Digital Transformation

Amazon cannibalising digital ad spend from Facebook, Google and YouTube

By John Glenday | Reporter

Amazon

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Amazon article

January 11, 2019 | 4 min read

Amazon is set to become one of the primary beneficiaries of Facebook’s privacy woes by hoovering up advertising dollars which might otherwise have found their way to the social network, according to a new study by Cowen.

The online retailer is cannibalising digital ad spend from more established digital ad platforms, with projections suggesting that it could double ad revenue from US ad buyers within the next two years, increasing its share of total digital ad spending to 12% by 2020.

Facebook’s fortunes meanwhile have fallen in lockstep with Amazon’s rise, with estimates suggesting it could lose 3% of market share over the same period. Google and YouTube also fall victim to the same trends although they will suffer more modest losses, the report predicted.

Amazon increasingly cannibalising digital ad spend from Facebook, Google and YouTube

Amazon increasingly cannibalising digital ad spend from Facebook, Google and YouTube

Facebook is believed to be bearing the brunt of defections owing to a rash of privacy scandals which have shaken faith in the former digital darling, as well as its stagnating North American user base.

Despite these diverging trends Facebook remains in second place behind Google with a 20% share of total US ad spend in 2018, well ahead of Amazon’s 3% stake, according to eMarketer.

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Instagram meanwhile has proven to be a rare bright spot for Facebook after posting a rising digital ad share courtesy of the success of its ‘Stories’ app amid predictions that its share of digital video budgets from ad buyers will double between 2018 and 2020.

This success is being driven by the younger demographic as the platform establishes itself as the first choice for brands launching new campaigns targeting 13-34-year olds.

Advertisers also find themselves increasingly drawn to Amazon owing to the improved conversion rates it offers and its unique position of being able to connect ads to purchases on the same page. In the process, advertising is becoming a 'meaningful' component of Amazon's business.

The predictions are based on a survey of 50 senior American ad buyers conducted last month.

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