Some advertisers move more than half of their budget which they normally spend on ads on Google Search to Amazon. It’s about hundreds of millions of dollars, according to top people at various media companies. That’s what CNBC reports.
There are several reasons for the shift of the budget, say the insiders. One of those reasons is that ads on Amazon correlate directly to sales. According to Survata, 49 percent of American product searches start on Amazon.
Several people also say that their clients appreciate Amazon’s seamless shopping experience. On Google Search, an advertisement can also lead to sales, but then a user must first create an account and provide credit card information on a separate website.
Amazon has recently seen strong growth in its advertising turnover, which can pose a major threat to Google’s parent company Alphabet. Last year, Alphabet converted 95.4 billion dollars in advertisements, which is 86 percent of its total turnover. Although there are no official figures known about the different parts of the advertisements, the vast majority of the turnover is expected to be earned from advertisements on Search.
So far, there doesn’t seem to be a problem for Alphabet. The growth of total advertising revenue even accelerated in the first half of 2018, compared to the same period in 2017. Moreover, not all branches move to Amazon. Most shifts come from packaged consumer goods. The car and travel industries do not yet move to Amazon.
A manager in Google’s advertising sales organization says he doesn’t see the budgets being moved to Amazon, but more and more often customers are setting up a separate brand to sell exclusively on Amazon. “Leadership is absolutely worried, but it’s not a big threat yet,” says the manager, who wants to remain anonymous.
There are several possible reasons to stay with Google. That’s not how everything’s sold on Amazon. Travel, cinema tickets and cars are not yet offered there. Companies that offer these kinds of products and services have no reason to advertise on Amazon.
In addition, several media companies say that Google is putting forward its other advertising products, including video ads on YouTube. This can yield a return on investment (ROI) of more than 50 percent, provided that the right advertisement appears in the right category.This news article was automatically translated from Dutch to give Techzine.eu a head start. All news articles after September 1, 2019 are written in native English and NOT translated. All our background stories are written in native English as well. For more information read our launch article.