Is Amazon Challenging Google’s “Gorilla-Like” Ad Dominance?
There’s been a shift in the search ad market recently, and it’s not in Google’s (GOOG) favor. Another behemoth company, Amazon (AMZN) is slowly snagging dollars from the parent company of the famous search engine as businesses spend more money on advertisements on the online retailer’s website.
Scott Hagedorn, CEO of Omnicom Media Group North America, explained that many of the businesses flipping from Google search advertisements to Amazon search ads sell products on the website, so the switch makes sense.
Hagedorn noted, “Consumers are no longer double hopping between Google and Amazon, they just go straight to Amazon.”
The trend can be seen in numbers from WPP PLC, the largest purchaser of advertisements in the world. According to sources familiar with the company, between 2017 and 2018 there was an increase in spending on Amazon ads by about $100-$150MM with nearly 75% of that increase coming from former Google ad clients.
Despite this shift, total spending on Amazon ads continues to pale in comparison to Google’s “gorilla-like” share of the search ad market. For example, WPP spent over $3 billion on Google search ads in 2018 while Amazon claimed just $300 million. This can be seen nationally, too, where Google claimed 78% of the U.S. market. And there hasn’t been a decrease in money flowing into Google for search ads despite the defections. On the contrary spending on them is supposed to increase by 17% just this year.
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