Amazon is beating up on Google and Facebook
When people think of digital advertising, they think of Google, Facebook, Twitter, Snapchat etc. But what about Amazon and Microsoft? Maybe you should just Bing it... said no one ever.
Microsoft's search engine Bing is often portrayed as a bit of a joke in comparison to Google. It just happens to be one of those jokes that makes billions of dollars of revenue. Per Chartr, in 2019 while Snapchat and Twitter combined generated $5.2B in revenues, Bing did $7.5B. Basically, Bing is a $7.5B joke that's over 30% bigger than Snapchat and Twitter combined.
The fact that Bing is often ridiculed, but is actually an enormous business, gives some context as to how important search actually is. It truly is our gateway to the online world, and unlike other forms of digital advertising it monetizes actual user intent. In some industries it's not uncommon for companies to pay Google $40 or $50 for every individual click on their ad (usually for phrases like "insurance", "mortgage" or "loan" where the value of a customer can be really high).
Ask anyone what search engine they use and I bet you that no one will mention Amazon, even though over 55 percent of searches for products begin on Amazon's website. Amazon has become a primary shopping search engine for consumers. So no, the biggest threat to Google and Facebook's advertising empire is not Bing, Snapchat or Twitter - it's Amazon.
In 2020, Amazon's advertising revenue rose to $15B- up from $10.2B in 2019. Amazon generated ~$8B in advertising revenues in Q4 alone - a total that surpassed subscription services, which includes Amazon Prime, for the first time and grew at a higher rate than any other segment.
The growth is primarily coming from sponsored goods on Amazon's website - marketers seeking to reach the e-commerce giant's customers while they are shopping online. As e-commerce grows, marketers are increasingly turning to Amazon to reach shoppers as they learn about products and prepare to make purchases. Amazon advertising has a 20% higher return on investment (ROI) compared to a brand's average marketing ROI, per an ROI Genome report by Analytic Partners. It all makes sense because people are on Amazon not to scroll, but to purchase, and purchase they do. It's also important to mention that ads on Amazon also drive sales through non-Amazon channels, increasing the importance of the platform for brands and other retailers.
The bottom line here is there is no stopping Amazon. It's a threat to every single business, including Google and Facebook. Its ad business will continue to grow fast because shoppers that used to begin their product search on Google are now increasingly starting on Amazon. Amazon realized this a number of years ago and began to sell ads, putting promoted products further up the page. Amazon should now be put in the same league as Google and Facebook. There are no boundaries to Amazon's empire.
Microsoft's search engine Bing is often portrayed as a bit of a joke in comparison to Google. It just happens to be one of those jokes that makes billions of dollars of revenue. Per Chartr, in 2019 while Snapchat and Twitter combined generated $5.2B in revenues, Bing did $7.5B. Basically, Bing is a $7.5B joke that's over 30% bigger than Snapchat and Twitter combined.
The fact that Bing is often ridiculed, but is actually an enormous business, gives some context as to how important search actually is. It truly is our gateway to the online world, and unlike other forms of digital advertising it monetizes actual user intent. In some industries it's not uncommon for companies to pay Google $40 or $50 for every individual click on their ad (usually for phrases like "insurance", "mortgage" or "loan" where the value of a customer can be really high).
Ask anyone what search engine they use and I bet you that no one will mention Amazon, even though over 55 percent of searches for products begin on Amazon's website. Amazon has become a primary shopping search engine for consumers. So no, the biggest threat to Google and Facebook's advertising empire is not Bing, Snapchat or Twitter - it's Amazon.
In 2020, Amazon's advertising revenue rose to $15B- up from $10.2B in 2019. Amazon generated ~$8B in advertising revenues in Q4 alone - a total that surpassed subscription services, which includes Amazon Prime, for the first time and grew at a higher rate than any other segment.
The growth is primarily coming from sponsored goods on Amazon's website - marketers seeking to reach the e-commerce giant's customers while they are shopping online. As e-commerce grows, marketers are increasingly turning to Amazon to reach shoppers as they learn about products and prepare to make purchases. Amazon advertising has a 20% higher return on investment (ROI) compared to a brand's average marketing ROI, per an ROI Genome report by Analytic Partners. It all makes sense because people are on Amazon not to scroll, but to purchase, and purchase they do. It's also important to mention that ads on Amazon also drive sales through non-Amazon channels, increasing the importance of the platform for brands and other retailers.
Disclaimer: This post is merely my own assessment and is not an investment recommendation. For professional advice, seek input from a licensed investment advisor.
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