Goliath vs. Goliath: Amazon’s ad spend continues to soar

25. July 2018

To the surprise of absolutely nobody, Amazon’s fourth Prime Day was a record-breaking sales day. Even with the site’s glitch, which cost an estimated $100 million, people spent a staggering $4.2 billion during the 36-hour sale. And that’s not counting any of the revenue from an ever-increasing cohort of customers: marketers.

Amazon now has a multibillion dollar ad business. While it’s nowhere near the level of Google and Facebook — the two accounted for 84% of last year’s ad revenue, according to GroupM — Amazon is still something of a dark horse. eMarketer predicts the company will be third behind Google and Facebook within the next two years. And according to Merkle’s Digital Marketing Report, Amazon’s search ads just had a phenomenal quarter.

A look at Amazon’s ad spend

During Q2 of this year, spend for Sponsored Products and Headline Search Ads increased 165% and 162% year-over-year, respectively. Product Display Ads haven’t performed nearly as well, but it’s worth noting that they’re only available to vendors, while third-party sellers have access to the other two formats.

Amazon ad growth

Sponsored Products appear alongside search results, while Headline Search Ads appear along the top of the page. The former makes up the lion’s share of Amazon ad revenue, though the latter has by far the highest click-through rate, up 272% YoY. However, advertisers consider clicks from Sponsored Product Ads to be more valuable.

Still, the two formats have strong conversion rates. In fact, they both convert at about three and a half times the rate of Google Shopping ads.

Despite decelerating growth, Google still dominates

Amazon’s search ads are outperforming those of Google, whose investment growth decelerated for the third consecutive quarter. In Q2, Google’s desktop search spend fell to a seven-quarter low. Clicks on the third and fourth search result also declined, resulting in an overall rise in cost per click.

However, that doesn’t change Google’s status as the dominant name in search. The company produces 96% of mobile organic search results in the U.S., with ad spend jumping 18% YoY during Q2. Google Shopping Ads were the search giant’s star performer, particularly on mobile devices. Spend on Google Shopping ads grew at five times the rate of text ads.

Two areas where Google continues to thrive are audience targeting—the company’s various products impacted more than one-third of search ad clicks—and YouTube. Last quarter, YouTube traffic increased a whopping 299%.

Google targeting clicksFacebook ad spend increases — but not as much as Instagram’s

Growth in YouTube traffic is outpacing that of every other social platform by a staggering amount. The only one that comes kind of close is Instagram, which is increasingly attracting more brands as it grows in popularity. Instagram’s ad spend growth during Q2 was 177%, more than four times that of Facebook. At the same time, impressions increased by 209%.

Excluding the photo-sharing platform, Facebook’s ad spend increased 40% YoY last quarter. And marketers are seeing traction; right-hand rail ads generated a 28% higher CTR.

Clicks in the Newsfeed increased even more (44%) which may be a byproduct of the recent algorithm change. In January, Facebook reduced the number of unsponsored posts from brands and publishers in the Newsfeed, which helps paid ads stand out more.

The post Goliath vs. Goliath: Amazon’s ad spend continues to soar appeared first on ClickZ.

Original source: https://www.clickz.com/amazon-ad-spend-soars/215976/


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