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The future of Amazon and Ecommerce: Ad spend on Amazon

By Chris Dawson May 18, 2018 - 9:00 am

David SpitzAt last year’s Catalyst Europe 2017 Conference, ChannelAdvisor CEO David Spitz made five predictions for the future of Amazon and ecommerce. This week marks the first anniversary of his predictions so each day we’ll examine one prediction and see if it’s holding true. Today we look at Amazon advertising.

If you’ve missed the other articles in this series they are:
1. The future of Amazon and Ecommerce: Growth
2. The future of Amazon and Ecommerce: China-sourced products
3. The future of Amazon and Ecommerce: Private label products
4. The future of Amazon and Ecommerce: Amazon Logistics

5. Ad spend on Amazon will rival ad spend on search engines

Amazon’s ad spend is relatively small compared to search engines, billing somewhere in the region of $2 billion in Q1 2018 (The figure Amazon gives is explained as ‘Primarily includes sales of advertising services, as well as sales related to our other service offerings’.

Small fry you might think, until you look beyond the numbers and realise that year on year that’s a 132% increase. Perhaps even more significant is when you look at the trend which is generally upwards but with a downward blip after the Christmas peak selling season in Q1 2017. That’s significant because this year there was no downward blip at the end of Q4 and advertising on Amazon accelerated faster than ever before showing advertisers are no longer just spending at peak.

Amazon Advertising Revenue ($millions) & Y/Y Growth

Retargetting

There are rumours that Amazon are about to up the ante and launch retargetting ads. This would allow merchants to target shoppers on off-Amazon sites and potentially (likely) also on mobile apps.

A shift from search engines to Amazon Advertising

Traditional search engines will be watching Amazon as there is a two fold implication for the online advertising industry. It’s possible that advertisers will find conversion rates better through Amazon as consumers are there specifically to shop rather than innocently browsing the web and having shopping ads foisted on them. In addition to the shift in advertising spend, we reported recently that Amazon themselves appear to have cancelled all their adverts on Google Shopping. When you’re ramping up your own ad sales it probably doesn’t look too good if you yourself are using a competitors services.

It’s too soon to call David Spitz’ prediction that Ad spend on Amazon will rival ad spend on search engines. It would be fair to say that all the current signs suggest that in the near future this one could come true.

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