Amazon’s Growing Ad Business Could Forever Change Tech
Google and Facebook’s ad business might not survive Amazon
Google has long been known to monitor basically everything you do, and use the data it gleans to target banner and search ads. Facebook integrates ads into users’ news feeds, Groups, and other parts of the platform, which recently landed the company in hot water for running ads next to hate speech.
But there’s a relatively new, rapidly growing player in the online advertising world: Amazon. The company’s advertising revenue has grown from almost nothing a few years ago to over $10 billion in late 2020. Revenue is expected to quadruple by 2023. Given its unique business model, its history of swallowing whole industries, and its sheer size, Amazon has the potential to massively disrupt the online ad world — and forever change tech.
The success of online ads depends on how close a user is to buying something. That’s part of why search engine ads are so effective. If you type “Lunch” into Google, there’s a fair chance that you’re looking for a place to eat lunch. If the company can show you an ad for a restaurant, there’s a good chance you’ll click through and end up eating there. All the better if Google knows where you live and that you like burgers, and can show an ad for a specific burger joint in your neighborhood.
In contrast, services like Twitter struggle with ads because users are there to doomscroll horrifying Covid-19 news or see the latest bizarre thing Donald Trump said. They’re not there to buy stuff. Facebook suffers from a similar problem, but its intense knowledge of user behavior (down to the specific items you’ve purchased at thousands of retailers) allows it to target ads so effectively that it still makes massive sums of money — $69 billion in ad revenue in 2019, according to TechCrunch.
Few companies, though, are more intimately connected to peoples’ buying behaviors than Amazon. As of mid-2020, Amazon controlled nearly 40% of American e-commerce, and data from 2018 suggests that it may control as much as 94% in certain categories, like cosmetics and batteries. Overall, the company is forecast to control almost 5.5% of all retail in America in 2020 — especially as Covid-19 has forced consumers to do more of their…