SEATTLE • Amazon.com Inc’s advertising business is gaining faster than expected in a market dominated by Facebook Inc and Google.
The world’s biggest online retailer will generate US$4.61 billion (RM19.09 billion) in US ad sales this year, which represents 4.2% of the total digital ad market, EMarketer Inc estimated yesterday in a report.
The research firm previously projected Amazon’s ad revenue this year would be US$2.89 billion. The revised number reflects an accounting change by Amazon as well as increased demand, EMarketer said.
Google and Facebook remain the dominant digital advertising companies, with a combined 58% of the US$111 billion market, slipping from 59% in 2017, according to EMarketer.
Amazon is an attractive place for online merchants to advertise because many product searches begin on the site, not on Alphabet Inc’s Google.
More than half of the products sold on Amazon come from third-party merchants who pay the e-commerce company a commission on each sale.
The growing advertising business has helped propel Amazon’s stock to new highs, with investors viewing the sector as a more profitable revenue source than the Seattle- based company’s main e-commerce business. Amazon shares have surged 66% this year.
Amazon’s push into the grocery business also is helping increase ad sales because big-spending companies like Procter & Gamble Co and Coca-Cola Co want to maintain brand recognition on the site, even if their products don’t lend themselves to online sales, said an expert.