11, 2019 at 11:00AM

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The e-commerce titan is catching up to Google and Facebook in online ads.

Last September, eMarketer estimated that Amazon (AMZN 1.42%) would command 4.1% of the U.S. advertising market in 2018. That put it in third place behind Alphabet's (GOOG -0.28%) (GOOGL -0.27%) Google and Facebook (META 2.03%), which together controlled 57.7% of the market.

That was a surprising development, but it didn't indicate Amazon would disrupt Google and Facebook's duopoly. However, a new Nanigans survey suggests the gap is narrowing quickly, with marketers allocating 14% of their digital ad spending to Amazon, versus 21% for Google and 19% for Facebook/Instagram.

Chart showing percentage of ad dollars spent per platform.

Data source: Nanigans. Chart by author.

Half of those respondents plan to allocate more ad dollars to Amazon within the next 12 months, with an average spending boost of 25%. Some marketers will shift ad dollars from Google and Facebook to Amazon, but 41% will incrementally increase their ad budgets to support new Amazon ads.

Check out the latest Amazon earnings call transcript.

That's great news for Amazon, which could turn its ad business into a third pillar of growth alongside its e-commerce and cloud businesses. But it's an alarming development for Google and Facebook, as they both lack Amazon's access to consumers' shopping habits. Ongoing privacy concerns about Google and Facebook's ads could also make Amazon a more attractive ad platform.

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