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04/08/2021

Amazon’s Digital Ad Market Share Soars to 10%

Amazon is one of the most dominant names in digital advertising, with the e-commerce giant’s total share of the U.S. digital ad market reaching 10% in 2020, according to eMarketer.
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Amazon is one of the most dominant names in digital advertising, with the e-commerce giant’s total share of the U.S. digital ad market reaching 10% in 2020, according to eMarketer. 

That brings Amazon up to the No. 3 ad publisher in the nation, after seeing a 52.5% increase in its advertising business last year. In 2020, Amazon’s digital ad revenue reached $15.7 billion, bumping the retailer’s market share from 7.8% in 2019 to 10.3%. The biggest drivers of growth included sponsored products and sponsored brands, followed by video ad revenues on Amazon Fire TV, Twitch and IMDb TV.

Ecommerce channel advertising, including search advertising and display ads on its retail properties, accounts for 89% of Amazon’s digital advertising revenue. According to the report, Amazon is--by far--the largest ecommerce channel advertiser, controlling 76.2% of the market share. By comparison, Walmart, the No. 2 retail media network, holds just 6.5% of market share.

Executive Summary

With such explosive growth, it’s clear Amazon is the top retail media network. While several other retailers have also seen significant growth in their media networks over the last year, including Walmart, Target and Kroger, Amazon’s dominance sheds light on a question of whether brands and retail media agencies should spread their digital ad strategies across several emerging retail media networks--or focus only on the big guys like Amazon. 

Looking ahead, Amazon’s digital ad business is expected to grow another 30.1%, topping $20 billion in revenue for the first time and putting the retailer on track to hit $30 billion by 2023. The new forecast by eMarketer is higher than previously predicted.

“For advertisers with goods to sell in the marketplace, Amazon ads were a key performance lever throughout 2020, especially with the cheap ad opportunities available in Q2, when many sellers suffered out-of-stocks and dropped out of the auctions,” Nicole Perrin, eMarketer principal analyst at Insider Intelligence, said in a statement. “Amazon advertising has long been a must for marketplace participants, and that hasn’t really changed—though more brands and retailers are considering Amazon from an ecommerce perspective due to the pandemic.”

Amazon’s growth is also “chipping away” at Google’s huge market share, according to eMarketer. Google’s digital ad market share is expected to drop from 28.9% in 2020 to 26.6% by 2023. At the same time, Google’s digital ad business will still grow over that timeframe. Facebook is the second largest in terms of market share, with 25.2% of the market in 2020. Retailers are the No. 1 advertiser on Facebook, according to a recent report.

Plus, Amazon’s search ad business continues to soar.

“Amazon’s search ad business will grow to $14.53 billion in 2021, boosting its share of US search ad spending to 19.0%, up from 13.3% in 2019,” the report noted. “By the end of 2022, its share will surpass 20%.”