Complete Story
10/11/2018
Some advertisers are moving half of their search budget from Google to Amazon, say ad industry sources
Amazon's ad business is booming. Some advertisers are moving more than half of the budget they normally spend with Google search to Amazon ads instead, amounting to hundreds of millions of dollars, according to execs at multiple media agencies. Some of these execs requested anonymity as they are not authorized to discuss their clients' expenditures in public.
Amazon's growing success could pose a rare threat to Google parent company Alphabet, which generated $95.4 billion in ad revenues last year, 86 percent of its total revenue. Google is the dominant digital advertising platform in the U.S., and will take in an estimated 37 percent of digital ad budgets in 2018. Although Alphabet does not disclose the breakdown of its ad revenue, most estimates believe the vast majority comes from search ads — approximately 83 percent in the year to date, according to research from eMarketer.
Alphabet has remained somewhat insulated from the threat so far, and its overall ad revenue growth actually accelerated in the first half of 2018 compared with last year. Not all categories of brands are shifting money to Amazon — most of the movement is coming in consumer packaged goods, while huge and lucrative advertising categories such as automotive and travel are not yet moving to Amazon. Also, while Google search may be flattening, advertisers are moving parts of their ad spend from other media to different Google properties, particularly YouTube.
