Amazon’s Master Plan To Become Profitable Through Advertising
The giant has awoken, and it is quite clear that Amazon walks the talks. On Thursday, Amazon reported record profits of $3 billion on revenue of $72.4 billion for the fourth quarter. This just shows that Amazon’s advertising has no business of letting up. 2019 is the year that Amazon Advertising begins to accelerate as a new force in the world of digital.
“Advertising is rapidly becoming a key profit engine for Amazon’s overall business, and it won’t be long before we see it break away from the “Other” revenue category”, said Herbie King, the head of Amazon strategy at Croud.
Amazon’s advertising division is quickly becoming an important pillar of the company. Advertisers such as Google and Facebook are going to have to keep up because it has been recently reported that this year alone, Amazon has become the third-largest advertising platform.
eMarketer has forecasted Amazon could generate $7bn in search ads this year alone, giving them a 13% share of the market. It’s still nowhere near Google’s 73% share, but it’s expected Amazon will continue to eat into this share throughout 2021, by which time it’s predicted Amazon’s share will increase to 16% and Google’s will slip to 70%. For those still sceptical; Amazon last year passed Microsoft to become the second-largest ad platform for search in the US.
Amazon makes money by charging companies to promote their items across the tech giant’s network of websites and stores. Amazon recently hosted 2019 advertising conference in Seattle. The invite-only event was done to educate companies on how to use Amazon Advertising to create connections with shoppers at key moments across the purchase journey.
Amazon has an advertising platform no other company can match; a web store selling hundreds of millions of products combined with a streaming entertainment service and a trove of data about customer preference. As more people shop on smartphones, they are skipping search engines like Google for Amazon’s mobile app.
2019 is the year that Amazon Advertising begins to accelerate as a new force in the world of digital advertising, and Google, Facebook etc are going to have to keep up. Rising from humble beginnings as a Seattle-based internet bookstore, Amazon has once again reminded the world of its growing dominance.