Ad giants boost Amazon's ad business (AMZN)

pulse

December 7, 2017 5:21 PM

Amazon could become a more formidable challenger to behemoths Google and Facebook, which currently capture the lion's share of digital ad revenue.

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WPP, Omnicom, and Publicis — three of the world’s biggest ad companies — will collectively spend more than $800 million to advertise on Amazon over the next several years, according to agency executives, perThe Wall Street Journal.

As a result, Amazon could become a more formidable challenger to behemoths Google and Facebook, which currently capture the lion's share of digital ad revenue.

Below is a breakdown of how each ad giant plans to increase its ad spend on Amazon:

WPP
Omnicom
t
Publicis

Here are two key factors that differentiate Amazon’s ad business from the duopoly's, and are likely major drivers for increased advertiser interest:

Amazon’s e-commerce dominance means consumers visit its website with the intent to purchase.
largest share
Amazon has a brick-and-mortar presence that gives it in-store data Google and Facebook don’t have.
8.5%

However, Amazon’s ad business is still a long way off from reaching the size of the duopoly’s. The sum of Amazon’s search, display, and off-platform 2017 ad revenues is in the low single-digit billions, according to Magna Global estimates. In comparison, Google and Facebook generated roughly $24 billion and $10 billion in ad revenue, respectively, in Q3 2017. Nonetheless, Amazon is still on its way to measuring up to these digital ad giants, and the company’s e-commerce dominance will likely help it sustain ad growth in the years to come.

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