Can Amazon Upset the Advertising Duopoly?

Key insights

6 takeaways

01
Google and Facebook dominated the digital advertising landscape in 2016, capturing 89% of all US digital ad revenue growth.
02
By 2019, Google and Facebook are projected to control approximately 66% of all US digital advertising revenue.
03
The digital advertising market has shifted toward value-based, return-oriented bidding, rendering traditional metrics like views and clicks less relevant than proprietary consumer data.
04
Amazon currently holds less than 10% of the non-duopoly advertising market, trailing behind the collective 23% share held by Microsoft and Oath.
05
More than half (52%) of consumers now initiate product searches on Amazon, positioning the company as a primary competitor for high-intent advertising traffic.
06
Amazon’s potential to challenge the duopoly relies on integrating its vast consumer data, Alexa search insights, Whole Foods retail data, and owned inventory like Twitch into a unified mobile advertising platform.

Summary

The digital advertising landscape is currently dominated by a Google-Facebook duopoly, which captured 89% of all United States digital advertising revenue growth in 2016. Projections indicate these two entities will control approximately 66% of total U.S. digital ad revenues by 2019. This dominance is driven by proprietary data sets that allow for highly effective, return-oriented bidding, shifting the industry focus away from traditional metrics like views and clicks toward user value optimization.

Amazon is positioned as the most credible challenger to this duopoly, despite currently holding less than 10% of the non-duopoly advertising market. The company’s potential as a competitor stems from its unique consumer-centric ecosystem. Notably, 52% of consumers initiate product searches on Amazon rather than traditional search engines, providing the company with a vast, high-intent data set. By integrating this retail data with insights from Alexa, the Whole Foods acquisition, and owned inventory such as Twitch—which averaged 737,000 concurrent viewers in Q3 2017—Amazon possesses the necessary components to build a competitive advertising platform.

The analysis concludes that if Amazon strategically consolidates these disparate data and inventory assets, particularly with a focus on mobile, it could effectively challenge the duopoly. Because the modern digital advertising market prioritizes value-based outcomes over inventory volume, Amazon’s ability to leverage its deep understanding of consumer purchase intent provides a significant competitive advantage. Success in this sector depends on the company’s willingness to move beyond its historically narrow and circumspect approach to advertising and fully integrate its data into a cohesive, value-oriented platform.