Is Amazon Siphoning Away Ad Dollars From Google?

Google has long been the king of the digital advertising market but one upstart competitor is reportedly taking some ad dollars away from the search-engine giant.

Some advertisers have begun shifting significant portions of their budgets away from Google and towards Amazon, CNBC reported. The e-commerce leader has only recently become a significant player in the digital ad space.

Multiple media executives told CNBC that at least some ad buyers are changing their budgets to accommodate Amazon’s rising position in the market. For some, more than 50 percent of their budgets are being moved from Google advertising to Amazon. This is mostly for consumer goods that could theoretically be bought on Amazon, but car ads and travel ads are staying with Google for now, per CNBC.

Google parent company Alphabet is valued at around $800 billion and most of its money comes from digital ads. The company made almost $100 billion on ad revenue alone in 2017, with most of that coming from Google search ads. Google also has other subsidiaries, such as YouTube, that diversify its ad offerings in case ad buyers become less interested in search.

Even with increased competition from $1 trillion dollar company in Amazon, Google’s ad business has continued to grow in 2018. In the second quarter of the fiscal calendar, Google reported 24 percent growth in its ad operation due to the increased prominence of Google ads on mobile phones.

Still, Amazon’s growth in the ad marketplace could eventually be a cause for concern for Alphabet. Recent projections from eMarketer put Amazon at third place in the ad market by year’s end. It would be a distant third place behind Google and runner-up Facebook, but it would be faster growth than was initially expected of Amazon’s ad business.

If eMarketer’s projections are accurate, Amazon will control about 4 percent of the digital ad market by the end of 2018. Google, in comparison, would control nearly 40 percent of it. Since Amazon’s ad offerings are somewhat limited by what products the site sells, it may be a while before it is a serious threat to Google’s advertising throne.

Amazon could get some TV ad dollars in the near future. Recent reports indicate the company will launch a free, ad-supported streaming service akin to Hulu.