Commentary

Amazon's Ad Business Will Speed Reckoning For Digital Publishers

  • by December 6, 2018
Amazon’s growing advertising business is the next great disruptor for publishers that must contend with another digital rival.
The U.S. advertising market may expand steadily next year, but digital giants like Amazon, Google and Facebook will put more pressure on publishers seeking to scratch out an existence.

Amazon currently has about 4% of the advertising market, a share that will grow to 7% in two years, according to researcher eMarketer.

While Amazon will grab market share from Google and Facebook, those companies will be better positioned to withstand the threat. Digital publications will also feel squeezed, pushing them to build up revenue from subscriptions, agency services, conferences, market research and referrals to ecommerce sites like Amazon.

The ecommerce giant has a wealth of data about its customers, including a history of their product searches and purchases. Facebook and Google don’t have that level of detail about personal spending. The information can help advertisers to reach target customers, especially when they’re in the mood to shop.

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Vice, Vox and BuzzFeed have scaled back their growth plans and are seeking additional sources of revenue. The three companies have had ready access to venture funding, but their investors are likely to get restless as their exit plans get delayed.

As traditional media companies like Disney and Fox merge, and telcos like AT&T and Verizon buy up content providers, the digital startups may feel compelled to sell.

BuzzFeed’s Jonah Peretti last month mused publicly about the possibility of a merger among BuzzFeed, Vice, Vox Media, Group Nine Media and Refinery29.

The outlook is especially worrisome for smaller publishers. Millennial-focused site Mic cut staff amid its sale to Bustle Digital Group for about $5 million, while Rookie also ceased publication. Women-focused Little Things shut down in February after Facebook changed its news feed algorithm to cut back on publisher content.

Small publishers “can’t compete in scale, they can’t compete in terms of quality and breadth of content, and they can’t compete because they only have one revenue stream,” a board member of a big digital-media company told Vanity Fair columnist Joe Pompeo.

Amazon’s growing clout in digital advertising will only add to their challenges.

1 comment about "Amazon's Ad Business Will Speed Reckoning For Digital Publishers".
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  1. Craig Mcdaniel from Sweepstakes Today LLC, December 6, 2018 at 4:39 p.m.

    The problem is worse for publishers than you wrote about. Google has done much more in hurting the publishers with their near total of the ad distribution channel, rules on how and where publishers can place ads, and the amount dictated to what the publishers can earn. On top of this, publishers earn much more when there was CPA was in play to earn revenue. Now, we earn nearly all from CPM and CPC ads. If this is not bad enough Google Search can control a publisher's website by front end loading scam ads. I was ranked in Google Search in 2011 number one in the world for the keyword "Sweepstakes" out of 100 million plus pages. For those who don't know "Sweepstakes" was one of the top 10 keywords in America. Now, Google is my biggest competitor and I fully expect them to retaliate against me for writing a couple of post about them today. They have done so in the past.  So past this one to Amazon Advertising, give me a better ad deal and you get a faithful client.

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