Amazon makes headway in breaking up Facebook and Google's digital ad duopoly

Amazon Forecast to Be No. 3 Digital Advertising Player in 2018

Amazon, the dominant player in e-commerce sales, has also become a dominant player in digital advertising sales. That will give Amazon 4.1% share of the market, putting it ahead of Verizon's Oath and Microsoft on eMarketer's rankings. EMarketer is predicting that Amazon's mobile ad revenue will surge to $2.9 billion next year and $4.8 billion by 2020.

A caveat: A big reason that Amazon's ad revenue is showing huge growth is because of an accounting change, effective January 1, 2018, under which the company's advertising services are now classified as revenue rather than cost of sales.

Meanwhile, Facebook and Google together will have about 58% market share this year. But that business began to take off recently alongside a perception among some ad buyers that Amazon, with its trove of data on what people buy, can help them more precisely determine whether people actually parted with their cash after seeing an advertisement.

Amazon (AMZN) is expected to move ahead of Microsoft (MSFT) and Oath, the Verizon (VZ) subsidiary that owns AOL and Yahoo, into third place in the U.S. digital ad market, according to a report released Wednesday by the research firm eMarketer.

Amazon Forecast to Be No. 3 Digital Advertising Player in 2018
Amazon share of digital advertising market on the rise

What eMarketer doesn't have insight into is what portion of Amazon's advertising business comes from selling ads on its own properties and how much it sells as a third-party network facilitating ad serving across the web. "We're seeing a broader appeal to advertisers than we might have expected", she said. "That's a major reason that we might have underestimated what kind of growth would come through by the first half of the year". That segment recorded $2.1 billion in sales during Amazon's most recent quarter, more than double the year-earlier figure.

Existing Amazon merchants and brands are among the customers buying ads on the site, as well as authors and other advertisers targeting Amazon customers.

The Seattle company's USA digital advertising business will likely bring in $4.6 billion in 2018, from an estimated $1.8 billion a year ago, eMarketer said in a forecast Tuesday.

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