Amazon.com, Inc.’s (NASDAQ:AMZN) exponential growth has been giving rivals sleepless nights but the e-commerce titan is not done dominating one industry after another. Next on the company’s hit list? Google.
In a feature by The Wall Street Journal, Amazon has been slowly making a presence in the digital advertising business and though the move is in its infancy, the online retailer is using its 63 million strong Prime members as leverage to win over advertisers.
According to news source, Amazon’s ad business is pretty basic, focusing more on driving online sales using sponsored ads anywhere online or through Amazon’s online store but it won’t be long before the e-commerce powerhouse will use its culled data to attract more marketers. For one thing, Amazon can make any partner brands look good to customers, scoring targeted sales. The Seattle-based company could also provide more exposure to its marketers’ products to boost sales.
Market research firm eMarketer has predicted that in 2017, Amazon’s ad business will grow to an impressive 9.4%, generating about 1 billion in online revenue in the US alone. But with Amazon’s North American division’s 28% growth in the second quarter and a harder push for sponsored listings on its website and app, there’s the real possibility that Amazon’s ad campaign will exceed the market’s expectation.
Ian Schafer, founder and chairman of the digital ad agency “Deep Focus” said Amazon culled so much data that it’s anyone’s guess how it will be used and for how long since the company implements strict rules on how its data is used outside of its shopping platform.
Now the question is, will Amazon’s entry in the ad segment pose a threat to Google’s lead position? That will depend really on how hard Amazon wants to push in its ad rivalry against Google. That said, the e-commerce firm has yet to lay out a plan in terms of expanding its own digital marketing campaign. Additionally, there’s no way to say if Amazon will be in it for long-term since the company has a lot on its plate.
Google-parent Alphabet Inc (NASDAQ:GOOGL) remains unfazed over Amazon’s entry into an industry the search giant has dominated for years. The Alphabet Inc.-owned conglomerate is betting big on its own shopping platform, an e-commerce channel that will feature sponsored products with images linked within Google’s own search results and shopping site. These ads are the same ones that eBay, Wal-Mart, Target and other online retailers use, with the exemption of Amazon. This means there’s plenty of opportunity for Google to cement its leading position in the industry.
Curiously, Amazon is keeping its new business under wraps and it’s hard to guess the company’s level of commitment to the initiative. Although the online retailer remains a minor player in the ad marketing segment, Amazon may give Google – along with the industry’s number 2. Facebook Inc (NASDAQ:FB) – a real competition as long as it plays its cards right.