When it comes to online advertising, you can no longer speak of a duopoly. The digital acceleration, after the COVID-19 pandemic, gave Amazon the boost it needed to strengthen its presence in the advertising market, and become a careful rival for Google and Facebook, which for years have been the kings of this segment .
Amazon is growing faster than anyone. In 2020, its advertising business increased 52.5% over the previous year, accumulating revenue of $ 15.73 billion, according to eMarketer data.
This increase gave Jeff Bezos’ companies control of 10.3% of the online advertising market and made him the number three player in the United States. In 2019, according to the research firm, Amazon only dominated 7.8% of the advertising market.
“COVID-19 came to change everything,” says Manuel Cano, CEO of the media agency Montalvo Media. “As the pandemic progressed, people began to move their money online, allowing a 40% growth in electronic commerce, with Amazon being the big winner.”
Nicole Perrin, an analyst at eMarketer, mentions that the platform’s growth was driven by revenue from product search and sponsored brands.
“For advertisers with products to sell on the market, Amazon ads were a key performance lever throughout 2020, especially with the cheap ad opportunities available in the second quarter, when many sellers were out of stock and abandoned. auctions, “he adds.
Goodbye to the duopoly?
But the might of Amazon is not a new topic. A few years ago, analysts in the advertising market were already talking about the growth of the e-commerce company and a gradual decline in the share of Google and Facebook.
EMarketer data indicates that in 2020, Google took control of 28.9% of the advertising market, a percentage lower than the 31.6% it achieved the previous year.
For its part, Facebook obtained 25.2% of 2020 advertising revenue, while a year earlier it only had 23.6% of the total.
“Amazon was already growing, it simply found its place with the excuse of the pandemic, which accelerated electronic commerce between two and three years. The activity that we see now, we had planned for 2025. This gives a lot of impetus to the company that is already taking an important market away from the great leaders of digital advertising ”, says Gustavo Quiroga, president of Quiroga Agencia de Medios.
Experts agree that Amazon’s growth will not stop, less so now that brands and retailers are turning to see the platform as an e-commerce option, because the pandemic changed users’ buying habits.
At eMarketer, they expect the advertising business of Jeff Bezos’ firm to grow another 30.1% in the United States, exceeding 20,000 million dollars for the first time in its history. These projections allow us to think that it will break the barrier of 30,000 million dollars by 2023.
“As consumers spend more online, business spending and buyer marketing will quickly follow, with most of it flowing to Amazon,” adds Eric Haggstrom, analyst at eMarketer.
The opportunity for brands
For Claudia Benassini, academic and expert in digital marketing at La Salle University, the sector is undergoing a process of redefinition in advertising terms that brands should take advantage of. Faced with the crisis that traditional media (such as television) are experiencing, digital advertising became a refuge space for advertisers, who now have one more platform to reach consumers.
In 2018, the analysis firm WARC indicated that 69% of marketers had already indicated an intention to invest in the company. Today, this figure is on the rise for a simple reason: the specialized knowledge of the audiences.
And it is not that Google or Facebook do not offer it, in fact it is these companies that for years have given brands information about their consumers, help them segment them and provide them with very accurate data on what they like, making it easier for them to take decisions. But, in this precious moment in which electronic commerce is part of everyday life, it is Amazon that has the power in its hands.
“They know perfectly well who enters their platform to buy, what time they do it, how often, what they take with them and what they leave behind. Amazon knows the person and what they have in their shopping cart. This is worth gold for brands. In advertising terms, there is no one else who does it, ”explains Manuel Cano.
Advertisers should pay attention to this, says Gustavo Quiroga, because it is not only about giving communication stimuli to people, but about talking with them and getting to know them perfectly.
In the United States, the industry is more advanced, which is why brands already have Amazon in their media mix. In Latin America, the steps are being taken with greater caution. However, eMarketer expects digital ad spending to grow 15% in 2021, as long as consumers adopt a more online lifestyle.
According to an analysis by Statista, digital advertising in Latin America still has a lot of room to grow: it barely reaches a value of 7.5 billion dollars and a share of less than 3% in the global market.
“The region has not yet reached the point where the internet is the most solid advertising medium, as it continues to be surpassed by television, which has more than 50% of the market. However, the digitization process is clearly visible and the internet is the fastest growing in the region, mainly in Brazil, Mexico and Argentina ”, reveals the company.
Regarding the most popular digital advertising formats in the region, which attract almost five million dollars, investment in Google dominates, followed by social networks with Facebook and, finally, banners. Amazon is not yet relevant.
“In Latin America you have to look at Amazon with interest, learn to use the platform to get the most out of it. It is growing and it is necessary to include it in the media mix, ”says Quiroga.
In Mexico, specifically, the company is still consolidating its advertising offer, so this is the right time to experiment. Manuel Cano recommends investing and testing to start generating knowledge before the competition. “He who hits first hits twice,” he warns.
