• by Wes MacLaggan , Columnist, August 30, 2018

Facebook and Google have long held the lion's share of advertising dollars, but Amazon is quickly growing its influence in the space, surpassing $2.2 billion in ad revenue in Q2. While still small in comparison, the ecommerce giant is on track to become the third largest ad player in the U.S. With each passing day, it’s becoming more clear that brands can’t afford to ignore Amazon.

For brands from retail to CPG to pharmaceuticals and beyond, Amazon’s move into digital advertising presents a classic case of “if you can’t beat them, join them” -- because if you don’t advertise with Amazon, your competitors surely will. Here’s why.

Advertising Where Customers Search and Shop
Mary Meeker’s latest Internet Trends report credited Amazon with owning $129 billion of e-commerce gross merchandise value (GMV), a 28 percent share of the market. But perhaps more impressive is that 49% of all product searches now begin on Amazon--it’s essentially a massive search engine with the ability to fulfill purchases. Now, more than ever, Amazon is both the beginning and the end of the modern customer’s journey.

High Stakes Brand Conquest
In traditional search marketing, brands have grown accustomed to bidding on their own brand terms because if they don’t, a competitive brand will undoubtedly buy those terms and appear at the top of the search results. The idea is that Advil, for example, could buy a brand term for Tylenol and snag the click on Google. We call this brand conquest.

Amazon offers this same threat (or opportunity, depending on how you look at it), but with even higher stakes because consumers are further along the purchase funnel. As customers move from search to purchase, brands on Amazon must be more active in protecting their turf, or risk losing prospects to competitive products.

This battle takes place at all stages of the buying process, across several different ad formats. Headline Shopping Ads are banner-like ads that help drive awareness and let advertisers display a range of products on the landing page. Sponsored Product Ads are helpful during the consideration phase, allowing advertisers to move up the search results page. Finally, Product Display Ads are focused on the conversion stage, giving an advertiser one last shot at the customers as they are ready to Add to cart.

Alexa and the Power of Voice
The evolution of voice technology has scaled quickly, with far-reaching implications for ecommerce and advertising.

Amazon is clearly ahead of the pack. According to comScore, 50% of all searches will be voice searches by 2020, while other reports estimate that Amazon’s U.S. market share of voice assistants, or smart speakers, is between 70% to 76%.

This is one area of advertising where the other giants need to catch up. For example, recognizing Amazon’s dominance in the space, Google recently launched Google Shopping Actions as an attempt to monetize voice search on the transactions. If Google and Amazon focus on capturing value from the transaction, Alexa and Google Home could be surprisingly free of traditional “ads.”

While Amazon is not yet primed to surpass Google or Facebook in terms of advertising revenue, its continued growth in the space and its captive, purchase-happy audience should be enough reason for brands to begin experimenting with the platform.

With Amazon, the customer journey is condensed -- search and purchase can happen without leaving Amazon’s site. If brands aren’t already advertising there, they risk being blown away by competition when consumers are in buying mode.