19 April 2019
Amazon Inc is planning to grab a chunk of the US$129 billion (S$174 billion) digital advertising market which has been dominated by internet giants Google and Facebook till now. The company plans to sell video spots on the e-commerce giant's smartphone shopping app according to reports.
The e-commerce giant has been beta testing the ads on Apple's iOS platform for several months now, according to people familiar with the plan. The company plans to launch ads on Google's Android platform for later this year, according to people who are close to the source.
The brief video spots appear in response to search results on the shopping app and can be a valuable space for advertisers as people are already searching for products on the app. Users have a higher propensity to buy who are already searching for products on Amazon, than those scrolling through Facebook or watching videos on Google's Youtube. Amazon is one of the fastest growing challengers in the digital advertising market and has captured 50% of all online sales in the US. The company’s digital advertising market share is expected to grow to 8.8% this year from 6.8% in 2018, according to a report by EMarketer Inc. Google which has been a market-leader till now, has seen a share slip to 37.2% from 38.2%.
Amazon has declined to comment and a spokesman for Google hasn’t immediately responded to a request for comment. The video ads are a new revenue earning an opportunity for Amazon's advertising division, as it mostly sells space featuring brand logos, product photographs and descriptions which are the equivalent of digital billboards.
Collin Colburn, an analyst at Forrester Research stated, “They roll out these new experiences slowly to see if it disrupts the shopping experience and see if it's something advertisers want,” he said. “This creates a new format for them and another way to sell space on the platform.”